Verizon Communications' CEO, Lowell McAdam confirmed that he feels that the company has the strength to pull off the deal. He did however comment that the joint-venture is functioning well and consolidation of the ownership isn't necessary.
"We have always said we would love to own all of that asset," he told the Wall Street Journal. Mr. McAdam added Verizon could buy the stake from Vodafone outright, but he noted there are "lots of different ways we could do it."
The stake could be valued at as much as US$100 billion - or around ten times the recent dividend payments. The Verizon Wireless division also holds low levels of debt, while the dividend payments are helping the two parent companies pay down their own debt piles.
Fitch Ratings recently warned that Vodafone Group's debt ratings are increasingly dependent on dividends from its Verizon Wireless joint venture. The ratings outlook is currently stable.
Vodafone has long said that it is not interested in selling the stake, and fought off a shareholder revolt over the stake. However, since then the US company has made sizable dividend payments and is now seen as a vital asset to Vodafone as it faces sluggish growth in Europe.
McAdam added that the partners don't talk about a deal every week but that Vodafone is aware of Verizon's position and both companies conduct yearly reviews of their operations.
"I don't feel compelled to go out and take action to make something happen," he noted.
The formation of Verizon Wireless is the result of a bout of deal making by Vodafone's founding CEO, Chris Gent who won the battle to buy USA based CDMA network, Airtouch Communications in the USA back in January 1999 - beating Bell Atlantic to the prize.
As a result of losing the battle for Airtouch, Bell Atlantic terminated its PrimeCo joint venture with Airtouch, leaving the company with a network that was limited to the Western side of the USA, while Bell retained its Eastern network. Despite this break down in relations, only a few months later, Gent was talking to Bell Atlantic about the creation of a nationwide CDMA network operator, and in late September, the two companies announced the formation of Verizon Wireless.
Vodafone took a 45% stake in the even larger company, while Bell Atlantic, later renamed Verizon Communications took the controlling 55% stake in the mobile network.
On the web: Wall Street Journal
Posted to: www.cellular-news.com/story/58032.php