The Wall Street Journal reported today that London-based telecommunication giant Vodafone and Verizon Communication are about to finalize their custody battle. The two companies have been talking terms since earlier this spring but just could not come to a price that satisfied both sides. According to the report when Verizon said that they would meet the price of $130 million Vodafone said they would hand over their 45% in Verizon wireless, the United States number 1 telecommunication company.
"Interest rates are going up and that could be the driver," said Roger Entner, a wireless industry analyst at Recon Analytics. "Financing the deal becomes increasingly expensive. Verizon might be willing to give a little more in expectation of higher rates."
The union between the two telecommunication giants goes back to 2000 when Bell Atlantic and GTE formed Verizon Communications. The Verizon Communications went into a joint venture with Vodafone that produced Verizon Wireless. The union went along fine until a few years ago when Verizon Communications decided they wanted to be the sole owner of little Verizon Wireless. For those couple of years Vodafone had no idea what was the problem. Then in April of this year Verizon Communications finally told Vodafone that they wanted full control of little Verizon Wireless.
"Even in the saturated market, (Verizon Wireless) continues to post growth figures," said Bill Menezes, an industry analyst at research firm Gartner. "They don't even post average revenue per user numbers anymore. They post average revenue per account. They're looking at a world where growth is coming from these ancillary devices."
That was when the two telecommunication giants started talks over how much Vodafone's 45% interest in Verizon Wireless was worth. Over the next 5 months the two behemoths went into negotiations to narrow the $30 million gap that was hampering the final deal. Now, that the two have finally come to those terms it will still have to overcome one little hurdle to pass the board of directors at Vodafone.
"There is no certainty that an agreement will be reached. A further announcement will be made as soon as practicable," Vodafone said in a statement.
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