US telecom provider Verizon Communications agreed on Monday to pay $130 billion for the 45 per cent stake in Verizon Wireless owned by British cellphone carrier Vodafone. The deal which is expected to be final by early 2014 is one of the largest in corporate history.
The $130 billion price will be paid in a combination of cash and Verizon’s stock, Vodafone said in a statement. Verizon will pay $58.9 billion in cash and $60.2 billion worth of Verizon shares, as well as $5 billion in loan notes. Verizon will also pay with its 23% stake in Vodafone Italy, worth about $3.5 billion, and assume $2.5 billion of Vodafone’s debt.
Verizon will wholly own the wireless unit after the deal giving the company more flexibility and options to manage growth in the lucrative mobile data market.
The deal will put to an end a joint venture launched by the two telecom giants in 2000. Vodafone chief executive Vittorio Colao said in a release that his transaction allows both Vodafone and Verizon to execute on their long-term strategic objectives. And that Vodafone will accelerate its investment in 4G coverage with the help of this deal. The 4G network would cover 90 per cent of its main five European markets by 2017, Vodafone said. It will also deepen its 3G coverage and invest in fibre and broadband.
Vodafone is the world’s second largest mobile phone operator in terms of customers and revenue while Verizon Wireless is the largest U.S. cell phone service provider. Meanwhile, Vodafone India is likely to soon award a nearly $200-million (around Rs 1,340 crore) contract to Finland’s Nokia Solutions and Networks (NSN) for upgrading its 2G and 3G networks. Also, in other telecom related news Bharti Airtel may soon buy Loop Mobile according to some reports.
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