Vodafone: Betting on an Economic Rebound in Europe

Outside the Verizon Wireless investment, Vodafone is a large wireless provider in the major European countries of Germany, the Netherlands, U.K., Italy, and Spain along with select investments in Africa and Asia. The company has roughly 500 million wireless subscribers around the world making it one of the largest mobile carriers. With the Verizon Wireless deal heading toward completion, the market is starting to wonder if Vodafone can justify its current price.

A rebound in Europe would help justify a long-term investment into Vodafone especially considering eMarketer lists that the U.S. market has already reached a 75% market penetration rate for high-speed data customers. Vodafone lists the primary European markets of Germany, U.K., and the Netherlands only reaching a smartphone penetration level of 39%. The rest of the markets are significantly below this level. Vodafone is clearly making a move out of the mature U.S. wireless market into the still developing European markets. A economic rebound in Europe would help Vodafone immensely.

Reviewing the deal
The deal involves Verizon paying Vodafone total consideration of roughly $130 billion. The primary details include the following:

• $58.9 billion in cash
• $60.2 billion in Verizon shares
• $5.0 billion in the form of Verizon notes
• $3.5 billion in the form of Verizon's 23% minority interest in Vodafone Italy
• $2.5 billion in the assumption by Verizon of Vodafone net liabilities relating to Verizon Wireless

source: www.fool.com