Verizon currently has about $50 b of debt. It is now planning to issue about $60 b more. That's quite a feat for a firm which has $13 b operating income, which is likely to go up due to its acquisition of Verizon Wireless from Vodafone.
Last year, Verizon Wireless reported $21.8 b in operating income and $75.9 b in operating revenue. Verizon will now claim 100% of this income rather than 55% before. Its market cap is likely to go up (if it is quoting at its fair value now), but not that much.
It surely has the capacity to service that debt based on its historical performance. But who knows about the future market conditions? Too much leverage is not good for the financial health.
Whether the acquisition is good news for Vodafone or Verizon, we are not that sure. However, the advisors are sure to make a lot of money off this deal. They have nothing to lose after all. You buy I win; you sell I win.
M&A gets going despite all odds.
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