NEW YORK (
) -- Don't get too excited about the prospect of
(VZ - Get Report)
taking full control of its Verizon Wireless joint venture with
, in a deal that could reach in excess of $100 billion.
While Verizon has hired advisors to pursue a deal for Vodafone's 45% stake in Verizon Wireless, according to a
, the prospect of a buyout has already helped to drive both company's shares for much of 2013, amid rampant speculation and public statements.
Verizon Communications Inc was gaining 1.9% to $52.75 while Vodafone shares were rising 2.5% to $30.33.
Full control of Verizon Wireless would allow Verizon to retain the venture's impressive and rising cash flow.
["We've] always said before, we're very interested in acquiring the 45% stake in Verizon Wireless that we don't already own," Francis J. Shammo, Verizon CFO, said during the company's first quarter earnings call.
"I will say though that there has been a lot of speculation about the tax consequences of a purchase of this 45%. And we are extremely confident that such a transaction could be accomplished in a manner that is very tax efficient and would not result in a tax on the gain in that stake."
Were a deal to be executed on friendly or even hostile terms, as the
report indicates is possible, the overall price tag for Vodafone's 45% Verizon Wireless stake would make it among the biggest acquisitions of all-time.
For investors in the consolidating U.S. wireless market, however, the possible $100 billion-plus deal may come in third in importance to the other mega-mergers in the space.
its merger with
as the company makes an
to win back
(AAPL - Get Report)
iPhone-addicted smartphone customers from Verizon and
(T - Get Report)
, the U.S. wireless industry's third leading player, is currently the subject of a
between satellite TV provider
and Japanese telecom
It is T-Mobile and Sprint's consolidation efforts, along with
, which are drawing the interest of smart money hedge fund investors as big as
Paulson & Co.
is one of the few hedge fund investors
betting on Vodafone's sale of Verizon Wireless
. Still, Verizon
Greenlight's recommendation in an investor letter it buy all of Vodadfone.
How T-Mobile and Sprint's consolidation efforts work out will be a far more important story for the telecom sector than Verizon's possible acquisition of all of Verizon Wireless. In fact, those deals may even prove more impactful to
, since the consolidation of Verzon's competitors would increase their financial strength and efficiency, possibly pressuring margins.
In the first quarter of 2013, Verizon's wireless profit margin surged to a record 50.4%, fulfilling a forecast made by the company it would achieve such profitability by year-end.
report that Verizon has hired advisors to look into a friendly, or even hostile stake buyout may be a more important issue for fee-hungry Wall Street bankers. According to the report, Verizon is willing to finance up to $50 billion to cut a deal, while financing the remaining piece of a transaction with its stock.
Such prospective stock and bond issuances would be a fee bonanza for Wall Street bankers winning the mandate.
Ultimately, the deal will have little ramifications for consumers or the financial performance of the wireless industry, given Verizon already holds a controlling 55% stake in Verizon Wireless.
Peter J. Thonis, a Verizon spokesperson, declined to comment.