Breaking News: Google to Buy Vodafone Share of Verizon Wireless

By Peter Bernstein April 01, 2013

In a move that is sure to send shock waves throughout the tech world because of its ramifications not just on mobile telecoms, but evolving digital ecosystems of every stripe, Google and U.K. mobile operator Vodafone Group PLC announced that they have agreed for Google to purchase the 45 percent minority stake of Verizon Wireless currently owned by Vodafone.   In a word, WOW!

The sale comes in the wake of rumors circulating that Vodafone was actively unloading its Verizon Wireless stake following years of an uneasy alliance with Verizon. As reported in the U.K.’s Sunday Times a few days ago, Vodafone recently has been talking with Verizon about severing their relationship. The estimated value of a sale was pegged at Vodafone shareholders getting as much as a $135 billion (yes that is billion with a “B”) windfall, and that the two companies could pull the trigger as early as this summer. Well it turned out that as they say Vodafone decided that Christmas should come early, and chose Easter to let the rabbit out of the bag.

Terms of the deal have not been announced, although Vodafone CEO Vittorio Colao, spotted leaving high tea at London’s posh Dorchester Hotel was overheard by a busboy saying, “They made us an offer we could not refuse!” Pending regulatory approvals, the deal is expected to close sometime before the end of 2013.

Part of Google’s new ‘All Ways.Always.Com’ strategy   

Coming hard off the heels of its Easter fiasco of putting the celebration of immigrant rights activist Cesar Chavez’s birthday as its Google Doodle instead of something in recognition of one of the holiest days of the Christian year, Google seems to have chosen April Fool’s Day as the perfect time to change the conversation. Sitting on almost $50 billion in cash seemingly burning a hole in Google’s big pockets, the move seems to make perfect sense in line with Google’s new   All Ways.Always.Com strategy of trying to monopolize online users’ time and money. It accelerates the company’s move into the real-time communications business as exemplified by its successful introduction of fiber optic service in Kansas City, and highlights the importance it is placing on dominating “E”verything. 

Google CEO Eric Schmidt, who could not be reached for comment, has long viewed owning the communications infrastructure, particularly in the United States, as the missing link in the evolution of the Google ecosystem, and this surely is the coup de grace he has been seeking in helping lock up user experiences regardless of the devices they use to connect anywhere, any time and all of the time.

The Shock waves have begun   

Morningstar’s highly respected telecom industry analyst, R.U. Kidding, noted that, “Google has the cash to make this happen, the desire to control its manifest destiny and could care less about being called the Evil Empire.” He added, that “If approved, this is certain to completely transform the entire landscape of the tech industry. It is a great day for Google enthusiasts, Vodafone shareholders and probably Verizon customers, and a bad day for competitors across a broad swath of the industry.”

Already a number of high profile tech industry executives have been heard from.

Facebook CEO Mark Zuckerberg in a terse statement said, “Darn! Wish we could have done this.” A not disinterested Microsoft CEO Steven Ballmer said, “This is a dark day for the Internet and users worldwide who will see innovation stifled, prices rise and their freedom of choice along with their privacy put in severe jeopardy…We plan to vigorously oppose this move and trust policy makers will put a stop to the insanity.” Apple CEO Tim Cook was equally displeased stating that, “Google wants it all and they need to be denied.”

Verizon has been noticeably quiet. While not happy with Vodafone as a partner, it has yet to say how it views Google. That said, those close to what is going to be an incredibly complex deal indicate that part of the negotiations include a contingency plan where Google has also agreed to purchase the outside plant of Verizon’s fixed network operations with Verizon keeping its popular service FIOS while divesting itself of its outside plant, a move sure to please Wall Street if true. 

As Kidding stated, this deal could radically alter the entire tech industry globally, setting off a spate of merger and acquisition activity that is unprecedented, and which already has large investment firms salivating at the prospects of enormous transactions fees.

Because of the nature of the deal, trading in Google, Verizon and Vodafone shares have been halted with no time frame placed on various stock exchanges around the world as to when they will open.

As a long-time industry observer I have always said, “There is no fool like an April Fool.” However, I should add that life can be stranger than fiction and we all need to be careful about what we wish for. Have a nice day!




Edited by Brooke Neuman
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