video Finance Videos

Breakingviews: Valuing Vodafone

Thursday, April 04, 2013 - 03:32

Breakingviews columnists argue that the UK telecom operator could be worth a third more than where it currently trades. Getting there, though, probably requires selling Verizon Wireless, a deal that has been on hold for a decade.

▲ Hide Transcript

▶ View Transcript

Certainly we've been looking at its that one of the biggest deals in history that just refuses the site saw that happen. Syrian you've been looking at this this week and the full and I -- I cynical right mr. about this. Seven years ago when I Barack I think that's yes. It's a vessel which allow Verizon one -- And -- early in the week and use that may be please -- layups because this we may be that Verizon was interested and and doing some sort of deal Vodafone. That he's glitzy visas to come visit China Verizon one. Passage as Vodafone owns 45% of cries of protest you can't communicate. And that's a very big part of it Verizon. Owns 55% and Verizon wants on the entire thing they want an entire thing for a long time it's been very hard to make a deal worked in various reasons. However there seems to the talks seem to be slightly heat is slowly heating up over time they've they've been going on for forever you know. -- three ran the numbers and we said well it looks like it probably could they probably could do we deal they want to. And if you get a deal Vodafone might be worth about a third more than it's currently bracket suicide a 180 days. Since we've weasel back you backed -- -- he's sciatica what's this seem that Verizon Wireless. Is gonna -- all that which you know candidates and look at this I needed on the I had -- done -- I didn't even have -- -- it was about I'm about eight point five times ebitda -- worth about a 120 billion dollars threats that could be a lot to Vodafone. The voters and is is Lewis how much these -- it's it's worth about it's just a bit. Bit more than that that's -- gritty details are leading and it's an easy merger of equals yeah I get into their by enemy guns most of it Savimbi every couple of problems that we're first off it's it's gigantic. You know horizon is only worth about -- 140 billion. Acquiring company that bit about roughly same size -- hard -- dues they have issued equity and you know do you know -- -- and you can't want equity that's a problem. The other together major problem is the tax problem if if Vodafone jets were to sell. Verizon Wireless stake. It's cost basis is about fifteen billion. So that's to me that mean honestly -- make its -- in its initial us fifteen things that -- capital gains on the difference between fifteen cents and other countries about the physicals yesterday GA huge contingent of Angela entertainment tax yet. However if they did another sort of deal perhaps if they did a merger than that that that that capital gains tax wouldn't come into play because they're offsetting losses in the other divisions run and so that's why people are trying to figure out could they do this and then what he's very -- he comes in -- -- -- -- sort of what does he suppose that things is that AT&T would take all the other assets. And Verizon -- just get the Verizon Wireless and that doesn't count. Why AT&T would want to do this is an -- and helps you become an even bigger domestic. I'm not entirely sure because you know AT&T got out of our operations. They've been kind of inching their way back in there but that be a very big -- you know. The whole thing is that Verizon obviously is one -- for a really long time. And if there's a chance of doing it and then maybe they would and we went with and with as we're showing in the -- in the math and there's a thirty you know. 30% gain. Accidents -- -- for -- for the thunder and I don't in other words they're there could be a lot of that's enough money to that potentially. Split between Verizon. Vodafone and -- -- to make this -- deal -- K well thanks of that -- I'm shall we about so you know this maybe tomorrow maybe next week and quite possibly 510 years -- well. But will also be back tomorrow -- -- breaking news.