Aug 25, 2006 1:10 PM,

Vodafone sheds another operator

By Kevin Fitchard

Global mobile operator Vodafone today said it has agreed to sell its minority stake in Belgian carrier Proximus to Belgacom in a move that could be precursor to exiting its U.S. joint venture with Verizon Communications.

Vodafone and Belgacom agreed at a price of Euro 2 billion (U.S. $2.6 billion) for Vodafone's 25% share of Proximus, Belgium's largest mobile provider with 4.25 million subscribers. More telling than the price, however, was Vodafone's reasoning for exiting the market.

"We have enjoyed a long and successful relationship with Belgacom, and together have built the leading mobile operator in Belgium," Vodafone CEO Arun Sarin said in a statement. "We do not, however, see ourselves as the most appropriate long-term holder of this minority stake. In line with our strategy of actively managing our portfolio and maximizing returns, we have achieved an attractive price with this sale."

Vodafone is actively cleaning up its massive portfolio of global wireless assets--a labyrinthine organizational chart of wholly-owned subsidiaries, partnerships, joint venture and affiliates, some bearing the Vodafone name and some not. Earlier this year, Vodafone sold off its Japanese subsidiary to SoftBank, marking the reversal of almost a decade of global expansion, which netted it more than 180 million proportionate subscribers.

Vodafone has been under pressure from its investors to sell off its 45% stake in Verizon Wireless, which not only is majority owned by partner Verizon Communications but also uses a mobile technology, CDMA, contrary to Vodafone's global GSM-UMTS strategy. CEO Sarin has said repeatedly Vodafone has no interest in divesting itself of one of its largest global operations despite its new strategy of focusing on core European operations where it has direct control. In a research note, Ovum said the next likely candidate for a divestiture is Swiscomm Mobile, in which Vodafone has a 25% ownership. Verizon Wireless, however, is less clear, Ovum said. "We still think that at the right price Vodafone might exit the U.S.," Ovum said.

If Vodafone leaves the Verizon joint venture, it might still look to have a presence in the world's largest mobile market. Even when Verizon Wireless' customer base is adjusted to Vodafone's minority stake, the U.S. has Vodafone's second largest pool of customers at 23 million behind Germany. Many analysts have speculated Vodafone would take a crack at buying Sprint, which has been financially vulnerable since its acquisition of Nextel. That acquisition, however, would give Vodafone a company with two entirely different network technologies (CDMA and iDEN) from its own instead of just one. There is also the possibility that a troubled Deutsche Telekom might sell T-Mobile USA.