For those of you who have been continuously confounded by the distinction between Verizon Communications and Verizon Wireless, your days of confusion are over. Verizon Communications on Friday finalized its $130 billion deal to buy out Vodafone’s stake in their mobile carrier joint venture. The company is sure to keep “Wireless” as part of its mobile group’s branding, but as far as corporate structure goes, there’s now only one Verizon.
The two companies have been wrangling over this ownership issue for years, even as Vodafone exited many of its other international joint ventures. As you might expect, Verizon CEO and chairman Lowell McAdam is ecstatic. Here’s his statement:
“This is a great day for Verizon. The new Verizon now has full ownership of the U.S. wireless industry leader in network performance, profitability and cash flow. Acquiring Vodafone’s stake in Verizon Wireless provides us with opportunities for greater financial flexibility, enhanced operational efficiency and innovations that will benefit customers. We are confident it will fuel further growth in our business.”
So what happens next? If you’re a Verizon Wireless customer, nothing at all. For all practical purposes, Verizon Communications has been the de facto owner of Verizon Wireless for the last decade, holding a majority stake (as Verizon puts it, Vodafone’s stake was “indirect”); Verizon has just been forced to run them as separate companies.
If you’re a shareholder in either company, then the carrier world is suddenly a very different place. Though Verizon Wireless proportionately only accounted for about 50 million of Vodafone’s nearly 400 million global customers, the joint venture actually took in more money than all of Vodafone’s global operations combined. As Bloomberg points out, the consolidation of shares in the wake of the deal will cut Vodafone’s market value nearly in half.
Vodafone will keep its crown as the second largest carrier group in the world in terms of subscribers (behind China Mobile and its 726 million customers). But it will likely move a few slots down the list when it comes to overall market value and revenues.