Shares in Vodafone surged as the company confirmed its plans to sell its shares in US phone network Verizon. The company will earn £84 million from the sale of its interests in the large US communications company.
The company’s share price jumped four percent to 214.65 – a record rate that puts Vodafone at its highest valuation since the early 2000s. The £84 million ($130 MM USD) deal is the second largest in US corporate history.
Vodafone has commented on the price, claiming that it’s a ‘good price’ and that the valuation accurately takes into account the worth of the company’s share in the US phone network.
The UK-based company had previously been disappointed with its earnings from the Verizon deal, claiming that Vodafone had ‘not really [had] a satisfactory cash return’ from its partial ownership of the American company.
Vodafone plans to give £84 million in cash and shares to its investors. The deal’s large financial benefits for investors in the phone network has caused its value to surge in late trading as Vodafone becomes flush with cash.
Analysts have commented on the deal, claiming that it’s a positive development for both Vodafone and US-based firm Verizon. The US network, which is the country’s second largest by revenue behind AT&T, now has total ownership of its business.
Despite falling second in terms of total revenue to US telecommunications company AT&T, Verizon maintains the largest subscriber base in the country. As of 2013, the company has over 100 million subscribers across the United States.
Industry experts claim that the successful deal could encourage European telecoms to consider mergers and consolidation efforts. Vodafone itself has voiced its plan to purchase of Omnitel, an Italian telecoms firm that Verizon has invested in.
