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Vodafone Group Public Limited Company Message Board

  • buffet_munger buffet_munger Mar 19, 2013 11:21 PM Flag

    VOD &VZ Merger will be the best option....here why....

     

    Merger
    The possibility of a merger has grown as Verizon and Vodafone have grown closer to each other in value. You can see that market capitalizations are nearly identical and enterprise values are very close. This makes a 50-50 merger reasonable simple from a value standpoint.


    Verizon

    Vodafone

    Market Cap

    $139.3 billion

    $137.4 billion

    Net Debt

    $45 billion

    $35.2 billion

    Enterprise Value

    $184.3 billion

    $172.6 billion

    Operationally, this would be a huge expansion in the globalization of telecom. Vodafone has operations across Europe and in Australia, Egypt, and India. Combine that with a dominant position in the U.S. and you would have a global juggernaut.

    If AT&T (NYSE: T ) and Sprint (NYSE: S ) have fallen behind because of Verizon Wireless' larger infrastructure, just imagine if the company had a global reach. A decade from now your phone could work around the world with little effort and it may be less costly than the exhorbinant costs companies charge internationally today.

    Take some stock
    The third option for Verizon and Vodafone is for Verizon to trade its own stock for Vodafone's 45% stake in Verizon Wireless. For Verizon, this would dilute shareholders and, depending on the price, may not even add to earnings. Unless Verizon went on a massive share buyback campaign, it would likely be better off issuing debt at low rates and buying Vodafone than issuing stock. Still, this is one of the options for the two companies.

    Implications across the industry
    If Vodafone and Verizon become one company, it could create a company so well capitalized that it would dominate wireless around the globe. As I mentioned before, AT&T and Sprint are already having a hard time keeping up with Verizon Wireless' superior network and this would only exacerbate the problem. In the fourth quarter, Verizon added a total of 2.2 million subscribers compared to 780,000 at AT&T and a loss of 243,000 at Sprint.

    For phone makers, a larger Verizon would also be problematic. Apple (NASDAQ: AAPL ) was able to negotiate a sweetheart deal with AT&T to get the iPhone when it was first launched but it wouldn't have the same power today. All carriers are trying to cut subsidies, leaving Apple with shrinking margins.

    Sentiment: Strong Buy

    This topic is deleted.
 
VOD
34.16+0.65(+1.94%)Jul 25 4:00 PMEDT

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