‘Will not sell Verizon’ stake says Vodafone

‘Will not sell Verizon’ stake says Vodafone

	Published : Tue, 24 Jan 2006 18:50 By : Cedric Benson Print this Story

Mobile phone operator Vodaphone said it would hold on to its stake in the US company Verizon Wireless rejecting calls from major investors such as Standard Life Investments.

Chief Executive Arun Sarin said they could not overlook the benefits of holding on to their 45 percent stake. Over the last two years, the value of this investment has grown by approx. £5.5bn a year. He clarified that it did not mean they had no intention of selling this asset in the future. They simply want to ensure “maximized value for shareholders” he said. Its current value is believed to be between £25bn and £30bn.

Vodafone’s main investors have been urging the board of directors to exit its US investment and to invest more in Asia and Europe - in line with its global strategy. The investors are also hoping to make gains from the sale of the Verizon stake.

Currently Vodafone is the UK’s fifth biggest company by market value and the world’s biggest revenue earning mobile phone group. In recent months the company has acquired many overseas companies to establish global operations.

The company today also announced impressive growth in subscriber numbers. The US company Verizon Wireless’s subscriber base grew during the October-December quarter by a record 2 million customers. Its total subscriber base now stands at over 179 million. In the UK, it added 561,000 new customers, 906,000 in Germany, 505,000 in Spain, 324,000 in Italy and 123,000 in Japan.

The festive season appears to have contributed handsomely to subscriber numbers but the more reliable measure of financial performance - the annual average revenue per user, has shown year-on-year declines. It dropped 8.3 percent in Germany, 7.8 percent in Germany and 4.3 percent in the UK. The declines are more significant when seen against growing regulatory pressure to cut prices and increasing competition.

Despite the growing competition Vodafone expects “to deliver full-year results in line with our existing guidance” Sarin said.