Vodafone won't sell stake in Verizon

[Barry]

It appears as if Verizon hit a road block with Vodafone Group over joint venture Verizon Wireless.

Fresh off its agreement to sell its Japanese wireless business to Softbank Corp. for US$15 billion, Vodafone dashed Verizon's hopes - at least for the moment - of buying out the 45% stake in Verizon Wireless it doesn't own. Vodafone's Japanese business had long struggled in its attempts to expand its subscriber base.

Last year, Verizon Wireless posted revenue of $32.3 billion, up 17% from 2004. Income rose 35% to $2.22 billion. Verizon, meanwhile, reported that total revenue grew 5.4% to $75.1 billion, while net income excluding items inched up 2.8% to $7.2 billion.

Analysts value Vodafone's stake in Verizon Wireless at between $40 billion and $60 billion, which values the entire business at roughly $90 billion to $130 billion.

While the heat is on Verizon to keep up with market leader AT&T, there isn't really a strategic need to get a deal done.

Eventually, Verizon will need to take full control of Verizon Wireless to enable the same kinds of cost savings AT&T will churn out with its integration of Cingular. But that may not occur for another year or two, Dixon said.

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