Vodafone’s big deal: Good or bad for UK?

Phones on the Verizon network

Few corporate deals are so big that they take on an economic significance.

But the $130bn Vodafone is receiving for its 45% stake in Verizon Wireless is equivalent to the size of the entire annual output of Hungary.

All that money will have an impact on lives in a variety of ways.

When most of it is distributed to Vodafone's shareholders, they will spend and invest some of it - which should increase economic activity.

Many of them should pay some tax on the increased income they'll receive.

Vodafone itself should be made stronger, when it uses some of the proceeds to pay down its debts - and maybe that will make it a more fearsome competitor in mobile phones, to the benefit of consumers.

And if it uses some of the residual billions to continue to expand its interests in cable and fixed line networks, maybe it will squeeze some growth out of its huge operations in the mature sluggish economies of Europe - to the further benefit of its shareholders.

So possibly it would be wrong to carp and wring hands that Vodafone won't be paying a penny of tax to the British taxman on the tens of billions of pounds of profit it will make from the disposal.

Because if it had been obliged to pay very substantial tax on the sale, it would have turned down the offer from Verizon Communications - and a windfall for the British economy would have been lost.

Robert Peston Article written by Robert Peston Robert Peston Economics editor

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  • rate this

    Comment number 31.

    #25 Prudeboy

    Firms pay Employers NI towards benefits. A lot pay pensions contributions for their employees (especially the public sector). Not forgetting business rates that cover their local services and of course VAT (albeit with relief).

    Yes they make profits, and should pay appropriately, but they also employee people and make investments. Freeloaders they are not.

  • rate this

    Comment number 30.

    So many think it's ok for vodaphone to pay no tax because because society gets it back in other forms. Surely what is important is that Vodaphone appears to be operating fairly. They obviously give an impression of impropriety. That, apparently, does not bother them?

  • rate this

    Comment number 29.

    It's good for Vodafone - no one else. Vodafone are expensive for private customers anyway.

  • rate this

    Comment number 28.

    A successful British company is good news, isn't it or do we really want all businesses to fail homegrown or otherwise?

  • rate this

    Comment number 27.

    I find some traction in the comment: "who do you most trust to wisely reinvest earnings, the individual who earned it or the government?"

  • rate this

    Comment number 26.

    Put it his way ... Rolls Royce also pay no taxes. They would argue that they employ thousands of people. The actual tax take from these 000's of people is tiny. Example 2000 staff x 25k is 50 million pounds x 20% tax = 10 million pounds.
    RR's net profit was 1.4Billion in 2012. If corp tax was 10% that would be a huge 140Mill in tax. No brainer and no would bother avoiding paying Uk corp tax.

  • rate this

    Comment number 25.

    #19. JustKBO
    "You say 'their whole life is paid for by somebody else'; isn't that true of all of us?"

    Some of us. Most of us pay taxes as PAYE.
    The State is funded by tax and borrowing.

    The taxpayers cop for the lot.

    These freeloaders rely on the rest of us to pay their share.

  • rate this

    Comment number 24.

    Vodafone’s big deal: Good or bad for UK?

    Seems pretty much UK neutral to me in financial terms, unless you happen to be a shareholder.

  • rate this

    Comment number 23.

    I bet none of the money goes to keeping consumers' bills down or improving customer service. Us proles are just teats to be milked.

  • rate this

    Comment number 22.

    At least we know some British business is growing (although we all know that just means the rich get richer)

    Well, its better than selling off all of Britain's companies. Cadbury's, Heinz are the more recent examples, as well as Jaguar, land rover etc...

  • rate this

    Comment number 21.

    @13 Andy SinclairC5 : What a rubbish argument, I am talking about Amazon's UK operations. It may have escaped your notice, but they have several warehouses in the UK : Marston Gate, Rugeley, Peterborough, Doncaster, Hemel Hempstead, 2 in Scotland and 2 in Wales. That's an awful lot of police, fire service and infrastructure they get, for nothing. I wish I could have free services from the state.

  • rate this

    Comment number 20.

    i went into vodaphone to get help waited 40 mins to get a battery, which never arrived, went in 1 week later and got verbally abused by the manager, still waiting to hear from vodaphone about my complaint.

  • rate this

    Comment number 19.

    prudeboy at 15 you use the language of hatred and bigotry. I'm not sure how labelling people you disagree with as 'scum' is likely to promote a happier society.

    And who is it exactly you think gets a free ride? Shareholders and executives will pay income tax on dividends, salaries, bonuses, etc.

    You say 'their whole life is paid for by somebody else'; isn't that true of all of us?

  • rate this

    Comment number 18.

    It's nieve to think share dividends will bring a windfall to our economy,the major share holders will first put their profits off shore then invest in third world manufacturing and services in Brazil etc. where there are tangible products made and exported,as for the tax issue we seem to be back to a feudal system,the royals and rich live off our money while hoarding their own,paying nothing in.

  • rate this

    Comment number 17.

    They could at least use some of it to repair the bad reputation of a chronically sick aftersales service. They took 2 bills in 1 month 6 months ago and I'm still struggling to get any sort of recompense via the inept call centre staff who constantly fail to make notes of previous conversations and their attempts to rectify the matter.

  • rate this

    Comment number 16.

    its capital gains and should be taxed as such

  • rate this

    Comment number 15.

    It is economic activity.

    Economic activity should be taxed.
    Otherwise folk get to reap the rewards of other folks' sacrifices.

    Why should they get a free ride? Give nothing back.
    They consume us.
    Their whole life, living, security etc is paid for by someone else.
    They make no contribution to education.

    Ditto healthcare.

    Do we need these scum?

    We need a government with the guts to get rid.

  • rate this

    Comment number 14.

    I am a Vodafone shareholder and intend to take the capital gain. This is taxable. HMRC will not do too badly. I will give some of it away. I will reinvest the rest. When I get a dividend, I spend it. It has tax paid on it. Whatever I spend it on is usually VATable. Vodafone's tax evasion does not seem to me to be something to winge over. The money will go to boost Western economies.

  • rate this

    Comment number 13.

    "11.Goves Silly Temper Tantrum
    They're all take take take. Why should the likes of Amazon and Vodaphone use our country's infrastructure, or rely on our police and fire services to keep them safe"

    Amazon's Luxemburg based operations rely on the Luxemburg police and fire service. Why should they subsidise ours as well?

  • rate this

    Comment number 12.

    5. nick-in-wales

    yep cou;d not agree more. The Vodafone network in the UK and others for that matter do not live up to expectation. I live near Cambridge. 50 miles from London and spend most of my time swearing about the Vodafone service to and from London. Recently Voda told me to turn off 3G and use 2.5, go figure! so I pay for a 3 G service but it does not work


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