What "Grow Internationally" Might Mean, for AT&T

Neither Verizon Wireless, nor AT&T Mobile, currently earns significant international revenue (aside from some roaming revenue or some enterprise accounts). But that could change in the future. AT&T has been talking more than Verizon about such potential developments.

The issue is what form such initiatives might take, or what the revenue drivers might be. Most observers would simply observe that "consolidation" has been a feature of nearly every segment of the communications business, for some decades. 

There perhaps is a "negative" way to characterize consolidation, and a "positive" way. One would expect any executive at a public company to take the "positive" approach. 

AT&T might see LTE as a significant enabling event. "There are probably some opportunities to create some unique roaming arrangements, roaming each other’s networks at different cost structures," said AT&T CEO Randall Stephenson, on AT&T's fourth quarter 2012 earnings call. 

That is not necessarily the same thing as investing in the equity of another service provider, at least not in the sense of "controlling interest." On the other hand, roaming agreements would not be seen as global expansion, either, so AT&T has to be looking at something more substantial than "mere" roaming agreements. 

Though it is helpful to create more "on-network" traffic at a global or regional level, for reasons of better operating cost, that is logically a different question than investing in asset growth overseas because domestic opportunities are growing constrained. 

That might also be true for some "applications" such as AT&T's home security and home monitoring platforms. In fact, AT&T has licensed its U-Verse platform to Frontier Communications domestically. And AT&T, which provides the "Whispernet" service for Amazon's Kindle devices, might see similar business-to-business opportunities overseas, as well. 

But should AT&T's board of directors be looking to authorize some equity-based acquisitions internationally, one factor would be the current state of European equity prices for telecom assets. Some would say some European telco assets are more affordable than in the past. 

But the "negative" argument for global expansion also makes sense. The Federal Communications Commission essentially has said, by denying the T-Mobile USA acquisition, that AT&T cannot hope to grow larger by making big asset acquisitions in the United States. 

If you believe opportunities for organic growth are going to contract, as smart phone penetration reaches saturation, and if you assume regulators will not allow domestic growth through acquisition, then a growing global footprint makes eminent sense.