September 4, 2013 in Business

U.S. Verizon users unlikely to see changes

Associated Press
 

Verizon’s $130 billion deal with Vodafone is huge for both companies, although Verizon customers in the U.S. are unlikely to see any big changes to their bills or their service.

Verizon is buying the 45 percent of its wireless business owned by British cellphone carrier Vodafone. That will let Verizon keep all of the profits from that business and gives Vodafone a large pile of cash that will fund its expansion ambitions in Europe. It’s the second-biggest buyout on record.

Verizon Chairman and CEO Lowell McAdam said on a conference call Tuesday that the company’s U.S. wireless businesses are working well now and that he would move slowly on any changes to its structure.

Verizon has already run that business on its own, so taking Vodafone out of the picture is not new territory.

Verizon’s network has a good reputation after 13 years of focusing on performance, and McAdam said the goal is to maintain that level of quality.

“That does not change,” he said.

The company will remain involved in future auctions for the frequencies that handle cellphone traffic.

And the company is seeking new growth.

The U.S. has a strong economy, and there are many potential customers who have yet to make the transition to smartphones, McAdam said.

“We’re very bullish on the growth outlook for the U.S. wireless marketplace,” he said.

In the most recent quarter, Verizon Wireless added 941,000 devices to its contract-based plans, exceeding expectations and extending a strong run. But almost all of Verizon’s wireless gains were customers upgrading to higher-priced plans or adding more devices, rather than an influx of new customers.

The outside advantage of the deal to acquire the U.S. stake is more flexibility for Verizon in expanding abroad. Vodafone has previously had authority to nix expansion under the terms of joint wireless venture.

Verizon said it expects regulators to approve the deal since it already controls its U.S. wireless business. It also needs shareholder approval. It expects the deal to close during the first quarter of next year.

Verizon Communications Inc. has long wanted to buy out its partner, but the two companies hadn’t agreed on a price. Analysts said Verizon wanted to pay around $100 billion while reports suggested Vodafone held firm for the final sale price of $130 billion.

© Copyright 2013 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.


Thoughts and opinions on this story? Click here to comment >>

Get stories like this in a free daily email