Reports: AT&T still nurturing European M&A ambitions

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AT&T has been sounding out a number of options to buy European operators in recent months according to multiple reports, as rumours persist about the U.S. operator's interest in expanding in the region to offset limited opportunities for growth in its home market.

Stephenson

Citing unnamed sources familiar with the situation, Bloomberg said AT&T has evaluated buying assets from Telefónica and Vodafone, including an offer to buy as much as 29.9 percent of Telefónica. Telefónica and Spanish government officials have denied receiving any approach from the company, however.

Bloomberg said the UK's No. 1 LTE operator, EE, and Telefónica's O2 UK unit are also potential targets for AT&T.

Although no official comments have been forthcoming from any of the companies involved, rumours that AT&T is interested in Europe have been circling around the market since early this year and refuse to die. According to the Financial Times, AT&T CEO Randall Stephenson told an investor conference in May that he found Europe "fascinating right now," but that suitable targets are difficult to find.

"The intelligence coming back from all parts of Europe is that AT&T is interested, even if there has not been any traction yet," one unnamed industry adviser told the Financial Times.

Another source told the FT that AT&T is testing the waters. "They are exploring everything, which means talking to everyone. But if it was to do a deal then the idea would be 'go big, and go early' as the opportunities will not last forever," the source added.

For some, the current interest in Europe seems ill-timed given the economic difficulties of the region, as well as regulatory changes that are set to abolish roaming fees and therefore have an adverse impact on operator revenues. Europe's economic woes make it a "sinking ship," David Heger, an analyst at Edward Jones & Co., told Bloomberg. "Overall, I'm more negative than positive."

However, Heger did note that any acquisition now would place a company in a good position for whenever the economy finally improves.

The FT added that AT&T is betting on mobile broadband and smartphone usage growth as LTE services, are slowly rolled out across Europe. The paper noted that Stephenson sees an opportunity to capitalise on some of the lessons AT&T has learned during its introduction of LTE services in the United States over the past two years.

Stephenson addressed the issue earlier this month at an event at the Brookings Institution in Washington, D.C. Though he declined to comment on any specific M&A activity, he reiterated his belief in opportunities outside the United States. Specifically, he said Europe is one of the largest consumer markets in the world, but that LTE coverage there has lagged the U.S. "Would we like to participate in that? I've said AT&T would love to participate in it. Is it by M&A? I don't know," he said.

For more:
- see this Bloomberg article
- see this FT article (sub. req.)
- see this separate FT article

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