AT&T closes door on Vodafone acquisition, but only halfway

Acquiring Vodafone at this point would have been a bold and risky move for AT&T, said an analyst

By , IDG News Service |  Networking

AT&T has said it doesn't intend to make an offer for Vodafone in the next six months, but that could change overnight if a competitor makes an offer.

After speculation that it was interested in acquiring Vodafone, U.S. carrier AT&T on Monday said that it doesn't intend to make an offer within the next six months. The statement comes at the request of the U.K. Takeover Panel. The panel had asked for AT&T to make a statement of its intentions, since rumors of a takeover bid had been affecting Vodafone's share price.

Local U.K. legislation, the so-called Takeover Code, specifies that such a statement cover a six-month period, but it also leaves the operator free to make an offer at anytime following a rival bid from a third party. So AT&T may have taken a step back but is very much leaving its options open.

"All the indications from AT&T have been that it is looking at a European expansion, and, quite possibly, Vodafone, as well. So this announcement was maybe a little surprising, but it doesn't change that AT&T seems to want to expand beyond the U.S. and sees Europe as a good option," said Kester Mann, an analyst at CCS Insight.

Acquiring Vodafone at this point would have been a bold and risky move for AT&T, because of tough competition, regulation and the economic situation in Europe, according to Mann. Also, in the face of increased competition with T-Mobile in the U.S., AT&T may have decided to concentrate on its home market for now, he said.

Vodafone isn't AT&T's only option into the European market. EE -- which is a joint venture between Orange and Deutsche Telecom in the U.K. -- would, for example, be a more manageable target, since it would be less expensive to acquire.

The last year has seen some interesting acquisitions, with Softbank's acquisition of Sprint and Verizon Communications acquiring Vodafone's stake in Verizon Wireless.

For users, these deals are a double-edged sword, according to Mann. If a deal results in fewer operators in a country, it could have a negative effect on pricing. But the counter-argument is that a stronger operator could invest more in infrastructure and get better deals on handsets, which consumers would benefit from, Mann said.

The mobile telecommunications industry is now getting ready for Mobile World Congress in Barcelona, where Randall Stephenson, chairman and CEO(at AT&T is one of the speakers, giving him an excellent opportunity to profess his love for Europe.

Also speaking at the conference will be Facebook's Mark Zuckerberg and Jan Koum, co-founder and CEO of messaging company(WhatsApp.

Send news tips and comments to mikael_ricknas@idg.com

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Answers - Powered by ITworld

ITworld Answers helps you solve problems and share expertise. Ask a question or take a crack at answering the new questions below.

Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Ask a Question