Will AT&T Try to Buy Vodafone?

A recent rumor that Verizon Communications and AT&T were making a huge joint bid for Vodafone was denied. Some think that only means Vodafone rejected the offer out of hand, but the deal of as much as $245 billion might yet see the light of day, in a new form.

Assume Verizon Communications is serious about now pursuing a long-rumored effort to buy  from Vodafone  the portion of Verizon Wireless it does not already own. Assume the deal proceeds and is finalized.

Would that put Vodafone back into play, with AT&T making a new bid?

Vodafone is the second-largest global mobile communications company, with approximately 403 million customers in its controlled and jointly controlled markets.

Vodafone currently has equity interests in over 30 countries across five continents and more than 50 partner networks worldwide.

AT&T would stand to expand in a major way as a global carrier, and find a way to overcome sluggish growth of its U.S. business.  

Such a bid would be ironic in some ways. In 2004, Vodafone made a bid for the entirety of AT&T Wireless when that company was for sale.

Had that bid been successful, Vodafone presumably would have sold its stake in Verizon Wireless, and then rebranded the former AT&T Wireless business as Vodafone.

Cingular Wireless, at the time a joint venture of SBC Communications and BellSouth ultimately outbid Vodafone and took control of AT&T Wireless, which now is known as AT&T Mobility.  

So in an odd turn of events, Vodafone, which tried to buy AT&T Wireless, would then be acquired by its former target.

Make no mistake, the rumored or potential deals would offer the two U.S. mobile service providers a pathway to growth. For Verizon Communications, owning all of its mobile business would immediately boost earnings. For AT&T, the Vodafone deal would catapult AT&T into the global market in a new way.

Strategically, the AT&T interest in Vodafone’s global assets is a clear sign that AT&T sees future growth in the U.S. market as problematic. Verizon first has to consolidate its U.S. business before it can consider looking overseas for future growth.