Vodafone says can invest in Europe without Verizon sale
By Kate Holton
BARCELONA (Reuters) - British mobile operator Vodafone said it did not need to sell part of its stake in its highly profitable Verizon Wireless joint venture in the United States to bolster its business in Europe.
Chief executive Vittorio Colao told reporters on Monday Vodafone had a healthy balance sheet and could invest when it needed to, adding it could step up its range of services without having to make acquisitions.
"The two things are not totally linked," Colao said, on the sidelines of the Mobile World Congress when asked about the need to sell down the Verizon stake which contributed over half Vodafone's adjusted first-half operating profit. "If it is right to make some investments, we will make some investments."
Facing falling revenue in its core European markets from economic pressures and fierce competition, Vodafone has come under pressure to cut its 45 percent stake in Verizon to fund the purchase of fixed-line assets to increase its product range.
Vodafone has hired Goldman Sachs to advise on a possible 10 billion euro ($13 billion) bid for German cable operator Kabel Deutschland, a source with direct knowledge of the matter has told Reuters.
It has been linked with deals in Spain to consolidate a market which has been hit hard by the economic downturn, with consumers cutting back on making calls and sending texts.
Vodafone has also been struggling in Italy where Colao, an Italian, said he had seen consumer confidence fall even further since October because of political uncertainty as it awaits the results of an election.
Sector bankers and analysts said Vodafone needs to acquire fixed assets to fight off challenges from low-cost mobile players and telecoms and cable rivals pushing discounted, all-inclusive mobile and fixed bundles. Continued...