Shares of British mobile phone company Vodafone Group PLC rose Thursday after Verizon Wireless, which is partly owned by Vodafone, agreed to a deal that will make it the largest U.S. cellular carrier.
Early Thursday, Verizon Wireless agreed to buy Alltel Communications for a total of $28.1 billion, assuming $22.2 billion in debt. Vodafone holds a 45 percent stake in Verizon Wireless, with the rest held by U.S.-based Verizon Communications Inc.
Verizon stock rose $1.79, or 4.8 percent, to $39.77, and U.S. shares of Vodafone gained $1.52, or 5.1 percent, $31.62.
Alltel, based in Little Rock, Ark., was taken private by TPG Capital and GS Capital Partners in November for $27.4 billion, including debt.
Because of the amount of debt Verizon Wireless is taking on, several analysts, including Michael Rollins of Citi Investment Research, said dividend payments to Vodafone will be delayed by a few years. Collins said the buyout will benefit Vodafone in spite of that delay, because it raises the value of Verizon Wireless.
Elsewhere, American Depositary Receipts of France Telecom SA fell after the company said it has started talks to buy Swedish telecommunications company TeliaSonera. If the deal is completed, the combined company would be the largest telecommunications company in Europe.
France Telecom made an informal proposal for $42 billion in cash and stock, which TeliaSonera said was too low.
Citi analyst Terence Sinclair was doubtful of the benefits of the deal, saying it would reduce profits, and that France Telecom may have to raise its offer.
France Telecom ADRs fell $1.11, or 3.7 percent, to $82.71. ADRs are securities that allow U.S. investors to trade shares of companies based overseas.
The Bank of New York European Telecom ADR Index rose 1.79 points, or 2.1 percent, to 88.54, while the broader Bank of New York Europe ADR index gained 2.88 points to 173.34 as U.S. markets rose in afternoon trading.
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