Vodafone, Verizon in talks for $100B-plus deal

Shares of Verizon Communications jumped 3% Thursday as the U.K.'s Vodafone confirmed that it has resumed talks to sell its shares of Verizon Wireless to Verizon.

Verizon, a telecom giant that sells Internet, TV and phone service, owns 55% of Verizon Wireless and has wanted to buy the rest for years. It is looking to pay around $100 billion but Vodafone wants about $130 billion, according to The Wall Street Journal, which first reported the resumption of their negotiation.

Verizon's desire to fully own the wireless subsidiary by buying the 45% stake it doesn't own has intensified in recent years as consumers' demand for all things mobile grows unabated, particularly in data usage and video streaming.

"Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications regarding the possible disposal of Vodafone's U.S. group whose principal asset is its 45% interest in Verizon Wireless," Vodafone said in a statement Thursday. "There is no certainty that an agreement will be reached."

In heavy trading Thursday, Verizon shares rose 3%. Vodafone shares leaped 7.7%.

Verizon shares zipped to about $47 shortly around 7 p.m. ET Wednesday, after the published report, then slid back below $46.80 within an hour. Still, that was higher than the day's close of $46.56, which was down 39 cents or 0.8%.

Verizon was said to be talking with banks able to finance the potential $100 billion-plus deal.

"Interest rates are going up and that could be the driver," said Roger Entner, a wireless industry analyst at Recon Analytics. "Financing the deal becomes increasingly expensive. Verizon might be willing to give a little more in expectation of higher rates."

In April, British publications reported that the two companies were about to pull the trigger on the huge deal, and that Verizon had lined up banks and lawyers to handle the transaction. Analysts in London suggested then that Verizon might have to offer $135 billion to get Vodafone's wireless stake.

"The reasons for a deal are well-rehearsed — Verizon has rising other post-employment benefits liabilities and taxes it must address, and the debt markets may not be this benign forever," Robin Bienenstock, an analyst at Sanford C. Bernstein in London, wrote in a July 19 note. "Vodafone on the other hand sees the coming weakness in the U.S. market and needs the cash to resolve structural problems at home."

Once Verizon can bring Verizon Wireless fully under its umbrella of operations, it can integrate the wired and wireless units more deeply, particularly in back-end operations and IT systems, Entner said. "They can also seamlessly bundle the bill. They can to more joint marketing," he said.

The wireless industry has consolidated in recent months as smaller competitors seek deep-pocket partners to combat larger carriers. In June, Japan's Softbank paid $21.6 billion to buy 78% of Sprint, giving the Overland Park, Kan.-based company a much-needed cash infusion to grow its wireless network.

AT&T sought to buy T-Mobile in 2011 but federal regulators, concerned about the merger's possible impact on prices consumers pay for wireless services, blocked the deal. Last October, T-Mobile bought MetroPCS to add about 9 million customers.

Contributing: Associated Press