Vodafone won't sell Verizon stake By JANE WARDELL, AP Business Writer

Vodafone won't sell Verizon stake By JANE WARDELL, AP Business Writer
57 minutes ago



LONDON - British mobile phone operator Vodafone Group PLC said Wednesday it has no plans to sell its stake in Verizon Wireless, attempting to end speculation about the future of its U.S. operations.

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Vodafone, the world's largest mobile phone company, said it had decided not to exercise its rights to sell the stake to Verizon Communications Inc., which owns the remaining 55 percent of Verizon Wireless.

"Verizon Wireless is a market-leading business with strong growth prospects and the board of Vodafone continues to believe that retaining its full 45 percent interest is in the best interests of shareholders," the company said in a statement to the London Stock Exchange.

Analysts estimate that Vodafone's holding in Verizon Wireless, which has 52 million customers in the United States, is worth between $45 billion and $55 billion. Vodafone had until Thursday to exercise a put option and sell up to $10 billion worth of its stake. The company had come under heavy pressure from a rebel shareholder group to do so.

Activist investor group Efficient Capital Structures had called on Vodafone to spin off, or issue a tracking stock for, Vodafone's stake in the U.S. mobile operator — hugely increasing the company's debt to return more cash to investors.

ECS suggested that ditching Verizon would leave Vodafone better placed for growth in Europe and Asia as markets become more competitive and pressure grows to generate extra revenues from each customer. It was also frustrated that Verizon's value is not fully reflected in Vodafone's share price and that the business is not expected to reinstate dividend payments until 2009.

However, shareholders overwhelmingly rejected ECS' position when Vodafone put it to a vote at its annual general meeting last month.

Chief Executive Arun Sarin told shareholders at that meeting that the company saw a great future for the business.

"We're comfortable that we have a reasonable window where we can maximize the value" of the stake, he said.

Vodafone reported last month that Verizon added 1.6 million customers during the first quarter, matching the gain in the previous three months.

Vodafone shares rose 1.2 percent to 161.3 pence ($3.29) on the London Stock Exchange.

Verizon Communications shares fell 39 cents to $42.72 in New York.