Vodafone "Insane" to Sell Stake in Verizon Wireless, Says Fund

The Australian hedge fund Bronte Capital is positively aghast at rumors of Verizon (NYSE: VZ  ) and Vodafone (NASDAQ: VOD  ) ending their quite lucrative joint venture known as Verizon Wireless.

"It would be insane," for Vodafone to sell its share in Verizon Wireless, said a post on Bronte Capital's blog, written by chief investment officer John Hempton. "And if it happens it will mark an important part of the British business establishment (and the entire Vodafone board) as both venal and incompetent."

Vodafone is the third-largest position in Bronte Capital's portfolio.

The hedge fund's hackles were raised by a Bloomberg report last week that the two companies held talks in December regarding Verizon either buying out its U.K. partner's 45% stake in Verizon Wireless, or Verizon acquiring Vodafone in its entirety.

Bloomberg's unnamed sources said wrangling over who would be in charge of a combined company caused the talks to halt.

Vodafone has been selling its stakes in phone companies it did not control, and not having control of Verizon Wireless is cited as one reason it is considering selling that unit off and using the money elsewhere. Vodafone's share of Verizon Wireless could be worth as much as $115 billion, according to analyst estimates.

But that's where the "insane" part comes in, according to Bronte Capital. Vodafone's share in Verizon Wireless "has been a good -- no a fantastic asset," the only bright spot over the last 10 years in Vodafone's "collection of modest success and abject failures."

Getting rid of that one outperforming asset just because they did not control it would be nuts. "Pointedly this one great success is the one asset they do not manage," wrote Hempton.

"Bluntly, if Vodafone management pursue any deal to resolve the Verizon Wireless issue then the entire Vodafone board should be sacked for venal and costly incompetence."

The only deal that would make any sense to the fund would be for Verizon to buy out Vodafone completely.

A fresh idea for 2013
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2313245, ~/Articles/ArticleHandler.aspx, 10/21/2014 3:26:35 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement