Verizon Communications Inc.'s effort to resolve its relationship with Vodafone Group Plc, potentially ending their wireless joint venture, would put it on a path to full ownership of the most profitable and fastest-growing major wireless carrier in the U.S. The two phone companies have discussed a range of options, including the idea of Verizon acquiring 100 percent of their U.S. wireless partnership, people familiar with the situation said. Vodafone's 45 percent stake in the venture, called Verizon Wireless, could fetch $115 billion, according to analysts.
Vodafone jumped as much as 6.7 percent for its steepest gain in four years, adding more than $8 billion in market value. Verizon is eager to take over the unit this year, giving the New York-based company greater control over its most profitable division, said the people, who asked not to be named because the discussions are private. Verizon Wireless added a
record 2.1 million subscribers last quarter, eclipsing the growth of AT&T Inc. and other rivals, and the wireless service generated an earnings margin of more than 41 percent.
“Verizon wants to control what is genuinely the best telecom asset on the planet,” said Jonathan Chaplin, an analyst at New Street Research in New York who has a neutral rating on Verizon. “Verizon Wireless just came off a phenomenal year where they capture all the growth in the industry with record high margins. And this year I would expect the same.”
Eoin Treacy's view Providers of wireless internet services have been among the greatest beneficiaries
of the evolution of social media and mobile devices. Competition in the product
segment has become increasingly intense while demand for various websites is
heavily reliant on trends. Regardless of what product or site one wishes to
use, access to the internet is a prerequisite. The number of companies with
the necessary networks to supply this service remains relatively small with
high barriers to entry. (Also see Comment of the Day on December
Verizon (4.35%) remains in a consistent medium-term uptrend and broke out of the most recent medium-term range yesterday. A sustained move below $43.50 would be required to question medium-term upside potential. .
Vodafone (5.92%) has been ranging above 150p since 2009 and rebounded to test the upper side today. A clear downward dynamic is now required to question potential for continued higher to lateral ranging.