Report: After Verizon deal, AT&T could target rest of Vodafone

After Vodafone confirmed this week it is in talks with Verizon Communications to sell its 45 per cent stake in Verizon Wireless to Verizon, reports resurfaced that the remaining Vodafone assets could fall prey to AT&T, which has reportedly been seeking potential European acquisitions this year and indeed is believed to have already evaluated Vodafone as one possible option.

Citing unnamed sources, Bloomberg reported that AT&T is only interested in wireless, however, and would be deterred if Vodafone expands in cable and fixed-line businesses. Vodafone has been buying up fixed-line assets in markets such as Germany in order to bolster its strategy to offer converged fixed and mobile services.

AT&T and Vodafone declined to comment, according to Bloomberg.

Indeed, other rumours circulating on Friday suggested that Vodafone could use the cash raised from selling Verizon Wireless to buy Liberty Global. Broadband TV News cited comments from Macquarie Equities media analyst Amy Yong, who speculated that Vodafone could swap its stake in the U.S. wireless market for the European cable operator.

Meanwhile Bloomberg reported that AT&T could pay about £80 billion (€93.6 billion or $124 billion) for what's left of Vodafone, based on estimates by Sanford C. Bernstein analyst Robin Bienenstock. Vodafone and Verizon are believed to be discussing a price of around $130 billion for the Verizon Wireless stake.

"Were somebody to buy Vodafone, AT&T would be the primary candidate," James Barford, a telecommunications analyst at Enders Analysis in London, told Bloomberg. "AT&T would both be likely to summon the financial resources and has already expressed an interest in Europe."

AT&T is believed to have looked at a number of options including Vodafone, UK-based EE, which is owned by Deutsche Telekom and Orange, and parts of Spain's Telefónica. Bienenstock told Bloomberg that Vodafone would fit AT&T's global strategy, and the cash proceeds from the Verizon Wireless stake sale could make it more interesting for an acquirer.

The difference in attitude over the expansion into fixed-line businesses would appear to be a hurdle to AT&T's interest, nonetheless. Bloomberg noted that AT&T is not convinced of the advantages of running combined fixed-line and wireless networks, but that is a core part of Vodafone's strategy. For example, it is in the process of acquiring Kabel Deutschland for €7.7 billion ($10.2 billion) and is believed to be interested in Fastweb in Italy. Vodafone bought Cable & Wireless Worldwide for $1.8 billion in July 2012.

For more:
- see this Bloomberg article
- see this Broadband TV News article

Related Articles:
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Vodafone reorg puts European business under Philipp Humm
Vodafone's European woes drive down Q1 revenue
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Report: AT&T hunts for deals in Europe with Telefónica, Vodafone and others
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