Published September 03, 2013
Verizon Communications Inc Chief Executive Officer Lowell McAdam on Tuesday did not rule out international expansion even as the company plans a $130 billion purchase of Vodafone Group Plc's 45 percent stake in Verizon Wireless.
Verizon shares were down 4.4 percent at $45.31 in morning trading. The deal was announced on Monday, a U.S. public holiday when financial markets are closed.
On a conference call with analysts on Tuesday, Chief Financial Officer Fran Shammo also said that the company would still expect to be able to participate in upcoming wireless airwaves auctions, despite a plan to take on more than $60 billion in new debt to pay for Verizon Wireless.
While McAdam ruled out an expansion into Canada's wireless market, which the company had previously considered, he said it would look at other international opportunities, as its wireline business already has overseas assets.
On top of all this, the executives said the company would pay down the debt from the Vodafone deal "as quickly as possible" and that they hoped to return Verizon to its previous investment-grade credit rating in four to five years.
Some analysts had said they were worried that Verizon's hands would be tied on any additional spectrum purchases or corporate acquisitions while it concentrates on paying off debt.
Verizon is taking full ownership of the wireless venture so it can get a 100 percent of the profits from the business. It expects this to increase its earnings per share by 10 percent after debt interest payments.
McAdam also told analysts that full ownership of Verizon Wireless would help Verizon more easily integrate its wireless and wireline networks. This would help the company offer services like mobile commerce, mobile video and mobile advertising, which need both wireless and wireline network support, he said.
McAdam had said on Monday that he decided against a full merger with Vodafone because just buying the Verizon Wireless stake made more sense.
(Reporting by Sinead Carew; Editing by Gerald E. McCormick and Lisa Von Ahn)