UK giant withdraws from race; Cingular takes prize
Vodafone has failed in its bid to take over US operator AT&T Wireless, following a short bidding battle with Cingular, which has submitted the winning bid.
Vodafone released its first formal public statement of the process on 17 February, stating that it had withdrawn from the auction after concluding that it was not in its shareholders’ interests to continue with the bid.
The operator had made a $14 per share $38 billion offer for AT&T Wireless but decided to go no further when Cingular, jointly owned by BellSouth and SBS Communications, declared a $15 per share, or $41 billion, bid.
Many in the industry had queried Vodafone’s commitment to the bid, despite Arun Sarin’s insistence it was a viable target.
Vodafone’s shares jumped 5% on the news, as did shares in Vivendi Universal, owner of French operator SFR. Vodafone has often said it intends to buy SFR and the temporary halt to its US aspirations is seen as pushing SFR up its “to do” list.
Vodafone remains a 45% stakeholder in US operator Verizon. The AT&T bid was interpreted by some as a shot to signal Vodafone’s intention to increase that stake. But one industry watcher has told Mobile Europe that Verizon and Vodafone have “almost no partnership to speak of.” One main difficulty for Vodafone is that it is not technically compatible with Verizon, which has been seen as a bar to getting visibility for the Vodafone brand in the US.
Vodafone’s statement:
“On 9 February 2004, Vodafone Group Plc (“Vodafone”) announced that it was exploring the opportunity to acquire AT&T Wireless.
On 17 February 2004, Vodafone withdrew from the auction when it concluded that it was no longer in its shareholder’s best interests to continue discussions.
Vodafone remains committed to its existing position in the US market with its successful partnership in Verizon Wireless. “
Analyst reaction
Julian Hewett, chief analyst at Ovum, said if Vodafone’s intention was to drive up the price it had succeeded.
“It’s a very full price for a business with falling subscriber numbers and profits,” he noted. Even so, he conceded that the deal would put Cingular on top of the pile in the US in terms of subscriber numbers, with Verizon now in second place.
As for Vodafone’s aspirations in the US, Hewett said that with the technical differences between its UMTS service and Verizon’s CDMA network being smaller, “perhaps Vodafone can develop a virtual 3G service on Verzon’s Wireless network.”