Bloomberg reported today that AT&T, the U.S.'s biggest wireless service provider, is eying a takeover of Vodafone, the largest carrier in Europe, as soon as next year.
AT&T is strategizing to determine what deal would make strategic sense, but no formal negotiations have begun, the report says. AT&T may not be interested in acquiring all of Vodafone's assets, and that would make any transaction extremely complex. The company tried but failed to include Verizon in a deal earlier this year.
There's been abundant speculation over the past several months that AT&T intended to buy Vodafone following Vodafone's move to sell its 45% stake in Verizon. Entry into Europe would enable AT&T to monetize newly built LTE data networks. Vodafone also holds potentially lucrative licenses to spectrum internationally. Spectrum is a vital invisible infrastructure for data.
Bloomberg estimates that a combined AT&T/Vodafone would have a market capitalization exceeding US$250 billion and well over half a billion subscribers. AT&T would gain leverage over device OEMs and could generate new advertising and partnership deals and revenues with OTT (over the top) and content providers.
One has to wonder what European regulators would think of any deal and its impact on customers. AT&T has clout with lawmakers in the U.S. where it's been one of the largest political contributors over many years, but that is not the case overseas where regulators can have more sway.
Disclosure: My client Amdocs provides BSS/OSS solutions to AT&T, and another client, xG Technology, makes cognitive radios that involve sharing spectrum.
(Thumbnail credit: Martin Pettitt)