AT&T Eyes Vodafone Takeover In 2014 – Report

US operator AT&T is exploring the possibility of acquiring Vodafone once the company completes the £84 billion sale of its stake in Verizon Wireless early next year, according to Bloomberg.

AT&T has long been linked with a move for a European operator as it struggles to find areas of growth in the US market, and its CEO Randall Stephenson has previously spoken of a “huge opportunity” for investment on the other side of the Atlantic.

Fierce competition and the economic problems in Europe have affected operators’ share prices, while companies have been slow to roll out 4G networks. Revenues are still largely dependent on voice and text services and AT&T believes that there is a chance to get a head start on shifting customers onto lucrative data-based pricing schemes that are common in the US.

AT&T Vodafone deal

In contrast, the majority of smartphone users in the US are already on these contracts, raising fears of market saturation.

AT&T has been eying up European targets since the beginning of the year and has been linked with a move for EE, but its lack of presence in Germany, the continent’s largest economy, is making Vodafone a more likely target.

A merger would create the world’s largest telecoms company by sales, with more than 500 million subscribers, allowing it to negotiate much more favourable deals with the likes of Apple and Google, while also getting it an entry into the mobile advertising market.

AT&T is apparently working out a takeover strategy as it is unlikely to want to keep all of Vodafone’s assets, such as its networks in emerging markets, which could be sold to another buyer like Carlos Slim’s America Movil or China Mobile. French operator Orange has also been suggested as a suitor for Vodafone’s African businesses.

Vodafone woes

It is thought that Vodafone shareholders could be receptive to a takeover, with many supporting Verizon’s bid for full control of the Verizon Wireless joint-venture, as it would make the British operator more attractive to a US buyer.

Vodafone is seeking new areas of growth amid the ongoing economic difficulties and tough regulatory climate in Europe, and has looked to boost its fixed line broadband business with several acquisitions including that of Kabel Deutschland. A new buyer could help achieve its goals.

It has been suggested there might be political opposition to the sale of a major British company, but there is no legal framework that would allow AT&T to be turned away.

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