Vodafone's Verizon problems continue

CRICKEY! THE mess that Vodafone is in with its stake in Verizon has just got worse. News has just leaked out that Vodafone has contemplated buying Verizon Communications, parent of Verizon Wireless.

The news appears to have shocked some in the cellular sector. The bid for Verizon would have been for around $172 billion according to reports in the FT. This has been painted as ambitious.

Have these observers forgotten that Vodafone made a hostile bid for Germany's Mannesmann and won? That deal was worth $183 billion and that was back in 2000 - seven years ago.

Vodafone was also embarrassed at having to admit that it has the option to force Verizon to buy back some of its share and that the option is only open for 30 days.

This is all intriguing news especially since Vodafone is under pressure from shareholders to do something about its Verizon holding.

What amazes the INQ is the rumour that Vodafone tried to force Verizon to buy Alltel. A merger between the two makes a great deal of sense because they both use the same technology.

Verizon's thumb twiddling over Alltel has allowed the company to fall into the hands of private equity - unless something happens fast. More worrying would be a scenario whereby Sprint acquired Alltel.

That would present a serious challenge to Verizon Wireless. Suggestions that AT&T (Cingular) might acquire Alltel are plain daft.

What Vodafone needs to do is dump its share in a US cdmaOne operator and buy a GSM based one. AT&T? Unlikely. T-Mobile? Possibly. A much better plan would be to simply buy a lot of small operators and build them into one big company.

One thing is certain. Vodafone's forthcoming annual general meeting is going to be well worth attending. µ

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