I am going to leave it to others to discuss whether Verizon or Vodafone makes out better in the repurchasing of the 45 percent minority ownership of Verizon Wireless. I am certain there will be advocates for both sides. The reality, though, is that the regulatory rules were very different when the initial deal was struck and getting capital to build out the network had a structural separation component then that made the deal seem quite attractive.
Vodafone stayed out of the U.S. as a result of the original deal, which may have caused significant problems for a young Verizon Wireless. Also, the company formed alliances between China Mobile, Softbank, Verizon and Vodafone that are no longer valid, so it is quite clear that a change had to occur.
So with all of this to consider, I am going to point out how the Verizon-Vodafone deal indicates that the wireline business is now beyond the reach of life support, and how it is now only a matter of time until its inevitable demise.
First, as far as the deal goes, realizing that the 45 percent of Verizon Wireless is for $130B, while the whole of Verizon is currently valued at $135B, the value of the landline network looks to be $5B at best. Of course, considering just the hard assets - the copper, servers and trucks- the value could be somewhat more than that. However, it is clear that everything associated as wireline facilities can be easily regarded as just some kind of abandoned “Storage Wars” locker...Read More
Edited by Stefania Viscusi
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