Verizon Wireless is the nation’s biggest wireless carrier, with about 100 million subscribers. In the second quarter of the year, Verizon Wireless brought in nearly $20 billion in revenue. Because it is jointly owned, it shares its profits between Vodafone and Verizon Communications.
The deal is unlikely to have a major impact on Verizon Wireless customers. Verizon Communications’ shares were up 3.1 percent at midmorning to $48.11 on the news and closed at $47.82. Company officials declined to comment.
In 2011, Verizon Communications decided to turn its efforts toward expanding its 4G wireless network and stopped the expansion of its wireline fiber-optic business known as FiOs, an expensive venture that took aim at the dominance of cable television service providers.
Analysts have since speculated that Verizon would buy out Vodafone’s stake in the wireless joint venture. The deal would give the New York-based firm full control over the future strategy of Verizon Wireless, they said.
The demand for wireless services is expected to continue for years as consumers increasingly rely on smartphones and other mobile devices. Businesses are also expected to increasingly turn to wireless services that allow robots and automated technologies to connect to the Web.
Verizon Wireless is “perhaps the preeminent global wireless asset today, and controlling 100 percent of . . . board seats gives [Verizon Communications] more strategic flexibility in the future for expansion into Canada as well as content and spectrum deals,” said Kevin Smithen, an analyst for Macquarie Capital.
The competition for U.S. and global wireless companies has reached fever pitch in recent years with the $21.6 billion takeover of Sprint Nextel by Japan’s Softbank and AT&T’s attempt to buy T-Mobile two years ago, which was ultimately blocked by federal regulators. Smaller players, which have been making a mark in the industry by allowing users to buy service without long-term contracts, have also been joining forces.
Verizon would have to take on significant debt to finance the deal, analysts say.
The purchase would rank among the biggest global telecomunications deals. In 2000, Vodafone paid $181 billion to purchase German wireless carrier Mannesmann.