While much of the country gathered for barbecues on Labor Day, Verizon Communications (NYSE: [[ticker:VZ]]), based in New York, announced it worked out a $130 billion cash and stock deal to take complete ownership of joint venture Verizon Wireless. The transaction, expected to close by the first quarter of 2014, will give Verizon the remaining 45 percent stake in Verizon Wireless held by London’s Vodafone Group (NASDAQ: [[ticker:VOD]]).
In a conference call Tuesday morning, Lowell McAdam, chairman and CEO of Verizon Communications, said he plans to put Verizon’s combined assets to work together in such areas as mobile commerce, mobile video and advertising, and cloud services.
The deal will give him more ways to dabble with the joint venture he once ran directly, having served as Verizon Wireless CEO from 2007 to 2010. During the conference call, McAdam said Verizon is “very bullish” on the growth outlook for the U.S. wireless market, with room to get more smartphones in the hands of users of basic cell phones. He also said the machine-to-machine, connected devices sector is just starting to develop.
“The digital economy is moving to mobile first on everything, which means there are many growth opportunities to pursue,” McAdam said.
Since Verizon Wireless’s founding in 2000, the joint venture with Vodafone showed no apparent signs of friction—at least in terms of operations, says Robert Rosenberg, president of telecom market research firm The Insight Research Corp. He also believes Vodafone’s European operations may have had a positive influence on Verizon Wireless to some degree. “The U.S. likes to think everything has to be invented here,” Rosenberg says. “In our use of technology, we’re well behind the rest of the world.”
Per the deal Vodafone gets $58 billion in cash with the remainder of the deal covered through stock and other considerations.
