With Vodafone apparently nearing a $130 billion exit from Verizon Wireless, analyst speculation has turned to a potential sale of the UK giant with AT&T tipped hot favourite as buyer if that should happen.
According to Bloomberg sources, AT&T will examine Vodafone’s remaining assets (if its 45 per cent stake in Verizon Wireless is sold). However, the US wireless heavyweight is reportedly less interested in making a purchase if Vodafone expanded its cable and fixed-line businesses.
“Were somebody to buy Vodafone, AT&T would be the primary candidate,” said James Barford, a telecoms analyst at Enders Analysis, quoted by Bloomberg. “AT&T would both be likely to summon the financial resources and has already expressed an interest in Europe.”
AT&T – according to various reports – has looked at other takeover candidates in Europe, including the UK’s EE and Spain’s Telefonica.
The thinking appears to be that Europe has got more scope for growth than the US given that 4G rollout has been relatively limited in the region.
“With 30 to 40 billion pounds cash in its pocket, Vodafone would quickly look an attractive target,” Robin Bienenstock, a Bernstein Research analyst, wrote in a note. “Alternatively, Vodafone could use the cash to build a bigger business itself. This would be more risky and time consuming, but it could be more fun and, depending on one’s view, more value creating.”
There is, of course, the possibility that Vodafone holds on to its Verizon Wireless stake. After admitting this week that it was indeed in sell-off talks with Verizon Communications, Vodafone stressed there was “no certainty that an agreement will be reached”.
And Vodafone’s growing appetite for fixed-line assets, particularly in Germany, may well be off-putting for AT&T.