Arun Sarin's swansong, the British company has concluded a $28 billion deal that makes it part of what has now become the biggest mobile phone company in the US.
LONDON/NEW YORK: In what could be outgoing Vodafone chief executive Arun Sarin's swansong, the British company has concluded a $28 billion deal that makes it part of what has now become the biggest mobile phone company in the US.
US-based Verizon Wireless - in which Vodafone holds a 45 percent share - announced On Thursday it is buying rural mobile phone service provider Alltel Corp, America's fifth-largest mobile phone operator, for $5.9 billion.
The deal vaults the New York-based Verizon from second to first place in the US market ahead of AT&T. Together, Verizon and Alltel will command a mobile phone subscription base of 80 million across the US compared to AT&T's 71 million subscribers.
The acquisition involves Verizon taking on an estimated $22.2 billion in debt, mostly incurred when Alltel went private last November in a leveraged buyout by TPG Capital and Goldman Sachs Group's GS Capital Partners.
The deal would be one of the last to be concluded by Vodafone's Indian-born CEO Sarin before he steps down July 29 after five years at the helm.
The Alltel deal is expected to boost the value of Vodafone's stake in Verizon, which Sarin fought hard to retain despite calls from some shareholders to offload it.
Holding on to its Verizon Wireless stake gave it the value from the investment that the deal was expected to immediately add to its adjusted earnings per share.
Verizon Wireless said the deal would create savings of $1 billion in the second year after closing, which is targeted for the end of 2008. It forecast total savings of more than $9 billion by 2011, driven by reduced capital and operating expenses.
With the news of the Alltel deal, shares of Verizon Communications, which owns 55 percent of Verizon Wireless, rose 6 percent on the New York Stock Exchange. The shares of Vodafone rose 3.8 percent in London.
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