AT&T Inc. (T): Vodafone Group Plc (ADR) (VOD) Is So Much More Than Verizon Communications Inc. (VZ)

With limited net debt for a wireless major, the company can use the cash influx from Verizon Communications Inc. (NYSE:VZ) to grow a couple of initiatives. Vodafone is moving forward on two fronts:  bundled services and 4G services. In the bundled arena, the company recently purchased the largest cable operator, Kabel Deutschland, in Germany for roughly $10 billion, and according to Bloomberg was rumored to be working on a deal for Italy’s Fastweb SpA. Such an acquisition would tie in nicely with the speculated deal to obtain the other 23% of Vodafone Italia from Verizon.

The other initiative has been to catch Europe up with the offerings in the US by introducing 4G services. As of the end of Q2, Vodafone now has 10 markets with 4G including recently launched Australia, Spain and Czech Republic. The company was the first operator to launch in Spain and is continuing to invest heavily in launches of the Netherlands and UK later in 2013.

Bottom line

With a massive cash influx from selling the 45% stake in Verizon Wireless, Vodafone could use the cash to become the dominant 4G services provider in Europe just as the continent shows some signs of emerging from an extensive debt crisis. With around $65 billion in annual revenue, Vodafone would suddenly become a smaller operator than AT&T Inc. (NYSE:T) and Verizon, but it would have a substantially better balance sheet that could make some potentially attractive acquisitions in weak markets around the world.

Of course, the risk would be that Vodafone would foolishly use the cash on bad deals or worse, just let it sit on the balance sheet instead of taking advantage of a weak European market. Vodafone is so much more than Verizon Wireless. Long-term investors could definitely benefit from the company selling US assets as the market becomes saturated and spending the cash in Europe and the suddenly weak emerging markets.

The article Vodafone Is So Much More Than Verizon Wireless originally appeared on Fool.com and is written by Mark Holder.

Mark Holder and Stone Fox Capital owns shares of AT&T and Vodafone. The Motley Fool recommends Vodafone.

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