Verizon company logo. — Reuters Photo

LONDON, May 3 - Verizon Communications would like to buy out Vodafone from their Wireless joint venture but will not do so at any cost, its chief executive has told JP Morgan analysts.

In a note to clients, analyst Philip Cusick said Verizon boss Lowell McAdam had said he did not believe a premium would be required to buy Vodafone's 45 percent stake in the highly successful Verizon Wireless business, because Verizon already had control through its 55 percent holding.

Shares in both groups are up over 20 percent this year on speculation Britain's Vodafone could finally exit the leading wireless business in the United States, a partnership the two firms' formed in 2000.

Verizon management have stepped up the rhetoric in recent months, saying they want to do a deal and two people familiar with the situation have told Reuters that Verizon is working on a possible $100 billion bid to take full control of the asset.

In response, Vodafone has said it has an “open mind” on whether to stay in the business, which makes up around 75 percent of its market value.

McAdam also indicated to the JP Morgan team that the two owners could face a “lean” year in terms of the dividend they receive from the Verizon Wireless asset, a move which could increase tensions between them.

Verizon refused to sanction a dividend from the Wireless asset between 2005 and 2011 because it said it preferred to pay down debt and make acquisitions. That however was seen by analysts as a move to pressure Vodafone out of the joint venture.

The JP Morgan analyst said McAdam had noted that $5 billion of Verizon Wireless's $10 billion of gross debt would be due between now and the first half of 2014, and that the group would use Verizon Wireless cash flow to pay down debt before paying out dividends.

The note said also Verizon was confident it did not need a Verizon Wireless dividend to pay its own corporate payout.

A Verizon spokesman in London could not immediately be reached for comment.

 

 

Opinion

Editorial

UNGA speech
25 Sep, 2022

UNGA speech

CRISES test a nation’s resilience but also provide opportunities to rise and move forward. Prime Minister Shehbaz...
Dar’s return
Updated 25 Sep, 2022

Dar’s return

Dar will now be expected by his party to conjure up fiscal space for the govt to start spending ahead of the next elections.
Iran hijab protests
25 Sep, 2022

Iran hijab protests

FOR over a week now, Iran has been witnessing considerable tumult after a young woman died earlier this month in the...
Post-flood economy
Updated 24 Sep, 2022

Post-flood economy

WITH a third of the country — especially Sindh and Balochistan — under water, over 33m people displaced, and...
Panadol shortage
24 Sep, 2022

Panadol shortage

FROM headaches to fever to bodily pain — paracetamol is used ubiquitously in Pakistan as the go-to remedy for most...
Star-struck cops
24 Sep, 2022

Star-struck cops

IN this age of selfies and social media, it is easy to get carried away in the presence of famous people, even if ...