When Verizon and Vodafone set out to create Verizon Wireless, through the merger of Bell Atlantic Mobile and GTE Wireless, the idea was to create a successful network in the US. In the past thirteen years, the carrier has grown to the most popular in the US, surpassing long-time holder AT&T.
Verizon and Vodafone shared the company 55/45 respectively, but rumblings early this spring started the rumours of Verizon wanting to buy the company back from Vodafone. This was met with Vodafone saying if they had to they would look for a merger or buyout themselves, convinced the US market is the future of carrier profits.
The news today comes as a surprise, simply because Vodafone and Verizon boards unanimously agreed on the move. This is one of the biggest deals in recent history, but does not surpass Vodafone’s deal with Mannesmann for $185 billion.
Verizon will now take full control of the company and this will give the company huge profits in the next few years, provided Verizon Wireless continues to keep a steady line of subscribers, they currently have somewhere around 100 million.
On Vodafone’s end, the company will get a nice pile of cash, split $58.9 billion in cash, $60.2 billion in Verizon stock and $11.1 billion from other transactions. This could be used to start other ventures in Europe and Australia, perhaps kickstarting 4G movements.
Big deals have failed before and the huge successes are few and far between, AOL and Time Warner is the biggest example of overpaying for something that will not give any reward in terms of content or profit. Verizon obviously knows what it is doing as it goes to buy Verizon Wireless, but was 45% of the company really worth $130 billion.