Can Verizon Ever Take Control of Its Destiny?

Verizon Communications (NYSE: VZ  ) has reached an inflection point in its business, and shareholders have long wondered when it would be able to take full control of its future mobile destiny. According to a recent Wall Street Journal report, the possibility that it could ink a deal with Vodafone (NASDAQ: VOD  ) to take full control of Verizon Wireless is still up in the air.

In an interview, Vodafone CEO Vittorio Colao said he remains "open" to future changes that implied the possibility that the company would be willing to sell its 45% stake in Verizon Wireless to Verizon Communications, which holds the remaining 55%. Colao noted that Vodafone's stake in the joint venture easily comprises roughly half of Vodafone's value, so the idea of selling it is not something that he takes lightly.

Verizon has long maintained that it could potentially borrow up to $50 billion to $60 billion to finance a possible deal that would inevitably entail both cash and stock. CEO Lowell McAdam has already said that he'd be very interested in taking full control of the joint venture, since Verizon Wireless has grown to become the largest wireless carrier in the lucrative U.S. market.

All that being said, it should be reiterated that there are no active negotiations and no deal is on the horizon. Vodafone has less of an incentive to sell its stake, since its European operations are struggling and Colao recognizes that Verizon Wireless is a "quality asset" worth hanging on to for the time being.

For Verizon, nearly all of its growth now comes from its wireless segment while the wireline side of the business is lackluster. The wireless segment's EBITDA continues to grow while wireline segment EBITDA is on the decline.

Segment EBITDA

Q4 2011

Q4 2012

Wireless

$6.4 billion

$6.8 billion

Wireline

$2.4 billion

$1.8 billion

 Source: 8-K.

Growth continues to shift from the wholly owned wireline business to the 55% owned wireless business. This was inevitable, though, as Verizon stopped rolling out its speedy fiber optic FiOS cable network back in 2010 because it was simply too difficult to compete with traditional cable companies.

This is a challenge that rivals don't face, as AT&T wholly owns its AT&T Mobility subsidiary.

Taking full control of Verizon Wireless would be a huge boon for shareholders, but it takes two to tango.

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