The Federal Communications Commission (FCC) approved the agreement of Verizon Communications Inc. (NYSE:VZ) to acquire the 45% stake owned by Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) in Verizon Wireless for $130 billion.
The telecommunications companies reached an agreement last September. Under the terms of the deal, Verizon Communications Inc. (NYSE:VZ) will pay the acquisition price with 50% cash and 50% Verizon stock. The board of directors of both Verizon and Vodafone unanimously approved the deal.
FCC decision met with approval by Verizon
According to the press statement of Verizon Communications Inc. (NYSE:VZ), the FCC specifically approved its “foreign ownership petition should post-closing foreign ownership of Verizon Wireless exceed 25 percent, and entered its consent to certain pro forma license transfers.”
Randal Milch, executive vice president – public policy and general counsel of Verizon Communications Inc. (NYSE:VZ) expressed gratitude to the FCC for the immediate approval of its transaction with Vodafone Group Plc (NASDAQ:VOD) (LON:VOD), which will allow the company to own 100% of Verizon Wireless and boost one of the most important sectors of the U.S. economy.
“This application approval also marks the first use of the streamlined foreign-ownership review procedures that the FCC adopted earlier this year, and we are grateful to the commission for its commitment to process reforms that benefit wireless carriers and the customers we serve,” added Milch.
Deal should strengthen Verizon’s position
Furthermore, Milch emphasized that Verizon Communications Inc. (NYSE:VZ) concentrated on meeting the needs of consumers through innovation and network reliability over the past 13 years. The company aims to become the premier mobile provider in the country with full ownership of the Verizon Wireless.
He emphasized that Verizon Wireless strengthen the ability of the company to provide “outstanding consumer experience with advanced mobile devices, first-in-our-class network quality and reliability, and new products and services that leverage and integrate our global communications technologies.
Verizon Communications Inc. (NYSE:VZ) expects to complete the transaction in the first quarter of 2014. The agreement is still subject to customary regulatory approval. The shareholders of both companies will still need to approve the deal.
Vodafone Group Plc (NASDAQ:VOD) (LON:VOD) plans to use the proceeds from the deal to reduce its debt by $21 billion. Analyst at JP Morgan believed that Vodafone will still have room to execute intra-market merger and acquisitions to complement its organic growth strategy.