Home Tech/AITech news Vodafone CEO Won’t Rule Out Disposal Of Verizon Wireless

Vodafone CEO Won’t Rule Out Disposal Of Verizon Wireless

by Amwal Al Ghad English

Vodafone Group Plc (VOD) Chief Executive Officer Vittorio Colao says while he’s satisfied with the company’s U.S. venture with Verizon Communications Inc. (VZ), he wouldn’t rule out exiting the business in future.

“I see myself as the guardian of money from shareholders,” Colao said yesterday in Barcelona at a conference organized by Morgan Stanley. Vodafone, which owns 45 percent of Verizon Wireless, doesn’t count on dividends from the asset to fund payouts to its own shareholders, he said, calling dividends from the largest U.S. mobile carrier source of “an extra layer of comfort.”

Verizon Wireless said this week it will pay its parents $8.5 billion in dividends, with Newbury, England-based Vodafone’s share being $3.83 billion. The payout is not guaranteed and Vodafone, as the minority partner, needs to negotiate every year and that creates uncertainty for investors in the world’s second-largest mobile-phone company.

Vodafone’s board reviews the investment twice a year, Colao said. The company is pleased with its partnership with New York- based Verizon. Verizon Wireless last quarter added 1.54 million net contract customers, beating analysts’ estimates, and boosted revenue by 7.3 percent to $19 billion.

Verizon Wireless is “the leading company in terms of management and everything else — it’s going very well,” Colao said at the conference.

Extra Revenue

Vodafone added 0.8 percent to 162.15 pence at 8:19 a.m. in London trading, valuing the carrier, whose revenue trails Hong Kong-listed China Mobile Ltd. (941), at 79.7 billion pounds ($126 billion). The stock is down 10 percent this year through yesterday. Verizon Communications fell 0.7 percent to $42.24 in New York yesterday.

Vodafone is working on generating extra revenue from each customer as it rolls out more expensive unlimited plans and proposes to levy a premium for faster fourth-generation services.

If customers trade up that could increase average monthly bills, Colao said. While it’s too soon to say what the effect will be, more customers are moving to pricier services than trading down to cheaper ones since Vodafone introduced its Red plans with unlimited voice and text, he said.

Europe Slowdown

The company will charge a premium for its faster 4G, or LTE, services, which may help push up prices industrywide, Colao said. Vodafone reported its first decline in organic service revenue in 10 quarters on Nov. 13 as its European market suffered from the region’s economic slowdown.

Colao has said he envies the pricing market in the U.S., where Verizon Wireless operates. Verizon generated an average of $145.42 a month last quarter from customers on contracts.

Vodafone isn’t ruling out expansion in southern Europe, where it took a 5.9 billion-pound writedown on assets in Italy and Spain this week.

While declining to comment specifically about Vodafone’s interest in Yoigo, a Spanish unit of TeliaSonera AB (TLSN), Colao said he would explore acquisitions in the country. Vodafone and France Telecom SA (FTE) have explored bids for Yoigo, two people with knowledge of the matter said in September.

Bloomberg

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