Rumour Mill: SoftBank eyes Vodafone as part of wider European M&A probe

SoftBank is reportedly turning its sights on a possible bid for Vodafone in the face of growing opposition by U.S. regulators to the Japan-based company's desire to merge Sprint with T-Mobile US.

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SoftBank's Son

SoftBank, which owns the majority of Sprint, is generally believed to be scouting around for potential opportunities in Europe should a U.S. merger fail, noted Forbes. Vodafone presents one opportunity for international expansion, while T-Mobile US parent Deutsche Telekom has been mooted as another. Indeed, Barron's recently said that Vodafone represents an appealing prospect for U.S. investors seeking exposure to European telecoms.

Nonetheless, there is scepticism on the market that SoftBank would be able to absorb an acquisition like Vodafone: Seeking Alpha said in a research note that Vodafone, which has a market capitalisation of around $96 billion (€70 billion), would be much harder for SoftBank ($87 billion) to swallow than T-Mobile US, which has a market capitalisation of $26 billion.

This is despite the fact that SoftBank is also due to get a liquidity boost from the initial public offering of Alibaba, which expected to be worth $150 billion to $250 billion at its market debut. SoftBank owns 37 per cent of the Chinese e-commerce company.

AT&T meanwhile has recently tried to calm speculation it would buy Vodafone. In January, the company was forced to deny it intended to make an offer for Vodafone at the request of the UK Takeover Panel. The statement to the London Stock Exchange ruled out AT&T from buying Vodafone for six months.

During the Competitive Carriers Association trade show in San Antonio, Texas, in late March, SoftBank CEO Masayoshi Son said he believes that the only way to truly compete against AT&T and Verizon is to create a carrier of equal size, although he declined to provide details of possible discussions between Sprint and T-Mobile or SoftBank and Deutsche Telekom.

Son also said he would be open to a possible partnership between Sprint and Dish Network, which competed with SoftBank last year for control of Sprint before SoftBank won out. "We are specifically discussing all kinds of alliances," Son added.

For more:
- see this Forbes article
- see this Seeking Alpha research note

Related Articles:
SoftBank's Son to CCA carriers: 'We need to fight back'
Barron's: Vodafone an appealing prospect for U.S. investors
Vodafone enters post-Verizon era at half its market value
Vodafone charts steady course amid European turbulence
AT&T says it does not intend to make a bid for Vodafone

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