Vodafone's $10 billion deal to buy Spanish cable operator Ono could complicate any plans AT&T (NYSE:T) may have for acquiring Vodafone, according to financial analysts.
The deal by Vodafone is an indication that it is doubling down on its own European expansion following Verizon Communications' (NYSE:VZ) $130 billion deal to acquire Vodafone's 45 percent stake in Verizon Wireless. The Ono deal is Vodafone's first major transaction since the Verizon deal closed last month. Vodafone struck a similar $10.7 billion deal for German cable operator Kabel Deutschland last year.
Last week at an investor conference AT&T CFO John Stephens said AT&T is now more squarely focused on the U.S. market--instead of Europe--than it was six months or a year ago. "We see the window of opportunity on owning assets there [in Europe] may be closing," he said.
"Things have changed," Stephens said, pointing to AT&T's focus on its Project VIP network rollouts of LTE and U-verse TV in the U.S., LTE rollouts in Europe and Comcast's bid to merge with Time Warner Cable.
"Investors could assume that an acquisition by AT&T becomes incrementally less likely as Vodafone's balance sheet becomes better utilized," analysts at Espirito Santo in London wrote in a research note on Monday, according to the New York Times.
The statement from Stephens was notable considering AT&T had previously been rumored to be interested in a takeover of a European carrier like Vodafone. In late January, AT&T said it does not intend to make a takeover offer for Vodafone.
In a statement then, AT&T said it was responding to speculation regarding a potential deal after the U.K. Takeover Panel asked AT&T to clarify its position. Under the rules of the panel, the statement meant AT&T cannot offer to buy Vodafone or a stake of 30 percent or more in the company until six months after the statement was issued.
Some analysts still think AT&T is hunting for Vodafone. "It's hard to take that too seriously and to see it as anything other than bringing the price down of an asset," Bernstein Securities analyst Robin Bienenstock told the Wall Street Journal in response to Stephens' comments.
Vodafone CEO Vittorio Colao said he was not concerned with AT&T's plans. "We are focused on our own strategy and our own story," he told reporters Monday, according to the Journal. "We are starting to see the fruits of our strategy in terms of broadband net growth and revenue growth."
"If there is no bid from AT&T, [Vodafone] needs to have a re-enforced business in Europe [with a] concentrated, strong set of assets," Bienenstock said. "The only way to do that is to invest loads in capex and to buy a bunch of things. Nobody is going to like that."
For more:
- see this WSJ article (sub. req.)
- see this NYT article
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