Vodafone sells US mobile phone Verizon stake

By Dyenamic Solitions - Last updated: Monday, September 2, 2013 - Save & Share - Leave a Comment

Vodafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history.Vodafone sells US mobile phone Verizon stakeThe £84 billion deal was announced by Vodafone after the close of trading on the London Stock Exchange.

The company will return £54 billion to its shareholders, of which £22 billion will go to shareholders in the UK.

Vodafone will also invest money in it’s business, with funds earmarked for high speed mobile phone networks.

It said that by 2017 its main five European markets would have almost complete 4G coverage.

Vodafone chief executive Vittorio Colao said “We got an offer that we thought was in the interests of our shareholders to accept – at the end of the day it’s as simple as that.”

The company is launching a £6 billion investment plan called Project Spring, which will accelerate the introduction of 4G networks and increase investment in laying fibre optic cables, among other things.

The investments would allow the company to offer much faster broadband services to customers. Project Spring will also add to Vodafone’s high street stores and develop mobile payment services.

It is the third biggest corporate transaction, behind Vodafone’s 1999 deal to buy Germany’s Mannesmann and AOL’s purchase of Time Warner in 2000.

Vodafone says that as the US business is owned by a Dutch holding company, it will not be liable for tax.  However, it will pay $5 billion in tax in the United States.

“Everybody is entitled to his or her opinion… but we don’t deal with opinions, we deal with rules, and with standard rules and practices and tax practices from any jurisdiction where we operate,” Mr Colao said. “This jurisdiction is the Dutch one but even the UK one has very similar rules – we apply the rules.”

Although the deal will not give the UK a direct tax windfall, it could provide a boost for the UK economy in a number of ways:

Nevertheless, the tax affairs of big companies have been under scrutiny, particularly since it emerged that Google, Starbucks and Amazon had found legal ways to pay relatively little tax on their big operations in the UK.

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