Report: AT&T could pursue Vodafone takeover in 2014

Rumours that AT&T has its eye set on Vodafone refuse to go away, with a new report indicating AT&T could make a move on the UK-based giant next year.

Citing unnamed sources, Bloomberg reported that AT&T executives are making internal preparations for a potential takeover of Vodafone next year, identifying the assets they would retain and those they would sell to others. The sources said the two companies have not yet entered into formal negotiations.

AT&T has made no secret of the fact that it is interested in a European acquisition, and indeed, CEO Randall Stephenson has commented several times in recent months that the operator would be interested in deals at the right price. He has also waded into the debate over regulatory change in Europe, suggesting that the region adopts a regime akin to the U.S. version.

Stephenson, speaking in October in Brussels at an industry conference hosted by ETNO, the European telecommunications lobby, said that he continues to be fascinated by how slow mobile broadband is moving in Europe and therefore he thinks it is "a huge opportunity for somebody."

So far AT&T executives have refused to name their potential targets, but Vodafone and EE of the UK are reported to be of primary interest to the operator, and indeed AT&T is believed to have already approached Verizon Communications over a three-way Vodafone deal that would also have included América Móvil. Verizon rejected this deal as too complex and instead moved ahead with its plan to buy Vodafone's 45 per cent Verizon Wireless stake for $130 billion (€96 billion), which is set to be completed in early 2014.

During AT&T's recent third-quarter earnings presentation, AT&T CFO John Stephens also would not be drawn on the issue of potential mergers and acquisitions.

"With regard to any transactions, I have got no comments," Stephens said, according to a Seeking Alpha transcript of the earnings call with analysts. "There has been enough written and said about a variety of M&A. There's nothing new to add there. No comment with regard to any of that."

Certainly an AT&T takeover of Vodafone would present a dizzying prospect to many, creating the world's largest operator by sales and uniting two strong businesses in the U.S. and Europe. Its realisation would be a process fraught with challenges at a regulatory and political level. Nonetheless, both Vodafone and AT&T face competitive challenges in their own markets, and AT&T is certainly interested in getting a slice of the European mobile broadband market as it matures.

Bloomberg said all of the parties involved declined to comment, but said Vodafone CEO Vittorio Colao is reportedly in principle open to a deal. At the same time, Colao is building up a separate Vodafone strategy by expanding the operator's fixed-line assets in a number of markets in order to bolster its ability to sell bundled plans of fixed and mobile services. For instance, Vodafone recently concluded its purchase of cable operator Kabel Deutschland in Germany.

For more:
- see this Bloomberg article

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