Vodafone Says No Sale Planned Of Verizon Wireless

A financial hit of as much as $48.7 billion to be absorbed by Vodafone Group prompted the return of reports Monday that the U.K.-based company could sell its 45 percent ownership of Verizon Wireless.

In announcing an "impairment review" Monday, the firm, the world's largest mobile phone service provider, stunned financial markets, which drove Vodafone's stock price down nearly 3 percent in early trading.

While the negative report renewed long-standing rumors of a possible sale of its Verizon Wireless stake, the Wall Street Journal reported that Vodafone Chief Executive Arun Sarin said the firm has no plans to sell its Verizon stake.

In its report, Vodafone also forecast a somewhat gloomy outlook for the mobile phone business in general, citing "the increasingly competitive environment in the industry." In discussing its 10-year plan, Vodafone predicted a "lower view of growth prospects for a number of key operating companies, particularly in the medium to long term." The company did not name those companies specifically.

In addition to intensifying competition, Vodafone cited "pricing pressures" in some key markets.The chief reason for the impairment charge was the goodwill item Vodafone incurred in 2000 when it acquired Germany's Mannesmann at the height of the technology bubble, when technology assets carried astronomical valuations. International accounting regulations now require firms to value physical assets more realistically.

Vodafone is in an unusual position over its equity ownership of Verizon Wireless, because Verizon uses the CDMA2000 standard developed by Qualcomm and Vodafone's generic technology is based on the competing GSM standard. Vodafone cited the growing competitive pressures experienced in its GSM markets, but Verizon Wireless has been booming, logging increased profits and growing faster than any other major U.S. cell phone service provider.

Vodafone said its outlook for the current financial year ending March 31 remains unchanged.