By MICHAEL J. DE LA MERCED and MARK SCOTT
Updated, 9:15 p.m. | Verizon Communications agreed on Monday to spend $130 billion to take full control of its enormous wireless unit because it said it believed that the American desire for cellphones and broadband services was not yet nearly sated.
In buying out its longtime partner, Vodafone of Britain, the telecommunications giant is also striking a takeover more than a decade in the making, taking advantage of receptive debt markets and its own strong stock.
And Vodafone will be flush with cash to reinvest in its own businesses and to buy competitors in Europe and emerging markets.
The roughly 100 million Verizon Wireless customers probably will not see any change in their services, at least at first. But the telecommunications industry is very much in flux as new competitors like SoftBank of Japan have entered the market, while new opportunities for wireless services have emerged. Verizon viewed gaining full control of its biggest business as essential to addressing those trends. In the most recent quarter, wireless services accounted for $20 billion of the company’s nearly $30 billion in revenue.
Among its plans is bundling mobile broadband services with wired offerings like high-speed, fiber-optic connections.
“There’s a big phase of growth in the U.S. telecom market,” Lowell C. McAdam, Verizon’s chief executive, said in an interview. “The timing was perfect for us.”
The deal is enormous by any measure, with the price nearly equaling Verizon’s entire market value. As part of the complex deal, Verizon agreed to pay $58.9 billion in cash and an additional $60.2 billion worth of its shares to Vodafone, the latter of which will be distributed to Vodafone’s shareholders. Verizon will also sell its minority stake in Vodafone’s Italian business for $3.5 billion, as part of a series of smaller transactions tied to the deal. The amount it is paying is merely for 45 percent of Verizon Wireless, implying that the wireless unit is being valued at nearly $290 billion.
Vittorio Colao, chief executive of Vodafone, told reporters on Monday that the deal offered good value for his shareholders. “It was a good move for both partners, and we were able to find the right price,” he said….