Vodafone denies Verizon talks on Sprint bid
Tue Dec 14, 2004 11:50 AM ET
(Releads with Vodafone denial of Verizon talks, updates shares)
By Kirstin Ridley, European Telecoms Correspondent
LONDON, Dec 14 (Reuters) - British-based mobile phone giant Vodafone Group Plc (VOD.L: Quote, Profile, Research) on Tuesday denied it was in talks with U.S. partner Verizon Communications (VZ.N: Quote, Profile, Research) about a possible $40 billion-plus bid for U.S. rival Sprint (FON.N: Quote, Profile, Research) .
"There have not been any discussions, and we are not in discussions, with Verizon about any offer for Sprint," a company spokesman told Reuters.
The Wall Street Journal reported that Vodafone, the world's largest mobile phone company by revenue, had given its U.S. joint venture partner approval for a possible bid for Sprint, the third-largest mobile phone company in the United States.
Industry sources familiar with the situation said if Verizon was seriously pursuing Sprint, the company would have to win consent from its British partner before rolling Sprint's mobile phone assets into its U.S. joint venture with Vodafone.
And while sources agreed that the largest U.S. telecoms carrier had considered a potential Sprint acquisition, people in New York told Reuters it had no imminent plans to do so.
"If they do decide to go after it, they will come and talk to Vodafone," said one source.
INVESTOR WORRIES
Any successful bid by Verizon would have scuppered Sprint's planned takeover of smaller rival Nextel Communications (NXTL.O: Quote, Profile, Research) and allowed the U.S. heavyweight to reclaim its seat as the largest wireless group in the world's most powerful economy.
But institutional investors' concerns that Vodafone, which is a 45-percent shareholder in Verizon's Verizon Wireless subsidiary, would be drawn into its second U.S. takeover attempt of the year had weighed on the British-based group's shares.
Vodafone's stock, which earlier fell to a low of 136.5 pence, pared some losses to trade 2.1 percent lower at 140 pence by 1620 GMT.
Institutional investors in Vodafone said earlier that any deal with Verizon to snap up Sprint would not be an "unmitigated disaster", but the timing was terrible.
"It feels like the year is finishing the way it began," sighed one Vodafone investor. "We don't know if Vodafone will be diluted down (in Verizon Wireless); will it be putting enough money in it to maintain its 45 percent stake?
"But clearly the uncertainty isn't going to make people want to buy the stock."
Vodafone underlined its frustration with its lack of control in the key, high-growth U.S. market with a controversial, and ultimately failed, bid for U.S. rival AT&T Wireless in February.
But the bid attempt, tipped to have risen to about $38 billion, triggered a steep fall in the group's shares on fears it was a serial acquirer at almost any price in order to clinch control of a U.S. business and bring its brand to the U.S.
It also prompted Chief Executive Arun Sarin to launch a quest over the summer to restore investor faith in his acquisitions and shareholder returns strategy -- while apologising for erecting a wall of silence during the auction.
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