Verizon, AT&T Rumored to Be Planning Vodafone Buyout

By Michelle Maisto  |  Posted 2013-04-02 Print this article Print

Gartner analyst Phillip Redman told eWEEK that the sharing of infrastructure is becoming more common, especially outside the United States, and in a high-capital market like wireless, "it can make a lot of sense."

Still, Redman said the likeliness of the deal coming together—and it would be a very complicated one—is limited. He noted that it's also not ideal for Verizon to have AT&T, the second-largest carrier in the United States and Verizon Wireless's major competitor, in a deal with it—certainly no better than having Vodafone. It would make more sense if Vodafone "sold it to Verizon full out," Redman said.

Given Verizon's size and might, "they could put together the value, but on the business side, it doesn't make as much sense."

For Vodafone, the deal would be great—a potential 10-times return on its original investment.

"They could use that capital to maybe go after T-Mobile or Sprint—they'd rather have total ownership of a business than partial, like they have with Verizon Wireless," Redman said.

But again, the potential price tag on the deal made him doubtful. "It depends on what the figure would be."

Philip Kendall, director of Strategy Analytics' wireless operator strategies, said that "there have been numerous versions of this over the last 10 years, none of which have materialized, so it's important not to get too carried away at this stage."

That said, the deal would make great sense for Vodafone, which is "quite pragmatic" in terms of its willingness to consider alternative situations and its understanding of the currently challenging macroeconomic situation in the EU, Kendall told eWEEK.

A Verizon Wireless breakup is realistic in that it makes some sense for the parties involved, he said.

"It is also realistic," he continued, "from a regulator/competition authority perspective—very few deals of this size could happen in the global mobile market without there being some level of footprint overlap that needed to be unraveled, so it is almost unique in its simplicity from that perspective."

The main issue Strategy Analytics has with the deal, Kendall added, is "it is just the latest rumor about Vodafone and Verizon."

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