Verizon CEO Seidenberg Adds Fuel To AT&T Wireless Rumors
While announcing the quarterly results for Verizon Wireless (VZW), Verizon (parent company) CEO Ivan Seidenberg dropped somewhat of a bomb on the AT&T Wireless (ATTWS) acquisition story. Seidenberg said that Verizon would welcome the opportunity to buy Vodafone (Voda)out of VZW, leaving Voda free to purchase ATTWS. As you may know, we pundits have been speculating that Cingular is the most natural fit for ATTWS, while DoCoMo may want to purchase it for vanity (the synergies are questionable), Nextel is the outsider, and Voda has a very good fit with ATTWS but is anchored by its existing 45% investment in Verizon Wireless. Verizon's Seidenberg seems very willing to nudge that anchor free. Indeed, Voda's investment in VZW has always been mildly acrimonious. VZW is the only Vodafone regional operator that uses CDMA instead of GSM, foiling economies of scale for Vodafone. Verizon's 2001 choice of CDMA for 3G was especially irksome to the UK-based Vodafone. So if we all agree that ATTWS is a better fit for Voda, why have we also figured Vodafone is anchored to Verizon? In a word: Money. Verizon Wireless has been a shareholder's dream, and with the recent customer acquisition numbers (1.5M in the quarter) no one knows when the value will stop growing. Should Voda dump VZW and trade in for ATTWS? It's like a hockey team with a star center that doesn't fit with the team. Do you trade your star player for better synergy, or keep him to fill the seats? We're not sure what coach Arun Sarin (Voda CEO) will do, but coach Seidenberg is talking trade. My Advice: I've thought that Vodafone, strategically, needs control and branding of a major US carrier for some time, and was among those who suspected Voda might make a play for T-Mobile back in the days when Deutsche Telekom was starved for cash. Sarin, trade away your star player for financial considerations, and build a team for the future. Mike adds: Meanwhile, Verizon Wireless CEO Denny Strigl gave a "bring 'em on" response to questions about a potential AT&T Wireless/Cingular (VZW's two largest rivals) merger saying that they'd beat the combined company in terms of subscribers quickly at the rate they're growing.
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