Vodafone Shares Rise On Verizon Wireless Report

LONDON (Dow Jones) -- Shares of Vodafone Group were the best performing in the British large-cap stock market index Monday following the latest speculation over the possible sale of its Verizon Wireless holding to Verizon Communications.

A British newspaper reported Sunday that Verizon Communications may buy the stake in its wireless joint-venture from Vodafone for about $48 billion -- a price tag close to what market observers believe the stake to be worth.

In the Sunday news story, the Observer reported that Verizon was "poised" to buy Vodafone's stake in the wireless service that bears its name.

Citing unnamed shareholders of Vodafone, the paper reported that a price tag "north of $45 billion" should be accepted by Arun Sarin, Vodafone's chief executive officer.

Neither company has confirmed the talks.

Earlier in the week, another U.K. newspaper -- the Daily Telegraph -- reported that the two companies were in talks, but that Verizon valued the stake at $38 billion -- a price well below what Sarin reportedly would accept.

A Vodafone spokesman declined to comment on Monday.

Vodafone shares nonetheless were the best performing FTSE 100 stock on Monday, up 2.4% in a significantly lower market.

"While the valuation gap is significant, it is a first step towards a likely sale," Jason Armstrong of Goldman Sachs said in a research note on May 9 following the Telegraph report.

Armstrong said a price tag of $50 billion would imply a valuation of 8.7 times estimated pre-tax earnings for Verizon.

"This should be a modest positive for Verizon shares as the top end of this range is lower than many investors had feared, and would cause limited dilution even after figuring in a possible directory spin, and Latam/Omnitel asset sales," wrote the analyst, who has an in-line rating on Verizon.

(END) Dow Jones Newswires"

Posted to the site on 15th May 2006