Report: AT&T gearing up for Vodafone takeover in 2014

AT&T (NYSE:T) is exploring plans for a potential takeover of Vodafone sometime next year, according to a Bloomberg report, adding further fuel to the idea that AT&T is interested in a major deal with a European operator.

The report, citing unnamed sources, said while the companies haven't started any formal negotiations, AT&T is sharpening its focus internally on which Vodafone assets it would keep after a deal and who could buy others. AT&T is also still looking at EE as an alternative target, which is owned by Orange and Deutsche Telekom and is the leading LTE operator in the United Kingdom.

Any AT&T/Vodafone deal would have to wait for the conclusion of Verizon Communications' (NYSE:VZ) $130 billion deal to acquire Vodafone's 45 percent stake in Verizon Wireless, which the companies expect to close in early 2014. AT&T may ultimately decide to abandon a Vodafone bid, the report said.

The companies involved all declined to comment, Bloomberg said.

However, AT&T has made no secret of its interest in Europe. AT&T CEO Randall Stephenson in October 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." In September he said "if there were opportunities that presented a good value, of course we would do it."

Vodafone CEO Vittorio Colao is in principle open to a deal, depending on its terms, but is nonetheless formulating a stand-alone strategy for Vodafone that could include major new deals in wireline telecommunications, according to the Bloomberg report. Colao has worked to bolster the company's ability to sell bundled plans of fixed and mobile services. For instance, Vodafone recently concluded its purchase of cable operator Kabel Deutschland in Germany.

Meanwhile, any ambitions AT&T has in Europe could be slowed by the growing furor across the region over disclosures of surveillance by the National Security Agency, as the Wall Street Journal notes. German and other European officials told the Journal any attempt by AT&T to acquire a major wireless operator would face intense scrutiny, given the company's work with the U.S. agency's data-collection programs for phone call metadata and other programs.

"One would really have to ask: Should this be allowed? Does this make sense? What does this mean for our standards of data privacy?" Anton Hofreiter, co-leader in parliament of the minority left-leaning Greens, said of a potential AT&T deal.

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

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