September 9, 2013

Verizon buys Vodafone stake in own company for $130 billion

Verizon Communications announced earlier this week that it had acquired Vodafone's share of Verizon Wireless—45 percent. The technology acquisition totaled $130 billion and will further strengthen Verizon's position as the nation's largest mobile phone carrier.

Verizon chairman and CEO Lowell McAdam said in a company press release that the previously established partnership with Vodafone was key to the organization's business strategy. Already, Verizon has strong capabilities in wirelessly streaming video and broadband in 4G LTE, which complement its assets in fiber, global IP and cloud, he said. With more customers wanting video, machine-to- machine technology and big data, McAdam explained that Verizon can now meet those needs.

"This transaction will enhance value across platforms and allow Verizon to operate more efficiently, so we can continue to focus on producing more seamless and integrated products and solutions for our customers," he said. "We believe full ownership will provide increased opportunities in the enterprise and consumer wireline markets."

Vodafone Group CEO Vittorio Colao agreed, saying in the press release that Verizon and Vodafone had a successful partnership and this transaction gives both firms an opportunity to execute their own strategic growth initiatives.

The Los Angeles Times explained that the M&A activity is not expected to immediately affect Verizon's nearly 100 million subscribers. The news source added that part of the acquisition strategy could have had something to do with the fact that wireless providers might want consumers to use their phones or tablets for non-traditional functions. For example, an elderly individual could use a home medical device that sends information directly to a doctor's office.