Vodafone confirmed late on Tuesday that it has agreed to sell its 3.2% minority stake in China Mobile. Vodafone owns 642.9 million shares of China Mobile stock and the sale would net the carrier about £4.3 billion ($6.58 billion). Seventy percent of the proceeds from the China Mobile sale will be directed back to stockholders; while the rest (30%) will be used to pay off debt.
Vodafone’s stock is slowly falling and the wireless carrier is under increasing pressure from its stockholders to re-examine its faltering investments. This China Mobile sale is the carrier’s first attempt at trimming its portfolio and is not its last. According to Vodafone Chief Executive Officer Vittorio Colao, Vodafone is also reviewing its holdings in SFR and Verizon Wireless. Verizon may be high on the chopping block as it has not paid a dividend to Vodafone since 2005.
While these China Mobile holdings are small, Vodafone’s other minority holdings are much larger. The wireless carrier owns a 45% stake in Verizon and a 44% stake in French Telecom SFR. Verizon has not commented on the potential for a sale but Vivendi SA, which owns the rest of SFR, has expressed a willingness to buy Vodafone’s minority stake.
While Vodafone’s sale of China Mobile is moving forward, it will be interesting to see what Vodafone does with its other minority holdings. Vivendi SA, SFR’s majority holder, hinted that it will buy back Vodafone’s SFR share; but what about Verizon? If Vodafone decides to publicly offer its shares of Verizon, will Verizon buy them back or will it let another company grab a minority share? Anyone with financial insight care to speculate?