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Monday, December 7, 2009

Don't expect any short-term changes for Vodafone and Verizon

The partnership between UK-based Vodafone and the USA's Verizon Wireless is unlikely to change in the short term, according to a number of analysts. However, it's thought that the possibility of a merger between Vodafone (which owns 45% of Verizon Wireless) and Verizon Communications (which owns 55%) is becoming more likely in the longer term.

Although there's some pressure on Vodafone to change the terms of the partnership because it hasn't seen any dividend payments from Verizon Wireless for four years, ING analyst Lawrence Sugarman suggests that Vodafone could be deliberately avoiding action until Verizon Communications approaches it for help.

Another perspective comes from Execution analyst Will Draper, who says the likelihood of the two partners merging was now up to 30 or 40%.

Alternatively, Verizon Wireless could be absorbed into its parent at some point in the future, with Vodafone maintaining a share of the larger business. [Sources: Reuters.com; FierceWireless.com]

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