UPDATE - 17:46 BST: Vodafone confirms sale & outlines spending plans
Sep 1, 2013
Vodafone has just confirmed the sale and announced that $58.9 billion of the $130 billion valuation of Vodafone's stake will be in cash and $60.2 billion in Verizon shares.
There's some tidying to be done as well which, with any other move of this nature, would be worth headlines of its own. There is a payment of $5.0 billion in Verizon loan notes, $3.5 billion from Verizon’s 23 per cent minority interest in Vodafone Italy and $2.5 billion through the assumption by Verizon of Vodafone net liabilities relating to the US Group... small change.
On the spending side, £6 billion from the total haul is being earmarked for 'Project Spring' projected to run over the next three financial years.
This will involve spending on an accelerated LTE network build to cover 90 per cent of its main European markets by 2017 and will involve a single RAN and high-capacity backhaul; more is going to be spent in wringing coverage and capacity out of the 3G networks in mature markets.
There is going to be wireline expenditure as well (though how much is unspecified), including an extended fibre roll out to support NGN and VDSL resale reach (says the statement).
As if to make sure that none of the segments feel left out Vodafone is also pepping up its enterprise service portfolio, "including IP-VPN, Cloud, Hosting and M2M".
More detail on Project Spring will come our way in November.
So ends one of the weirdest deadlocks in telecoms corporate history with Verizon now in full control of the cash-generating machine that Verizon Wireless has become and Vodafone with wads of cash to return to shareholders or spend up on further expansion.
Meanwhile thoughts are turning to other M&A possibilities. AT&T is apparently mulling (again) a big European acquisition and now Vodafone (if disentangled from Verizon) is looking alluring, although the global mobile operator's recent habit of picking up wireline infrastructure is reportedly a negative for AT&T.
But let's get real here. The apparent opportunity for AT&T stems from the fact that European telco valuations are low - a combination of recession, mature markets and an increasingly competitive regulatory regime account for that. But those conditions (or some of them) inevitably won't remain. Recessions always end, it just doesn't feel as if they will when you're in one.
The US incumbents, on the other hand, may well be enjoying the last blush of summer before some real competition hits them as T-Mobile gets its in ducks in a row and, most of all, Sprint gets a Softbank service makeover and cash injection.
But more than this theoretical reversal of fortunes, the history of US telco entry into Europe has been arguably even more dire than European attempts to go the other way. Clearly Vodafone's investment foray turned out alright in the end and T-Mobile is still hanging in there - but US telcos' and cablecos' European landings dating back to the 1990s have mostly been failures (although admittedly many were terminated by the telecoms crash of 2001).
Back in the 1990s Europe was privatising its telcos and liberalising its markets and so (like today) looked ripe for entrepreneurial entry. US carriers mostly came in as joint venture partners with competitive telcos or - especially in the case of the UK - cable TV network deployments.
They also formed so-called 'carrier alliances' with assorted incumbent telcos, the idea being to offer multinationals end-to-end managed services from a single source. These were mostly unmitigated disasters.
Obviously the world moves on and intra-European telco groups have clearly emerged from under the wings of Telefonica, France Telecom and Deutsche Telekom at least proving that cross-border ownership can work very well in the European mobile market.
But there must be a big question-mark over whether the US corporate and regulatory experience will prove a helpful background for AT&T if it decides to buy into Europe - especially the idea, oft repeated in the US, that because the US operators have invested heavily in LTE they have found the magic key for mobile deployment and so can now export it.
Europe is a very different and - in some territories - highly competitive market. While at present the US has high prices and profits and Europe low, that could - and probably will - change.
See last week's story - Vodafone in talks to sell its stake in Verizon Wireless