US number two operator AT&T is looking at potential overseas acquisitions, with the company studying targets in Europe, according to the Wall Street Journal (WSJ).
Its intention is to diversify beyond its home market to “a new wireless market where it can upgrade technology and roll out more lucrative pricing strategy”, the paper said, citing “people familiar with the carrier’s thinking”.
Apparently, potential markets include the Netherlands, Germany and the UK, with suggested targets including KPN and Everything Everywhere.
To date, AT&T has had little success with expansions beyond its home market, although it has been engaged in M&A activity within the US.
However, with the US regulators blocking AT&T’s proposed acquisition of T-Mobile USA, its efforts to expand in its home market have become more limited.
It was noted that a European acquisition would be plagued with difficulties. The company may struggle to exploit operational synergies due to the geographic differences; it will need to engage with a new set of regulatory regimes; and the European market is already fiercely competitive anyway.
In AT&T’s favour is the fact that the weak European macroeconomic situation may make potential targets more affordable.
Indeed, Latin American group America Movil – which the WSJ indicated has links with AT&T – has already made investments in KPN and in Telekom Austria.