AT&T is reportedly making the necessary preparations for a takeover of Vodafone Group next year, once the British telco has finalised the US$130bn disposal of its stake in Verizon Wireless.
The companies are not in formal negotiations and AT&T may…
AT&T is reportedly making the necessary preparations for a takeover of Vodafone Group next year, once the British telco has finalised the US$130bn disposal of its stake in Verizon Wireless.
The companies are not in formal negotiations and AT&T may decide against a bid, but the US incumbent is working on a strategy to acquire Vodafone and focus on its European assets, people familiar with the situation told Bloomberg.
Vodafone’s share price has risen 3.3% in trading today following the publication of the report.
A tie-up between the companies would result in the creation of a US$250bn-plus telco with more than 500 million customers worldwide. The combined company would expect to benefit from considerable economies of scale and a strong bargaining position with handset suppliers, the report noted.
Any takeover attempt would have to wait until Vodafone completes the sale of its 45% stake in Verizon Wireless to Verizon Communications, which is scheduled to close during Q1 2014.
While the deal makes Vodafone US$130bn richer, it means it loses its golden goose and leaves it with struggling European assets and an uncertain future.
Vodafone is now pursuing a convergence strategy and led the €7.7bn (US$10.4bn) takeover of Kabel Deutschland (KDG), which completed in October. A takeover attempt for pan-European cableco Liberty Global has also been mooted.
However, should AT&T acquire Vodafone it is likely to pursue a different strategy that focuses on increasing the adoption of mobile broadband which has proved so fruitful for it in the US.
AT&T CEO Randall Stephenson has become a regular visitor to Europe this year. He recently described Europe as a “huge opportunity for somebody”.
Commenting on the European market at a recent conference in Brussels, Stephenson said: “I think Europe has the potential to be incredibly exciting, and I believe that because of what we’ve just come through in the United States – this mobile internet revolution.”
AT&T is less interested in Vodafone’s business in India – which the British telco is looking to gain 100% control of – and its African assets. One idea which has reportedly been suggested is for Vodafone’s emerging market portfolio to be spun-off into a single unit which could then be bought by one buyer.
America Movil, which is 9%-owned by AT&T, is mentioned in the report as a buyer for the portfolio, alongside China Mobile. Meanwhile Orange could be interested in the African assets.