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Verizon now 100% American as Vodafone cashes out for $130B

Kris Carlon
4

Did you know that almost half of Verizon Wireless was owned by the UK's Vodafone? Well, it doesn't really matter anymore, because Verizon has just sealed a deal to buy Vodafone's 45% stake in the company's wireless division for a cool $130 billion. Yes, you read that correctly, $130 billion dollars. This price tag makes this one of the most expensive acquisition deals in history at the same time as making Verizon a 100% American-owned company. This makes Microsoft's purchase of Nokia this morning for $7 billion seem like chump change.

verizon cash
They may have had piles of cash to make the purchase, but there mustn't be much left. / © modmyi.com

At the same time Verizon has announced that they are no longer interested in expanding into Canada, leaving those in the Great White North to get by with the existing three carriers: Rogers, Bell and Telus. Perhaps dropping ludicrous amounts of cash for home-ground advantage has diminished their reserves. Oh yeah, did I mention the $130 billion was in cash and stocks? It's the third largest merger and acquisition ever.

Verizon CEO Lowell McAdam was quoted yesterday as saying: ''At this point in time we're not interested in entering the Canadian wireless market.'' Although what I think he meant to say was: ''we can't even afford coffee in the office anymore.'' $130 billion dollars for a 45% stake in the company is a very good deal for Vodafone, who got exactly the price they were asking for, compared to Verizon's hopeful acquisition figure of $100 billion.

VerizonUSAMap
Verizon is now officially 100% red, white and blue. / © CNET

What this high valuation means is that Verizon is dropping eight times its earnings before tax, interest and other sundries are calculated, meaning the office parties at Verizon might be a little lackluster for a little while. But seizing complete control of the largest American cellular network will give Verizon huge advantages in future. Advancement into the Canadian wireless market, other investment opportunities and joint marketing/bill bundling between wired and wireless services can now all be handled independently.

Verizon has been growing steadily recently, with the most recent quarter revealing 8.3% growth in service revenue year-over-year. That's over 100 million connections equaling close to a third of the US population. Verizon also hosts the largest 4G LTE network across the country, covering 500 markets. While belts may be tightened for the immediate future, it won't be long before Verizon starts loosening them a notch or two as they continue their growth and expansion through North America.

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Comments

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  • Ed E. 10 months ago Link

    Good luck trying to get a foot hold in to Canada, with our foreign ownership laws you can only have a very small ownership and the rest must be Canadian owned, so most likely will not be of any interest to you........... besides our market is very very small...........good luck...........even though it would be good for our market, we have to many laws and regulations on foreign ownership.

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    Kris Carlon 10 months ago Link

    I read something while researching the article where Ian Grant of the Seaboard Group said Canada represents 1/130th of the opportunity compared to the buy-back deal, so he wasn't surprised Verizon backed out. But in the same article (on msn news), there were complaints by the big three about how foreign companies have an advantage because they would be considered a ''new player'' in the Canadian market and, according to current Canadian wireless laws, would have bidding rights to two (instead of the Canadian companies' rights to bid on only one) blocks of 700 megahertz spectrum to go up for auction in January 2014. So there's still time for another foreign company to step in...

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  • Sterling Keys 10 months ago Link

    Come on foreign companies, get into our radio-o-sphere. Maybe then the big 3 will reduce the prices from their astronomical rates.

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  • Ed E. 10 months ago Link

    Thats true Kris............Our big three cry when there's any hint of a foreign company thinking of entering Canada. .........Our government needs to relax the foreign ownership laws and just have an open market for all and let us diside to buy there products.

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