Vodafone has confirmed the sale of its stake in US firm Verizon Wireless to its partner Verizon Communications for $130bn.
The two companies started the joint venture back in 2000 with the UK partner owning 45% of the business. But after several rocky years and disagreements between the parent companies, recent months have been focused on how Vodafone could make its exit rather than invest further.
As a result, it has made one of the biggest sales in corporate history and exited the US market.
Chairman of the Vodafone Group, Gerard Kleisterlee, said: “Our sustained investment in Verizon Wireless has created a great deal of value for shareholders from a market leader with great momentum. Verizon’s offer now provides us with an opportunity to realise this value at an attractive price.”
“The transaction will position Vodafone strongly to pursue our leadership strategy in mobile and unified communication services for consumers and enterprises both in our developed markets and across our emerging markets businesses. It will also enable us to provide substantial returns to individual shareholders and to the investment funds relied upon by savers and pensioners.”
There has been controversy, however, regarding the tax bill with the sale. Vodafone will not be subject to capital gains tax with the deal as its US business is owned by a Dutch holdings company, making it exempt.
But in several interviews, the CEO of the company, Vittorio Colao, claimed the large amount going to shareholders in the UK – £24bn – would result in the treasury still collecting a fair sum. It will, however, pay $5bn in tax in the US.
Now Vodafone is looking at the money it has made and making plans to invest, announcing Project Spring will see the firm put £6bn into its own network over the next three years.
“As a result of the transactions, we will greatly enhance Vodafone’s long-term prospects through Project Spring, our new programme of additional organic investments in 4G, 3G, fibre and broadband, enterprise services and improved customer experience across all of our markets,” said Vittorio Colao.
“Project Spring will strengthen and accelerate our existing Vodafone 2015 strategy, enabling us to take even greater advantage of the growing global demand for ubiquitous high-speed data.”