AT&T Still Pondering Vodafone Acquisition

by Matt Klassen on January 30, 2014

It was a strange sidebar to the news earlier this week that British mobile giant Vodafone was selling its stake in Verizon Wireless, that fellow American telecommunications gaint AT&T may actually be looking to takeover Vodafone itself. Although Ma Bell has denied any immediate plans to acquire the UK-based company, a report from Bloomberg states that AT&T’s interest in such a merger is still alive and well, and could even become a reality before the end of the year.

Citing sources familiar with the situation, Bloomberg reported that although AT&T will likely not have the time, willingness, or even legal ability to make a bid for Vodafone in the short term–given the complex rules put forth by the UK Panel on Takeovers and Mergers–some sort of offer before the end of 2014 may be a distinct possibility.

Of course such an impending merger would make better sense of Vodafone’s earlier move to divest itself of a stake in Verizon Wireless, a company that is head and shoulders above the competition in the American market, as Vodafone was able to secure strong returns for its investors while at the same time showing some respect to its long time partner Verizon Communications by ending the partnership before it pursued a relationship with AT&T, Verizon’s only real rival.

AT&T was forced into a decision regarding Vodafone earlier this week when several reports surfaced that company CEO Randall Stephenson was meeting with EU telecommunications officials inSwitzerland, a discussion that involved Ma Bell’s interest in getting a foothold in European telecom operations. Given that AT&T had made its intentions clear, the UK Panel of Takeovers and Mergers immediately jumped into action, asking AT&T to clarify its intentions.

Under British law, companies interested in takeovers, mergers, and acquisitions of UK-based firms must declare their intentions and put forth a firm offer to the target in question within 28 days. Should no solid offer be proffered before that, the parties will have to walk away from the deal for at least six months.

With that in mind its clear why AT&T would deny any formal interest this week, as the company likely doesn’t have the necessary ducks in a row to make a serious bid for Vodafone—or any other carrier for that matter—but that doesn’t mean the company isn’t interested, only that it will likely now have to wait out the six month no-offer window before it readdressed the merger.

Given that the American wireless market has largely grown stagnant, to which we could add the fact that through its several failed local merger and acquisition attempts that AT&T will never match Verizon’s subscriber base, the attraction of such expansion is obvious, particularly into a European market with few competitors and even fewer dominant incumbents. AT&T wants continued growth, and that won’t happen in the American wireless market.

In the end, while AT&T’s Stephenson has said that the company’s declaration that it is not interested in Vodafone “speaks for itself,” all it really says is that AT&T isn’t ready today to pursue such a landmark deal, but for what tomorrow may bring, well that’s an entirely different story.

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Written by: Matt Klassen. Follow by: RSS, Twitter, Facebook, or YouTube.

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March 13, 2014 at 5:42 am
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