AT&T (s t) couldn’t convince regulators to let it buy T-Mobile, so now it may be eyeballing overseas markets. According to the Wall Street Journal’s unnamed sources, AT&T has its checkbook open once again and this time is taking an interest in European operators Everything Everywhere(s fte) and KPN.
Perhaps there are strategic or business reasons why AT&T would want to buy a foreign mobile carrier, but operationally it’s hard to see what it stands to gain. While there has been plenty of international investment in U.S. operators, the opposite hasn’t been true. And there are plenty of reasons why U.S. operators have tended to stand alone rather than function as globe-spanning multinationals.
It’s no coincidence that most of the big multinationals are based in Europe where the individual wireless markets are small. By launching in multiple countries, companies like Vodafone(s vod) or Telefónica(s tef) gain much bigger economies of scale than if they just stayed home. With such scale they can dictate pricing to their infrastructure and handset suppliers, and they can coordinate their services across borders.
If you’re AT&T, though, scale isn’t an issue. With 100 million connections AT&T is the 18th largest mobile carrier in the world even though it operates in just a single market. If you rank them in terms of mobile revenue, AT&T is the globe’s fourth largest carrier. AT&T has enormous leverage over its vendors. It even got Apple(s aapl) to design a version of the iPhone 5 for its LTE band – a 4G configuration no one else in the world uses. You can’t get more powerful than that.
What’s more, if AT&T were aiming at increasing its pricing power further, buying an international carrier would do it little good. In the U.S., carriers use different mobile frequencies, deploy different network technologies, and maintain different requirements for their handsets.
So far all of the international ties U.S. carriers have yielded zilch. Verizon is almost half-owned by Vodafone, but apart from collaborating on a few international standards efforts, the two function completely separately. T-Mobile USA is wholly owned by Deutsche Telekom, but the only thing the U.S. operator shares with its international cousins is branding and a few common carrier apps. A T-Mobile USA customer venturing onto a European T-Mobile network still pays the same exorbitant roaming rates as any other customer of the U.S. carriers. And as our European readers constantly pointing out, T-Mobile sells a lot of iPhones — none of them happen to be in the U.S.
AT&T already has international mobile interests to boot. It owns a substantial stake in Latin American wireless giant América Móvil(s amx), which AT&T inherited from SBC Communications. There’s no major cross-border coordination there either. I assume we’ll see the same independence from Sprint(s s) when Japan’s Softbank takes over the carrier later this year (though it would be awesome if Softbank brings its brilliant advertising campaigns here).
Basically U.S. operators have always acted as independent global players, through both necessity and wont. I can definitely understand why AT&T would like to grow its business internationally. It already serves a huge multinational customer base through its wireline and enterprise business, and it would like to exert that same influence in mobile. But I doubt it would get any closer to accomplishing that goal by buying international carrier like KPN or Everything Everywhere than it merely by partnering with those same carriers.