Vodafone sells Verizon stake for $130bn

Vodafone has sold its 45% stake in Verizon Wireless to US telecoms group Verizon Communications in one of the biggest deals in corporate history.

The $130bn (£84bn) deal was announced on Monday by Vodafone after the close of trading on the London Stock Exchange. The company will return £54bn to its shareholders, of which £22bn will go to shareholders in the UK.

Vodafone chief executive Vittorio Colao told BBC News: “We got an offer that we thought was in the interests of our shareholders to accept – at the end of the day it’s as simple as that.”

The company is launching a £6bn investment plan called Project Spring, which will accelerate the introduction of 4G networks and increase investment in laying fibre optic cables, among other things.

The investments would allow the company to offer much faster broadband services to customers.

Vodafone will avoid paying any UK tax on huge profits it will make but thousands of its shareholders will be hammered with a hefty bill on the windfall they will receive. The company is set to gain £84billion from selling its stake in US mobile phone company Verizon Wireless.
But due to a loophole introduced under Labour, Vodafone cannot be forced to pay anything to HM Revenue and Customs.

Shareholders including a large number of pension funds will receive more than £54billion from the deal. As well as a dividend, on which they will have to pay full tax, investors will also be given shares in Verizon Communications – the US giant which is buying the Verizon Wireless stake from Vodafone.

It means more than half a million private Vodafone shareholders will face a tax bill while the corporate giant will pay nothing itself in Britain.

Higher rate taxpayers face paying at least 25 per cent of the dividend in tax, though some basic and lower rate taxpayers may not be taxed at all.

Companies that receive the dividends will not be taxed.

MPs last night demanded Vodafone to ‘do the right thing’ and pay its ‘fair share’.

Margaret Hodge, chairman of the Public Accounts Committee, said: “I don’t understand how anyone can justify such a massive windfall without handing any of it to the Exchequer. If this is an instance in which Vodafone has simply played the system then clearly they themselves have an obligation to UK consumers, on whom they depend for their business, to do the right thing”.
Margaret continued to question executives from those firms, told the BBC, “I think we want reassurance that HMRC is doing its darndest to look over this deal in huge detail to make sure that Vodafone, under the existing law, is paying all tax due“.

The deal ends a long-running saga, with both Vodafone and Verizon trying to take full control of Verizon Wireless over the years, but having been unable to agree a price.

Vodafone shares rose 3.4% during the day.