* Colao says "very comfortable" with Verizon stake
* Will keep hold of latest Verizon payout
* Posts biggest-ever fall in key sales figure
* FY EBITDA 13.3 billion stg vs f'cast 13.2 billion
* Shares up 0.7 percent
By Kate Holton and Paul Sandle
LONDON, May 21 Vodafone boss Vittorio
Colao staked his reputation on selling the group's prized stake
in U.S. operator Verizon Wireless at the right time and right
price, saying on Tuesday he would not bow to pressure to do any
Contemplating what could be the world's third-largest ever
corporate deal, Colao and his number two Andy Halford said they
were happy holders of the 45 percent stake, following increasing
demands from majority owner Verizon Communications Inc
for a sale.
That would only change, they said, when they received an
offer which was preferable to the existing structure, in terms
of dividends received and tax paid.
Verizon is working on a $100 billion offer, seen as an
opening gambit by investors, two people close to the situation
have told a deal which would rank behind only
Vodafone's purchase of Mannesmann and Time Warner's AOL buy.
"I'm paid to have a weight on my shoulders," the Italian
chief executive said after publishing full-year results that
showed the scale of the pressures on the rest of the company.
"We are in a very comfortable situation, we have an
ownership of an asset that delivers a pretty important amount of
value to our shareholders, which also has liquidity, and is in a
country which has a fantastic market structure, with a company
that is the leader."
"It is a pretty good position to be in," Colao told
reporters. "(But) if an offer comes that is more advantageous
than the current situation, then of course we will look at it."
Colao, a 51-year-old former partner at consultancy McKinsey
who has won plaudits from investors for selling assets at the
right time in his almost five years as CEO, noted he had a good
record when it came to selling out of different countries.
"So far I think the decisions have been pretty good," he
said. Shares in Vodafone are up 28 percent since the start of
the year to highs not seen since the dot-com boom in 2001, on
speculation that a deal could be close.
Formed by the two parents in 2000, Verizon Wireless has
become the most important asset in Vodafone's portfolio,
providing rapid growth in both subscribers and profits at a time
when the rest of the British company is contracting.
Vodafone's results highlighted the challenges facing Colao,
including the biggest-ever drop in one measure of the revenue it
gets from customers. That forced the group to reinvest its
latest dividend from the United States into its struggling
European assets, rather than return it to shareholders.
The steepest falls came from southern Europe, with service
revenue down 12.8 percent in Italy and down 11.5 percent in
Spain. The group also took a 1.8 billion pounds impairment
charge on its business in Italy, taking total writedowns for
Spain and Italy for the year to 7.7 billion pounds.
Vodafone is the second-largest mobile operator in both those
markets, but has lost share to cheaper rivals as cash-strapped
customers switch to low-cost options or ditch their phones.
Overall, the contribution from Verizon and cost cuts
elsewhere helped Vodafone, the world's second-largest mobile
operator with 403 million subscribers, to post profits slightly
ahead of forecasts. Core earnings of 13.3 billion pounds
compared with a forecast 13.2 billion.
Having completed a three-year dividend programme that
guaranteed an attractive 7 percent growth per year, Vodafone
scaled back its ambitions, pledging instead to maintain the
dividends at least at current levels.
"We continue to face stiff headwinds from regulation,
competition and the tough economic environment, particularly in
Europe," Colao said.
Management at Verizon Wireless has implied that the two
parents could also face a lean year in terms of dividends, but
Colao and Halford said they were happy with their lot.
"If $7 billion is paid out in a lean period, then we're ok
with lean periods," Halford said, referring to the sum announced
last week to both parents. "It is a great business with good
Analysts had said a possible $20 billion tax bill could
prevent a deal, but the people familiar with a possible buyout
said it could be structured to keep the bill nearer $5 billion.
Asked for his reaction, Colao said he could not comment until he
saw firm details.
"There are so many different possibilities in terms of
transactions and so many jurisdictions involved ... it is
difficult to give an answer," he said. "(But) it's a very
disciplined board, it's a very disciplined management and we
have no emotional attachment to anything."