Verizon goes shopping

AS PREDICTED by the INQ, consolidation in the US cellular market is surging ahead with Verizon acquiring another cdmaOne operator, Unicel, which is owned by Rural Cellular.

The move follows news that arch rival, AT&T (Cingular) has announced it intends to acquire Cellularone, a GSM operator run by Dobson Communications.

AT&T appears to have got the better bargain because Cellularone currently has 1.67 million subscribers and will cost $2.8 billion. While for $2.67 billion, Verizon gets a mere 700,000 subscribers.

Verizon Wireless' decision apparently has the backing of Vodafone which seems somewhat strange. Why is it backing an acquisition which can surely only increase how long it has to wait to receive a dividend?

Anyway, one of the declared benefits of the Unicel acquisition is savings on operational costs. Verizon's bigger purchasing clout will surely make it much cheaper to enhance the Unicel network.

Handsets might get cheaper too.

So, once again, Vodafone's 45 per cent holding in Verizon Wireless looks redundant. If its stake in Verizon really is worth $58 billion, it could buy 20 different US GSM operators with that and build its own rival to AT&T and Verizon. µ

L'INQs
Dobson
Unicel