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Verizon Communications

5/25/2013, 7:35 PM ET

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Tuesday, May 21, 2:31 PM Vodafone (VOD +0.3%) views its Verizon Wireless stake as a more attractive long-term asset than its slumping European ops, and is thus loath to sell it, argues Bernstein's Robin Bienenstock in the wake of the carrier's FQ4 report (included major Y/Y drops in Italian/Spanish revenue). Bienenstock, no stranger to throwing cold water on deal expectations, also thinks Vodafone's remarks about keeping its new $3.15B VZW distribution are a sign Verizon (VZ -1.3%) won't be issuing fresh distributions in the near-term; recent comments from Verizon's CFO also back this up. 11 Comments [Tech]
Tuesday, May 21, 4:34 AM Vodafone (VOD): FQ4 organic service revenue -4.2% (in line, but worst quarterly drop on record): -12.8% in Italy and -11.5% in Spain. Impairment charge of £1.8B in Italy, bringing total impairments for Spain and Italy to £7.7B for the full year during which sales were down 4.2%, to £44.4B and core earnings were off 3.1% to £13.3B. Adjusted operating profit beats, rising 9.3% to £12B. The company said it will keep its 45% share of Verizon's (VZ) dividend payment to shore up operations. 4 Comments [Tech, Earnings]
Monday, May 20, 5:38 AM The deal may be far from done, but that hasn't stopped analysts from spending (in their heads anyway) the theoretical $100B+ cash hoard Vodaphone (VOD) would be sitting on in the event Verizon (VZ) buys out VOD's 45% Verizon Wireless stake. "What they should do is a dramatic rethink of the business," a Bernstein analyst tells Bloomberg. One possibility: acquisitions, such as Kabel Deutschland Holding and/or Liberty Global, KBC asset management says. Even if the company returned half of the cash from a potential deal to shareholders, it would still be left with $62B, including what it currently has on its books. 3 Comments [M&A]
Saturday, May 18, 6:23 PM 32% of Q1 U.S. smartphone sales involved prepaid phones, up from 21% a year ago, says NPD. That trend could spell trouble for AT&T (T) and Verizon Wireless (VZ, VOD), whose recent growth has been heavily tied to selling costly postpaid data plans. With 72% and 61% of the carriers' postpaid bases now respectively on smartphones, they face pressure to gain prepaid buyers without cannibalizing postpaid subs. Cannibalization fears have led AT&T and Verizon to make their prepaid plans 3G-only; Sprint (S) and T-Mobile (TMUS) offer 4G. A mix shift towards unsubsidized prepaid phones could also be a challenge for Apple (AAPL), estimated to have just 8% of the Q1 U.S. prepaid smartphone market (though that's up 4x Y/Y). 16 Comments [Tech]
Friday, May 17, 9:10 AM Leap Wireless (LEAP) -2.5% after Barclays starts coverage with an Underweight and $4 PT as part of a broader coverage launch of U.S. telecom service providers. Tower owners SBA (SBAC) and American Tower (AMT) have been started at Overweight, and so has Verizon (VZ). AT&T (T) and T-Mobile USA (TMUS) have been started at Equal Weight. Comment! [Tech, On the Move]
Tuesday, May 14, 6:07 PM Verizon Wireless distributions will be "more lean" going forward than they have been thus far as the carrier pays down debt and bids in upcoming spectrum auctions, says Verizon (VZ) CFO Frank Shammo in the wake of a $7B payout. The comments suggest Verizon might still use the distributions as a bargaining chip (previous) to get Vodafone (VOD) to sell its stake. Shammo also states 1/3 of Big Red's postpaid subs are now on its costly shared data plans; that's up from 13% last November. (earlier) 3 Comments [Tech]
Tuesday, May 14, 2:24 PM Verizon's (VZ +0.8%) decision to let Verizon Wireless make a $7B distribution, rather than play hardball with Vodafone (VOD +0.3%), "smacks of stalemate" in Verizon's efforts to buy Vodafone's 45% stake, writes Bernstein's Robin Bienenstock. "In effect, Verizon is betting that Vodafone will be under more pressure to sell at a lower price next year because of Vodafone's own poor operational trends." Past reports suggest the gap between Verizon's initial bid and Vodafone's initial asking price could be $30B. (previous) 3 Comments [Tech, M&A]
Monday, May 13, 4:53 PM Verizon Wireless is making a fresh $7B cash distribution to owners Verizon (VZ) and Vodafone (VOD) - Verizon will get $3.85B, and Vodafone $3.15B. A $10B distribution was made in 2011, and an $8.5B distribution last November. CEO Lowell McAdam appeared to be hinting earlier this month Vodafone might not get a distribution this year, as Verizon Wireless focuses on paying down debt. VOD +0.5% AH. VZ +0.3%. 5 Comments [Tech, On the Move, Breaking News, Top Stories]
Friday, May 10, 11:49 AM AT&T (T) and Verizon Wireless (VZ, VOD) might finally realize their dream of charging consumers and content providers for mobile data traffic: a WSJ report states ESPN has held talks with "at least one major carrier" about subsidizing access to its content, perhaps by guaranteeing it doesn't count towards monthly caps. If such deals ever became widespread, media providers such as YouTube, Netflix, and Pandora would probably be the biggest payers. But ESPN isn't yet sure of the economics, and (though net neutrality rules only apply to wireline) there could be a regulatory backlash. 5 Comments [Tech]
Monday, May 6, 12:58 PM Some big Verizon (VZ -0.8%) shareholders seem comfortable with the carrier paying $120B-$130B to acquire Vodafone's (VOD -0.4%) 45% stake in Verizon Wireless. "No way do I dream that $100 billion is going to get this deal done," says Craig Leopold, whose firm (Columbia Management) owns 22M Verizon shares. He estimates even a $130B deal would lift Verizon's 2014 EPS by 15%. One big challenge: Verizon already has $52.9B in debt on its balance sheet, offset by just $9.5B in cash/investments. Even a 50/50 cash-stock deal for the stake would lead total debt to soar above $100B. (previous) 5 Comments [Tech]
Friday, May 3, 2:05 PM AT&T (T -0.5%) is set to launch new prepaid plans on June 15 under a brand called All in One, Fierce Wireless reports. The services will reportedly include a $35/month feature phone plan and a $50/month smartphone plan, with each supporting unlimited voice and text to go with a data bucket. The report comes a week after AT&T reported a Q1 net loss of 184K prepaid subs, a number that contrasts unfavorably with Verizon's (VZ) 43K net gain. Verizon recently launched a $35/month prepaid plan for feature phones, and $60-$70/month prepaid plans for smartphones. 5 Comments [Tech]
Thursday, May 2, 9:59 PM Vodafone (VOD) might not be getting a Verizon Wireless cash distribution this year, Verizon (VZ) CEO Lowell McAdam hints in comments seen as an effort to further pressure Vodafone into selling its Verizon Wireless stake. At a meeting hosted by JPMorgan analyst Philip Cusick, McAdam said the top priority for Verizon Wireless' considerable cash flow will be to pay down $5B in debt due by mid-2014, rather than fresh distributions. Verizon Wireless has paid out $18.5B in two distributions over the last two years, $8.3B of which has gone to Vodafone. (previous) 5 Comments [Tech, M&A]
Tuesday, April 30, 5:31 PM Pres. Obama is expected to nominate Tom Wheeler, a former CEO for both the cable and mobile phone industry's top trade groups (the NCTA and CTIA), to be the next head of the FCC, the WSJ reports. Given Wheeler's background and the fact he supported the AT&T/T-Mobile merger (shot down in part by the outgoing Julius Genachowski), albeit on grounds it would give the FCC a chance to impose new regulations, AT&T (T) and Verizon (VZ) might be happier with this report than Sprint (S) and MetroPCS (PCS). If Wheeler gets the job, he'll arrive ahead of a major spectrum auction whose rules are still being hotly debated. 2 Comments [Tech]
Monday, April 29, 6:01 AM Vodafone (VOD) is "sitting with a rather ugly set of assets once you lose the Verizon Wireless stake," a UK fund manager tells Reuters, explaining why six big VOD stockholders who control ~1.3B shares between them would likely prefer a merger with Verizon (VZ) rather than sell the stake for what they consider to be a paltry $100B. These and other shareholders are ultimately concerned that VOD's "exposure to troubled European markets" will take center stage once the Verizon stake is gone. 3 Comments [M&A, Tech]
Friday, April 26, 7:47 AM Vodafone (VOD) wants $130B from Verizon (VZ) for its 45% stake in Verizon Wireless, the WSJ reports. The paper notes Verizon, which has reportedly been eying an initial bid of $100B, seems to be using a PR campaign - promising Verizon can finance the deal, insisting Vodafone's tax bill will be small, etc. - to bring a reluctant Vodafone to the negotiating table. Sources claim no formal offer has been made by Verizon yet. (Jefferies) 12 Comments [Tech, M&A]
Thursday, April 25, 12:36 PM If Verizon (VZ +2.2%) is serious about buying Vodafone's (VOD +2.8%) Verizon Wireless stake, $100B isn't going to cut it, thinks Jefferies. The firm values the stake at $121B based on a 7.7x estimated EV/EBITDA multiple for the March 2014 fiscal year, and notes a Sunday Times article discussed a possible valuation of $135B (others have suggested $115B). There's also the question of how keen Vodafone is on selling when its stake has been appreciating considerably, and is now yielding giant cash distributions. On the flip side, a sale could fuel a massive M&A-driven expansion into growth markets. (Reuters report) 7 Comments [Tech, M&A, On the Move]

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