Vodafone the Victor in Verizon Wireless Buyout

by Charles Sizemore | September 3, 2013 12:54 pm

British telecom giant Vodafone (VOD[1]) agreed to sell its stake in Verizon Wireless to Verizon Communications (VZ[2]) in one of the biggest deals in history.

That’s the headline.


Seriously. Mobile phone penetration is the United States was 102%[3] as of the end of last year, and this is a conservative number using the entire population of the United States and its territories as the denominator. Removing small children, the elderly and infirm and the prison population, the number would be significantly higher. Not only does every American already have a cell phone, but many of us have two or three.


Not nearly as much as you might think. Already, more than 61% of all American mobile phones are smartphones[4]. Even among Americans aged 55 and older, the rate of ownership is 42%.


It’s hard to see a lot of room for margin expansion in a saturated market where the “stickiness” of consumer loyalty is being steadily eroded by falling switching costs to the consumer. Add to this the body blow that T-Mobile US (TMUS[5]) dealt to the industry with its adoption of transparent pricing and the elimination of the carrier phone subsidy, and it’s hard to find much to like here.



As far back as 2011, Vodafone’s CEO had publicly stated that Vodafone was an “emerging markets company”[6] and not a European company. Emerging markets accounted for 29% of Vodafone’s service revenue last year and virtually all of its expected future growth. The company operates in 30 countries and partners with other carriers in 40 more.







  3. Mobile phone penetration is the United States was 102%: http://www.ctia.org/advocacy/research/index.cfm/aid/10323
  4. 61% of all American mobile phones are smartphones: http://mashable.com/2013/06/06/smartphones-61-percent/
  5. TMUS: http://studio-5.financialcontent.com/investplace/quote?Symbol=TMUS
  6. “emerging markets company”: http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/telecoms/8877655/Vodafone-were-an-emerging-markets-company.html

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