Vodafone says its Verizon sale talks are advanced

Vodafone has said talks regarding the sale
of its 45% stake in Verizon Wireless in the
US are "advanced" and it has put a value
on the stake.
It has confirmed it is discussing selling the
stake to Verizon Communications for $130bn
(£84bn).
The company said last week that the talks were
taking place and the sale is expected to be
confirmed on Monday.
But BBC business editor Robert Peston said no
UK tax would be paid on the enormous
transaction.
He said that as the deal would involve the sale
of a stake in a US group, the holding company
for which is in the Netherlands, the UK
taxman would not be entitled to anything.
This could prove to be controversial, with
Vodafone's tax affairs having been subjected to
scrutiny in the past.
Vodafone warned there was still no certainty
an agreement would be reached.
In a brief statement in response to what it
called media speculation, it said: "Vodafone
confirms that it is in advanced discussions
with Verizon Communications Inc regarding
the disposal of Vodafone's US group whose
principal asset is its 45% interest in Verizon
Wireless for $130bn.
"The consideration would substantially
comprise a mixture of Verizon common stock
and cash."
If the deal goes through it will be one of the
most valuable corporate deals in history.
An announcement is expected on Monday,
despite US markets being closed for Labor Day.
Vodafone shares were up almost 4% in
London.
It would bring to an end a long-running saga,
with both Vodafone and Verizon trying to take
full control of Verizon Wireless over the years,
but having been unable to agree a price.
Richard Dunbar, investment director at
Scottish Widows, said Verizon Wireless was
now in excellent shape, with 100 million
customers.
He told the BBC: "It has been worth the wait
[for Vodafone shareholders]. Previously it
[Verizon Wireless] wasn't generating a lot of
cash and it wasn't paying dividends to the
parent company and the relationship between
the managers was a poor one.
"Recently it has been better - and the business
has been performing better."
Cash injection
Robert Peston says that at least half of the
proceeds of the deal will be returned to
Vodafone shareholders.
It means tens of billions of pounds being paid
to UK investors, which he says is being seen by
some as a significant injection of cash into the
economy, similar to the Bank of England's
quantitative easing programme.
The rest of the money may be used by
Vodafone to fund acquisitions in Europe.
Vodafone's ownership of almost half of Verizon
Wireless stems from the $61bn acquisition in
1999 of a US company called AirTouch, which
later merged its US mobile phone business
with that of Bell Atlantic.
The deal is not expected to have much effect
on Verizon Wireless customers, with Vodafone
having had little say in the running of the
company.