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Verizon Communications Inc. Message Board

  • edwardjk edwardjk Sep 3, 2013 8:33 PM Flag

    Reasons for the Vodafone Purchase?

    I have read several stories quoting VZ CEO Lowell McAdam who tries to explain the reasons behind the acquisition of Vodafone's partnership interest.

    First, let's start with what the deal is NOT about. According to McAdam, the deal is not about synergies, since VZ management has recently taken steps to consolidate wireless and wireline functions in the overall business.

    Also, the deal is NOT about control, since VZ already owns 55% of the JV and pretty much does what it wants to do anyway.

    So eliminating what the deal is not about, then what is it about? Well, two thoughts here. First, the deal is an all-in bet on the US market. McAdam apparently believes there is still growth opportunity in the US even though pretty much everyone already owns a cellphone. He has to see the opportunity for growth through new services and products over the existing wireless network. Hmm.

    And the deal is also all about ego. VZ is loaded with executives who believe their's is bigger than the next person. McAdam wants to walk around and say I own the biggest market in the world.

    Assuming the deal closes, he is correct. But it remains to be seem whether the growth opportunities will pan out.

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      Sentiment: Strong Buy

    • McAdam apparently believes there is still growth opportunity in the US even though pretty much everyone already owns a cellphone
      there is the KEY ... it's not about phones , but mobile computing .. which by all accounts has a lot of growth
      down the line ...
      also , there was something about VOD holding that 45% that did keep VZ from some pursuits

      on the first 2 points that you quoted from McAdam means that there are no "cultural matters" do deal with,
      it's a business that VZ has been in since the beginning .. that means a smooth transistion to greater
      cash flow and profits ...

      it's too bad that the deal cost so much , but bear in mind that 4 years ago and more than that back to
      2003 when the matter first surfaced , interest rates were double or more than what they are now .. also
      VZ stock is a lot higher , means fewer shares needed to come up with that 60 bil .. .

    • The US is not the biggest market in the world. China is.

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