Vodafone has sold its 45% stake in Verizon Wireless to Verizon Communications group in one of the biggest deals in corporate history.
The $130 billion deal was announced by Vodafone after the close of trading on the London Stock Exchange.
The company will return $84 billion to its shareholders, of which $34 billion will go to shareholders in the UK.
Vodafone will also invest money in its business, with funds earmarked for high speed mobile phone networks.
It said that by 2017 its main five European markets would have almost complete 4G coverage.
Vodafone group chairman Gerard Kleisterlee said: “The transaction will position Vodafone strongly to pursue our leadership strategy in mobile and unified communication services for consumers and enterprises, both in our developed markets and across our emerging markets businesses.”
Vodafone has sold its 45 percent stake in Verizon Wireless to Verizon Communications group in one of the biggest deals in corporate history
The company is also launching a $9 billion investment plan called Project Spring, which will accelerate the introduction of 4G networks and increase investment in laying fibre optic cables, among other things.
The investments would allow the company to offer much faster broadband services to customers.
Project Spring will also add to Vodafone’s high street stores and develop mobile payment services.
Vodafone group chief executive Vittorio Colao said: “Project Spring will strengthen and accelerate our existing Vodafone 2015 strategy, enabling us to take even greater advantage of the growing global demand for ubiquitous high-speed data.”
It is the third biggest corporate transaction, behind Vodafone’s 1999 deal to buy Germany’s Mannesmann and AOL’s purchase of Time Warner in 2000.
Despite the huge size of the deal, it will not generate tax revenue for the UK.
Vodafone says that as the US business is owned by a Dutch holding company, it will not be liable for tax.
However, it will pay $5 billion in tax in the United States.
Vodafone shares rose 3.4% during the day.
The deal ends a long-running saga, with both Vodafone and Verizon trying to take full control of Verizon Wireless over the years, but having been unable to agree a price.
Vodafone has confirmed it is in talks with Verizon Communications over the sale of its 45% stake in their joint venture, Verizon Wireless.
Reports earlier this year suggested that Verizon was looking to buy Vodafone’s stake in Verizon Wireless for about $100 billion.
However, there has also been speculation that the stake is worth more than this.
Shares in Vodafone jumped 8% following the company’s announcement.
Vodafone is in talks with Verizon Communications over the sale of its 45 percent stake in Verizon Wireless
Vodafone said in a statement: “Vodafone notes the recent press speculation and confirms that it is in discussions with Verizon Communications Inc. regarding the possible disposal of Vodafone’s US group whose principal asset is its 45% interest in Verizon Wireless.
“There is no certainty that an agreement will be reached.”
Verizon Wireless is the largest and most profitable phone operator in the US, with 100 million customers.
The deal would be one of the largest corporate transactions of all time if it goes through, and would provide a large cash injection for the UK telecoms company, but would leave Vodafone without a highly profitable non-European partnership.
Verizon has been looking to buy out Vodafone’s stake in Verizon Wireless for some years, however, price has been a consistent hurdle.
Vodafone and 02-owner Telefonica have announced plans to create one shared grid in the UK.
The move is designed to improve existing coverage and to speed up the roll-out of superfast 4G services.
The companies say it will mean 4G mobile services, which allow users to download music and videos to their phones at high speed, can be delivered by 2015.
That is two years ahead of regulator Ofcom’s requirement of 98% coverage by 2017.
Vodafone and 02-owner Telefonica have announced plans to create one shared grid in the UK
The two firms will continue to compete but will pool their network infrastructure.
“Exceptional customer demand for the mobile internet has challenged the mobile industry to consider innovative solutions to building a nationwide network that will be fit for our customers in the future and support the products and services that will truly make Britain digital,” said Ronan Dunne, chief executive of Telefonica UK.
Guy Laurence, Vodafone UK chief executive, said: “This partnership will close the digital divide for millions of people across the country and power the next phase of the smartphone revolution.”
The deal will help keep costs down for the operators at a time when consumer spending in Europe is weak. Telefonica in particular has been under pressure to cut its debt and is currently disposing assets.