The M&A rumor mill went into hyper-drive Tuesday as substantial but anonymous reports of AT&T potentially collaborating with its arch-rival Verizon Wireless to acquire Vodafone. On the face of it, it sounds like a “cunning plan”. Verizon Communications wants to secure full control over its Verizon Wireless subsidiary, in which Vodafone holds a 45% share, and AT&T is keen on building out its international mobile carrier portfolio, having missed the mobile phone land grab back in the 1990s. Certainly the relationship between Vodafone Group and Verizon is fractious but it is professional and the two management teams have put in place supplier sourcing efficiencies of hardware and services.
But what are the chances of AT&T and Verizon pulling this off? Vodafone Group is unlikely to relinquish its 45% stake in Verizon Wireless as the stake is very profitable given the strong growth of 4G LTE, adoption rates of smartphones and transactional value of value-added services and content in the US market. This rumor, however, is unlikely to gain any material substance as Verizon Communications has publicly denied any interest in buying or merging with Vodafone. According to the Financial Times, that means “Verizon is prevented by (stock) market rules from bidding for Vodafone for six months”.
This may not be the last time we hear rumor mongering regarding Vodafone. It owns some very substantial mobile operator real estate around the world but many of its assets, which are mostly in Europe, are underperforming due to economic woes. 4G and the development of innovative VASes may start to pull Vodafone out of the quagmire but it could take a couple of years for Vodafone recover some of its previous vitality.
