Payment to Vodafone opens options for the future

By Marc Castro

Sep 02, 2013 02:20 PM EDT

The USD130 billion dollar deal to buy out Vodafone from its jount venture with Verizon Communication would leave it with a large war chest even if it shares the windfall with its shareholders.

If the buyout price reaches between USD116 billion and USD132 billion, many analysts, such as those at Citigroup estimate that Vodafone could distribute about USD40 billion in cash and Verizon common stock to its shareholders and still have about an amount between USD30 billion and USD38 billion in deferred proceeds. This amount comes after the payment of taxes and the reduction of debt.

With this amount, Vodafone CEO Vittorio Colao will have the necessary funding to undertake a new future for the world's second largest telecommunications operator as it exits the US market. 

As for that future, many investment analysts and bankers are speculating for the next move of Vodafone. Colao can opt to expand in Europe or buy into new countries such as Brazil or even go back to the US through another acquisition. The European option through looks slim as the intense price competition and tough regulations have made many operators think twice about investment much more about expansion.

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