AT&T Saga: Why Vodafone will, and NTT Won’t

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Consider this an update, on the continuing saga of AT&T Wireless. It is becoming increasingly clear that Vodafone will have to make a bid for AT&T. Two reasons: first this would finally complete its global GSM network, and also it would free up the company from the vexing control Verizon has over their joint venture. Vodafone CEO Arun Sarin should know – he was there with PacTel evolved into AirTouch and eventually Verizon.

The Times of London is reporting that the company “stands to lose its U.S. earnings – currently worth $1 billion a year – in 2005 unless it mounts a $30 billion-plus bid for AT&T Wireless, America’s third-largest mobile carrier. The potential loss of earnings is a key argument in favor of Vodafone joining the battle for control of AT&T Wireless. Vodafone has until February 15 to lodge an offer.” Okay this is a bit of a stretch, but I can see the logic behind it.

bq. The British company holds a 45 per cent stake in Verizon Wireless, the US market leader, which pays it a dividend of $1 billion, but it has no guarantee that payouts will continue after April 2005. The dividend decision is entirely up to Verizon Wireless’s 55 per cent shareholder, Verizon Communications, the fixed-line group.

Infoworld Online reports that “AT&T Wireless could, indeed, be the last opportunity for Vodafone to gain control of a U.S. operator with a GSM network,” and quotes Michael Ransom, senior analyst with Current Analysis who adds: “It’s kind of now or never.” On the flip side, Wall Street Journal is reporting that NTT DoCoMo is unlikely to bid for AT&T Wireless, as Japan’s biggest mobile-network operator has enough nagging problems about domestic competition.

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One: with dual-mode CDMA2000/WCDMA handsets already in the pipeline, is getting a GSM business in the US that important to Vod? Especially given that 80% of ATTW’s subscibers are still on TDMA?

Two: Wouldn;t it make more sense for Vod to buy out Verizon itself?

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