Vodafone could spend up to US$40bn on acquisitions in the years ahead, with a large mobile operation in the emerging markets or a fixed-line company in Europe the most likely target for a mega deal.
Vodafone chief executive Vittorio Colao confirmed yesterday that he was considering a transformational acquisition on the back of the US$130bn windfall that the company will receive before the end of February from the sale of its 45% stake in the leading US mobile operator Verizon Communications.
The disposal should leave Vodafone with US$40bn to spare, after it returns US$70bn of the Verizon proceeds to shareholders and invests a further US$30bn in its global network over the next two years, assuming that it keeps to its current debt-to-ebitda ratio of 2:1.
While Colao said there would be limited opportunities to acquire further mobile assets in Europe, given the regulatory problems Vodafone would have in buying another large operation there, he could think of “two, maybe three” significant opportunities in the emerging markets.
He added that the company was also keen to expand its fixed-line operations in Europe.