Vodafone preps bid for AT&T Wirelesss – report
Will the shareholders swallow it?
US mobile operator AT&T Wireless may be the target of an acquisition bid by multinational mobile firm Vodafone, which is looking to increase its US presence.
According to a report in The Observer, Vodafone is drafting a proposal for a takeover worth USD30 billion. If such a deal were to go through, it would represent the company's largest acquisition since it gained control of German operator Mannesmann in 1999, a deal worth roughly $170 billion.
Any bid for AT&T Wireless would have to be approved by Vodafone's shareholders. It was reported that Vodafone chief executive Arun Sarin is keen on the proposal, believing it will strengthen the firm's presence in the US and be of commercial benefit in the long term. However, it is also believed that some of the company's largest shareholders may block a bid since it could reduce earnings over the next couple of years.
In order to bid for AT&T, Vodafone would first have to divest itself of a 45 per cent stake in rival US operator Verizon because of US competition laws. Verizon has an estimated 24 per cent market share, making it the biggest US mobile network. However, the majority stake in the company is owned by Verizon Communications. Vodafone's minority share means that it cannot use its brand name in the US. AT&T has around 14 per cent of the US market. However, buying out the company would mean that Vodafone could rebrand it in a similar fashion to other acquisitions and integrate it into the Vodafone Group.
AT&T Wireless announced on 22 January that it is exploring a sale. The company said that it encountered significant interest from other parties and, as a result, would examine strategic alternatives. Japanese firm NTT and rival US firm Cingular are also rumoured to be interested in the company. AT&T Wireless was spun off from AT&T Corporation in 2001.
Vodafone released key performance indicators for the quarter ending in December last week. The company revealed that it had acquired over 4.3 million new customers in the quarter, increasing its customer base to over 130.4 million. Its total data revenues increased to 15.9 per cent of controlled service revenues for the year to December 2003 from 13.9 per cent for the prior year. The company revealed that it had 4.5 million Vodafone Live customers at the end of December.
Vodafone is the largest player in the Irish mobile market. The firm acquired Eircell, the former Eircom subsidiary, in 2001.