My gran was a wonderful person. She told stories of seeing hundreds of soldiers pulling cannon with horses in the First World War and of running out into the streets to watch a Zeppelin air raid. She was proud to be British and tearful for the days when the globe was pink and the sun never set on the Empire.
Today we have a similar empire. The greatest British success story: Vodafone. They started from behind. Racal Vodafone the newbie to BT’s Cellnet.
Vodafone is the biggest company in the UK. Having swallowed American and German rivals. There was a defeat in Japan but India looks good. Yet The City thinks that Voda should withdraw from America. “Sell your stake in Verizon and give us the money”. At least that’s what they think. What they say is that “There are no proper synergies, Vodafone is a minor shareholder, the network doesn’t have the Vodafone name, it uses different technology so there is no power in buying infrastructure or handsets, it’s been profitable but now is the time to cash in”.
It’s crazy that The City is telling the singularly most successful British company what to do. The US is a strong growth market with only 85% penetration. There is however a way for the City to get what it asks for and for Vodafone to ensure that the sun never sets on their empire.
Vodafone should sell its 45% stake in Verizon, equivalent to 28 million subscribers, and use the money to buy T-Mobile US with 26 million subscribers. Cash-strapped Deutsche Telekom needs the money. Spending the income in the US avoids a $9bn tax bill. Vodafone then gets to brand the network red and has the synergies that The City claims makes Verizon a mistake. It gives Vodafone tremendous power in purchasing – which they’ll want because the T-Mobile US network needs $10bn of upgrading to 3G. Indeed Vodafone is probably the only company that can cut the deal necessary to do this. Skint Deutsche Telekom certainly can’t.
When Deutsche Telekom bought One-2-One they sat smugly in the Dorchester at the announcement and said “Vee are zee Germans. Today Europe, tomorrow zee vorld”. As good a reason as any why Vodafone, sponsors of the English cricket team should buy T-Mobile US. A second defeat of the Germans. My gran would have been very proud.
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