A Vodafone Bid For T-Mobile UK Unit Could Spur Sale of Verizon Wireless Stake Back to Verizon (VZ) - Analyst

June 29, 2009 9:33 AM EDT

FBR Capital notes that news from the Financial Times that Vodafone (NYSE: VOD) is considering a bid for Deutsche Telecom's T-Mobile UK unit, has implications for Verizon (NYSE: VZ) as it could spur Vodafone to sell their Verizon Wireless stake back to Verizon.

FBR notes, "Vodafone owns a 45% stake in Verizon's wireless business, and a major point of discussion over the last several months has been our belief that Verizon and Vodafone may have been having tentative discussions regarding the potential sale of Vodafone's stake back to Verizon."

FBR said Vodafone’s 45% interest in Verizon Wireless is worth between $62.5 billion and $80 billion. They said a transaction would would effectively double Verizon's leverage, but longer term, the transaction would create a compelling opportunity.

FBR maintains its Outperform rating on Verizon.

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