Seeking Alpha

Vodafone (VOD +2.2%) spikes after Verizon (VZ +0.4%) CEO Lowell McAdam says his company is...

Vodafone (VOD +2.2%) spikes after Verizon (VZ +0.4%) CEO Lowell McAdam says his company is capable of digesting Vodafone's 45% stake in Verizon Wireless. "We have always said we would love to own all of that asset," he reminds us. The fact Verizon Wireless is now making giant cash distributions gives Verizon more incentive to make a deal, but the fact Verizon has $53B in debt complicates matters. McAdam also suggests Verizon won't be following T-Mobile's lead in eliminating phone subsidies. "I don't think U.S. consumers are ready to buy an iPhone for $700."
Comments (8)
  • "I don't think U.S. consumers are ready to buy an iPhone for $700."

     

    Lowell is probably a lot smater than I, but I would have said the same thing for a $500 iPhone. If Apple had the human capability of a rectal cavity, you would find a lot of people up it.
    7 Jan 2013, 03:20 PM Reply Like
  • "I don't think U.S. consumers are ready to buy an iPhone for $700."

     

    yep, they rather pay almost 2000$ per years of service including that 700$ iPhone.

     

    In Europe they pay 700$ for device but year cost is much lower compared to 2000$.

     

    So Verizon may be worried of that 1300$ revenue per two years rather than 700$ iPhone
    7 Jan 2013, 03:48 PM Reply Like
  • VZ has a higher debt to equity ratio than VOD. Knowing what was just paid for Sprint by Softbank(20B for 70% stake of a company that has 56M subscribers), it'd be a lot more to pry that 45% from VOD for the top wireless carrier in the country. VZ can talk it up all they want, but I just don't see it happening. No reason to sell this asset.
    7 Jan 2013, 03:55 PM Reply Like
  • I don't really see a path unless VOD wanted out which even though they have made some rumblings; I doubt they do. I think VOD has it pretty good just stoking their 45% with divs.

     

    Ive had VOD stock for quite a while and jumped in VZ about a year ago; both have worked turned out better than I expected and this speculation is great for both sides.
    7 Jan 2013, 04:14 PM Reply Like
  • I would trying the pricing both ways, high price for the phone for a reduced charge and no contract vs. low price for the phone and the current 2 year contract. You could pilot the above in small sample and see which one works best. After all, if you pay $700 for a phone, even without a contract, you are not going to be in a rush to switch carriers and you might hold on to your phone longer than the contract period.
    7 Jan 2013, 05:02 PM Reply Like
  • VZW is VODs best asset when considering cash flow and stability (South Africa is a good earner, but questionable stability). I doubt they have any interest in selling.
    7 Jan 2013, 08:30 PM Reply Like
  • Exactly. VOD has absolute no reason to sell.
    7 Jan 2013, 09:26 PM Reply Like
  • VOD will hold pat. To assume bravura talk like this has real credence is about akin to the buzz media hype pundits use to sell-the-sizzle.

     

    VOD may be questionably directed at times, but VOD's management is not as weak and wobbly as let's say, the U.K's BP is. VOD knows the income stream and stability that VZ wireless brings, further VZ's debt coupled with its flat profit margins (predicated on its aggressive future directed 4G build out, land-line erosion, I-phone subsidies, and mature US wireless market) will ensure no annulment or divorce is in the offing. VZ might like to mortgage the ranch, but VOD won't be offering to being with.
    8 Jan 2013, 09:00 PM Reply Like
DJIA (DIA) S&P 500 (SPY)