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, economics editor Article written by Robert Peston Robert Peston Economics editor

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  • rate this
    +2

    Comment number 211.

    209.mocker
    The business exec you describe wants his benefits too. Corporate welfare is as harmful as social welfare. Stand on your own 2 feet, contribute, don't expect a handout. Be an adult. Freedom means personal responsibility, not dependence.

    I decry MPs doling out welfare cheques to idle people, and equally to execs who also get 'benefits' in the form of protectionism measures, at my expense

  • rate this
    +2

    Comment number 210.

    Vodafone pay tax?
    Ha ha ha ha ha ha ha!

  • rate this
    0

    Comment number 209.

    @198. Dunno what role you hold in industry Sally, or maybe you're just another theoretician peddling a particular libertarian point.All I can relate is that one very senior utility exec once derided the introduction of more competition in his industry,cos the 'fixed costs' would remain the same,thus no tangible beneficial effect.The rest applies anyway in varying degrees wherever business is done.

  • rate this
    +1

    Comment number 208.

    207.Concerned Citizen
    Well said.

  • rate this
    +2

    Comment number 207.

    What a domestic technology business success for the UK - Vodaphone is.

    A world player which makes £130bn after years of dividend payments from 45% ownership of the dominent US player - will someone applaud this?

    At least the domestic private & institutional shareholders have made staggering returns from their investments.

  • rate this
    +1

    Comment number 206.

    130bn is more or less the govt deficit for 2013 (bless). I'm not quite so convinced it'll have the dramatic effect Pesto believes. After all, 350bn of QE failed to light the blue touch paper for the economy.

    Not that it was meant to of course. "Saving the banks" was only code for saving the gravy train funding structure of banks-central bank-govt, so the govt can continue bleeding us all dry.

  • rate this
    +1

    Comment number 205.

    204.Alaric
    The people simply vote themselves a 'free lunch'. That is why we have a huge insolvent Nanny-state, people keep voting for the politician who promises them the most stuff. But I am seriously considering running for office anyway :)

    I do vote in accordance with my values too.

    I'd ask them to elect me, to leave them alone. I don't know how they should live their lives, only they can.

  • rate this
    0

    Comment number 204.

    Sally, if you're that convinced by your prescription to the world's problems why don't you stand on a platform to change and submit yourself to the democratic will of the public? Alternatively vote & lobby for a party that advocates such a platform. If people don't want what you want why would you force them to? Isn't that the every tyranny you object to? You do have choices you don't offer them.

  • rate this
    0

    Comment number 203.

    202.Alaric
    How do you plan to bring about nirvana of liberty?
    =
    Hi, Step 1: spread the word of liberty.

    Democratic mandates are immoral, they are mob rule over those who disagree. Violence may not be needed, Ghandi achieved revolution peacefully.

    Ask yourself: is forcing others against their will wrong? If you answer "yes," you are a libertarian at heart too, that's really all it is :)

  • rate this
    0

    Comment number 202.

    Hey, Sally. How do you plan to bring about nirvana of individual liberties you seek? Will this by a democratic mandate via elections (if so is it reversible if people end up not liking it?)? Or is it via some violent revolutionary process? If it's violent or irreversible, why is your nirvana any different to jihadists, Stalinists/Maoists or any other snake-oil salesmen of past revolutions?

  • rate this
    +1

    Comment number 201.

    200.canalmaniac
    Do we need that though?
    Do businesses need a law to force to them contribute to infrastructure? Surely it would be in the town's business district's greedy commercial interest to see roads built and maintained, so as to ensure as many customers as possible?

    Why are council roads so neglected, despite bloated council budgets, and advances in technology?

  • rate this
    +1

    Comment number 200.

    21.
    >Goves Silly Temper Tantrum
    >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.

    Thouhg I don't like their Corporation Tax arrangements they do pay Business Rates which cover these costs.

  • rate this
    0

    Comment number 199.

    Windfall my harris - the astronomical sums of money in play here will trickle down about as much as all the other trillions have. The belief - one that stems from a blind faith in market capitalism - that a change of ownership in a telecoms company will improve the lives of the average UK punter or 'boost' the economy in any meaningful way is laughable. Peston = arch apologist for the uber-rich

  • rate this
    +1

    Comment number 198.

    197.mocker
    Your justified concern is not founded:
    UK utilities operate under a regime of insane labour laws, property restrictions and short-term franchise licenses from the state. These combine to form an environment of cronyism & short-termism (like a logging company permitted to log/rape the Amazon). There is no reason to invest for the long-term. Just plunder what you can, as fast as you can.

  • rate this
    0

    Comment number 197.

    @185.privatised the post in NZ, and now it works better.

    Don't know about NZ,never been there,but DO know a little about the UK,& speaking as a customer of both the utility supply & rail companies, can't see any great improvement in their services to ME.since privatisation. What I have noticed is a lack of local competition,& an ever increasing, inflation busting, series of consumer price hikes.

  • rate this
    0

    Comment number 196.

    So Vodafone's shareholders are all private british consumers are they?

  • rate this
    0

    Comment number 195.

    194.ken1760
    Get over yourself.

  • rate this
    +1

    Comment number 194.

    Not so much concerned about the deal and it's impact on us but more about the petty bickering that goes on between two particular "contributors" to this HYS...have your argument elsewhere.

  • rate this
    0

    Comment number 193.

    Mr Peston, what tosh. Vodafone needed this move to get out from under as they are currently struggling and hoping that investors will be happy with a return and that incresing market penetration in Europe (esp Germany) will bring rewards. This remains to be seen, but to say that Vodafone wouldn't have done the deal if they had to pay tax, just like the rest of us, is disingenuous in the extreme.

  • rate this
    0

    Comment number 192.

    191.Friendlycard
    Agreed. I thank of no further dispersal than back to the individual them-self. However, reducing laws to the local level, rather than London (or Brussels) telling us all what to do is a good step too.

    Monopolies, cartels etc can only persist with the help of government.
    http://i.imgur.com/r08m4.jpg
    We must revoke these powers from MPs to make choices for us, to avoid this cycle.

 

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