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Will AT&T buy Vodafone?

US carrier AT&T is considering buying Vodafone, and is planning ways to sell off parts of the business it doesn’t want.

Credible reports are emerging out of the US that AT&T is putting together a bid for Vodafone, a deal which would make the combined company the largest telco in the world by far.

AT&T is already number one, with revenues of US$127 billion, but its revenues are almost all in the US and it is not strong in mobile. It sees a purchase of Vodafone as a way to quickly gain a strong presence in Europe. It reportedly is not interested in many of Vodafone’s other subsidiaries, and before making a bid it wants to be sure it can unload the assets it does not want.

Vodafone, with annual revenues last year of £46 billion, is the world’s seventh largest telco by revenues, and the most internationally dispersed, with operations in 65 countries. It owns 50% of Vodafone Australia.

The speculation is based largely on a report from news agency Bloomberg, quoting the usual unnamed ‘sources familiar with the situation’. The reports says no formal discussions are underway, but that AT&T is laying the groundwork by identifying potential buyers for Vodafone subsidiaries, largely in emerging markets, the sale of which could defray some of the costs of acquisition.

The report says AT&T might do that by aggregating the businesses it does not want into one separate holding company, then selling that to a single buyer. Under that circumstance a possible purchaser would be Mexico’s America Movil, controlled and largely owned by Carlos Slim, sometimes mentioned as the world’s richest man. AT& owns 9% of America Movil and has two seats on its board.

Any bid would also have to wait until Vodafone completes its massive US$130 billion sale of its half share of Verizon Wireless, which would have been a regulatory impediment to any acquisition by AT&T.

That sale will make Vodafone cash-rich, making it an even more attractive takeover target. Vodafone’s shares on the London Stock Exchange rose 3.6% to 232.5p on the rumours.

Vodafone’s market capitalisation is £90 billion. An acquisition of this size would be the second largest in history, exceeded only by Vodafone’s own acquisition of German company Mannesmann in 1999.


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire and editor of sister publication CommsWire. He is also founder and Research Director of Connection Research, a market research and analysis firm specialising in the convergence of sustainable, digital and environmental technologies. He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.