Rumors continue to swirl regarding AT&T’s interest in purchasing European-based telecom giant Vodafone in a deal that would result in a super-carrier with a market capitalization in excess of $250 billion and serving in excess of 500 million customers around the world.
Vodafone currently controls telecom operations in 21 countries across Europe, the Middle East, Africa, Asia-Pacific and – for now – the United States. Vodafone ended its most recent quarter with more than 450 million wireless customers, while AT&T ended the quarter with more than 100 million wireless customers.
Earlier this year reports surfaced that AT&T was looking to partner with domestic rival Verizon Communications on a joint bid for Vodafone worth up to $245 billion. Those rumors indicated that Verizon would take over the 45% stake in Verizon Wireless controlled by Vodafone, with AT&T taking over Vodafone’s remaining assets. Verizon quickly put the kibosh on that rumor, claiming it has no plans “to merge with or make an offer for Vodafone, whether alone or in conjunction with others.” In early September, Vodafone accepted a $130 billion offer from Verizon to pick up its stake in Verizon Wireless.
AT&T earlier this year began selling off its stake in Latin American telecom operator America Movil in a move the carrier said was designed to maintain its position in America Movil following recent share repurchases by that operator. However, financial analysts took the move one step further, noting that AT&T could be setting itself up for an eventual liquidation of its America Movil holdings in favor of gaining a stronger foothold in the other markets. Macquarie Equities Research put out a note claiming that one potential target for AT&T could be Vodafone’s wireline business.
“We continue to believe that [AT&T] lacks a growth strategy and a driver for its stock and that a big, bold deal is needed before the buyback slows, rates rise and wireless competition intensifies,” Macquarie Equities noted in a research note at that time. “We would likely become more positive on [AT&T] shares if such a transaction is consummated.”
AT&T has refused to comment on its future plans. Vodafone’s stock (VOD) was trading up slightly early Friday at $36.90 per share.
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