Vodafone rises on Verizon Wireless stake hopes (Reuters)

LONDON (Reuters) - Vodafone Group Plc (VOD.L) shares roseas much as 4 percent on Tuesday as speculation mounted that themobile phone giant will sell its 45 percent stake in its U.S.joint venture to partner Verizon Communications (NYSE: - ).

The Daily Telegraph newspaper, in an unsourced report, saidVerizon had put an indicative price tag of $38 billion on theBritish group's stake in Verizon Wireless, but that Vodafonevalued the asset at $50 billion.

Vodafone declined to comment.

Analysts said that, while suggesting a gulf over price, thereport raised hopes a deal will take place and lead to a bigreturn of cash to investors.

"If the story is correct, the valuation gap looks large butit may be that the process is at an early stage and a pricesomewhere in the middle could be agreed upon in due course,"Goldman Sachs analysts wrote in a research note.

At 1215 GMT, Vodafone shares were up 3.2 percent at 130pence, the biggest rise on the benchmark FTSE-100 index( - ), after touching an earlier high of 131 pence.

A source close the matter told Reuters that Vodafone andVerizon had recently been in a talks over the sale of the stakebut that Verizon had not yet put a price on the table that wasacceptable to Vodafone.

Analysts have long speculated that Vodafone might sell itsstake in Verizon Wireless to focus on its core Europeanmarkets, while also branching into new technologies such asconvergence services, which link mobile and fixed-line devices.

Some investors have also urged a sale in the hope of a bigreturn of cash. However, insurer Standard Life (SL.UL), whichowns about 1.7 percent of Vodafone, said on Tuesday it did notsupport a deal at any price.

"Although we are supportive of Vodafone selling out ofVerizon, the indicative price of $38 billion is far too low,"Standard Life's head of UK equities, David Cumming, said in astatement.

Analysts' valuations of the stake vary widely, with BearStearns saying on Tuesday that its current equity valuation was$39 billion and Citigroup forecasting in a recent research notethat the stake could fetch $60 billion.

Vodafone has repeatedly said it has no plans to sell thestake and some analysts warn against a deal.

"Under investor pressure, it would appear that Vodafone isnudging toward a U.S. disposal, a move that in our view ups therisk profile of the group's earnings," analysts at InvestecSecurities said on Tuesday.

Investec would not support a deal at less than $50 billionand was concerned Vodafone would be more exposed to slowergrowing European markets after a sale.

Verizon, meanwhile, has made clear it is interested in adeal, particularly after rival AT&T Inc. (NYSE: - ) agreed to buyBellSouth Corp (NYSE: - ), giving AT&T full control of CingularWireless and upping the ante with Verizon.

Cingular Wireless is the largest U.S. wireless carrier,following by Verizon Wireless.

Verizon Chief Executive Ivan Seidenberg said last week thatVodafone was "...fully aware of our views" and the decision was."..more on their court at this point."

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