Vodafone Group’s share price has plummeted more than 5% today after AT&T issued a statement to the London Stock Exchange to say it was not planning on making an offer for the British telco.
The news follows reports over the weekend that the US…
Vodafone Group’s share price has plummeted more than 5% today after AT&T issued a statement to the London Stock Exchange to say it was not planning on making an offer for the British telco.
The news follows reports over the weekend that the US giant’s CEO, Randall Stephenson, had met with European Union digital agenda commissioner Neelie Kroes at the World Economic Forum in Davos, Switzerland last week.
The two were said to have discussed the European Commission’s receptiveness to a potential takeover bid from AT&T for a large European operator such as Vodafone.
AT&T’s declaration of disinterest this morning means it is barred from making an offer for Vodafone in the next six months.
Bernstein Research analyst Robin Bienenstock said that AT&T’s disclosure was not particularly limiting as it only stopped the US player from making a hostile bid, and did not prevent it from making a recommended bid.
She was more interest in the fall of Vodafone’s share price: “The selloff of Vodafone in reaction to the denial says much about the increasing weakness of Vodafone’s hand … Vodafone’s hand has weakened for three reasons: (1) Softbank appears more interested in consolidating the US than extending into Europe reducing the chance of a competitive bid; (2) none of the three changes to spectrum regulation for which AT&T lobbied the European regulator have come into port; (3) the regulatory process through which any acquirer would likely have to run has grown more complicated thanks to Mr [Edward] Snowden.”
Vodafone’s share price had been on an upward trajectory, rising more than 10% since it announced the sale of its stake in Verizon Wireless last September amid speculation of an AT&T deal.
AT&T has been repeatedly linked to an offer for Vodafone going back to the first half of 2013.
A merger between the two would result in the creation of a reported US$250bn-plus telco with more than 500 million customers worldwide. The combined company would likely benefit from considerable economies of scale and a strong bargaining position with handset suppliers.
Any deal between AT&T and Vodafone would have had to wait until next month, when the British operator is expected to complete the US$130bn sale of its 45% stake in Verizon Wireless to AT&T’s main domestic rival, Verizon Communications.
Stephenson had become a regular visitor to Europe last year and described the continent as a “huge opportunity for somebody”, referring to the fact that it was yet to undergo the same “mobile internet revolution” as the US.
AT&T is said to be looking at new markets outside of its home territory, where growth has slowed. Meanwhile Vodafone appears to be pressing ahead with its stand-alone strategy of diversifying into fixed line. It is reported to be in talks with Ono’s private equity owners regarding a takeover of the Spanish cableco.
