Verizon sale cuts Vodafone's value by half to $100 bn

Vodafone Group Plc completes the biggest sale of the past decade today, leaving the wireless carrier about half the size it was, as Chief Executive Officer Vittorio Colao embarks on a new expansion strategy.

After the disposal of its 45 per cent stake in Verizon Wireless, the biggest US mobile-phone company, Vodafone will pay out $82.5 billion to shareholders and consolidate its shares, cutting its market capitalisation to about 60 billion pounds ($100 billion) starting next week. Its value was 116 billion pounds, based on last month's 12-year high of 240 pence. The shares rose 2.7 per cent to 235.9 pence at 8:17 am in London trading. Colao has spent his tenure pulling Vodafone out of joint ventures and partnerships it doesn't control.

Now that Colao has pulled off his biggest sale, he has to find somewhere to grow as the company grapples with shrinking service revenue in its main European markets.

"The next few months are going to be tough," Guy Peddy, a London-based analyst at Macquarie Bank Ltd., said in an interview. "Vodafone continues to lose share and is losing share in its major markets at an accelerated rate because it is facing convergence competition from incumbents and price competition from smaller players."

After pulling off the $130 billion sale, Vodafone will drop from the world's second-biggest phone company to the fourth, measured by market value, behind China Mobile Ltd, AT&T Inc. and Verizon Communications Inc, according to data compiled by Bloomberg. Vodafone's weighting in share indexes such as the FTSE 100 in London will be cut approximately in half.

Shareholders will get a return of about 102 pence ($1.70) per share. That's about $23.9 billion in cash and about $58.6 billion in Verizon Communications shares.

The deal will also help Vodafone pay off debt and help fund 7 billion pounds of additional network investments by March 2016, adding high-speed broadband and wireless coverage across its largest markets.

While Vodafone will remain Europe's most valuable telecommunications stock, the company is looking to acquisitions for growth. Vodafone may have 10 billion pounds to 15 billion pounds of capacity for deals, Peddy said.