WSJ: Verizon Renews Talks To Buyout Vodafone's Stake In Verizon Wireless JV

(RTTNews) - US Telecommunications giant Verizon Communications, Inc. (VZ) has renewed talks to buyout British telecom giant Vodafone Group Plc.'s (VOD, VOD.L) 45 percent stake in the Verizon Wireless joint venture, according to a Wall Street Journal report on Wednesday. The stake purchase could reportedly cost Verizon well over $100 billion.

Verizon has been contemplating the buyout of the stake several times in the past decade, but pricing has been the biggest stumbling block along with the risk of raking up a huge tax bill nearing $10 billion.

The closest they came to reaching a deal was in 2011. Talks have also failed as recent as earlier this year when Verizon was looking to pay about $100 billion for the stake, but Vodafone was hoping a consideration in excess of $130 billion.

However, the talks have accelerated since July due to the rising interest rates and growing competition in the U.S. wireless market. Its is not clear whether the pricing issue is resolved and Verizon has made an offer.

According to WSJ, Verizon could be looking to pay using a mix of stock and cash for the stake. Verizon is said to be in talks with banks on possibly borrowing $50 billion or more to cover the cash component.

Verizon Wireless, the largest U.S. cellphone carrier, is the US wireless joint venture between Verizon Communications and Vodafone, with Verizon owning a 55 percent stake and Vodafone owning a 45 percent interest. The joint venture began operations as Verizon Wireless on April 4, 2000.

Basking Ridge, New Jersey-based Verizon Wireless has made a dividend payment of $7 billion on June 25 to its owners. On the basis of ownership, Verizon got $3.85 billion, and Vodafone received $3.15 billion.

Meanwhile, several reports in April speculated that Verizon Communications was working with its U.S. rival AT&T, Inc. (T) on a potential bid for Vodafone. However, Verizon immediately denied any such move, but reiterated then that it would be a willing purchaser of the 45 percent stake that Vodafone holds in the Verizon Wireless joint venture. Vodafone Chairman Gerard Kleisterlee also reportedly said last month that he is would seriously consider any offer for its stake in Verizon Wireless if it offered more value to investors than the current status quo.

VZ closed Wednesday's regular trading session at $46.56, down $0.39 or 0.83% on a volume of 6.80 million shares, but gained 0.56% in after hours trading. VOD closed at $29.41, up $0.07 or 0.24% on a volume of 7.38 million shares, and gained a further 3.37% in after hours trading.

VOD.L closed in London at 188.98 pence, down 2.77 pence or 1.45% on a volume of 86.32 million shares.