Vodafone Hangs on to Its Stake in Verizon

Aug 08, 06:08 PM

Current Headlines: By HUGO DUNCAN

MOBILE phones giant Vodafone today turned its back on the sale of its 45% stake in fast-growing US business Verizon Wireless.

Vodafone had until tomorrow to exercise a put option and sell up to $10 billion (5 billion) of shares in Verizon Wireless, which analysts have valued at around $45 billion.

But today it delivered a blow to rebel shareholders by saying it will not to exercise that right Some Vodafone shareholders have been frustrated that the value of Verizon Wireless, which is controlled by America's Verizon Communications, is not fully reflected in Vodafone's share price and that the unit is not expected to reinstate dividends until 2009 at the earliest.

A rebel group called Efficient Capital Structures led by former Marconi executive John Mayo, are pressing for the break-up of the joint venture.But other shareholders, many of whom are thought to have lost money in the collapse of Marconi, rejected the proposals and gave their backing to Vodafone chief executive Arun Sarin and chairman Sir John Bond last month.

Analysts say any partial sale of the stake would trigger market speculation of a full sell-out, hand control of the stake's valuation to independent investment banks and hamper Vodafone's bargaining position for any later deal.

Sarin has said only that he is examining all options in the US, which contributes well over 20% of underlying group operating profits.

Verizon Communications, the second-largest telecoms operator in the US, has long voiced its willingness to buy out Vodafone.

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