Vodafone Shares Rise on AT&T/T-Mobile Deal

1:05 PM Good news ripple-effect from M&A action in the US reaches Vodafone across The Pond

Michelle Donegan, Contributing Editor, Light Reading

March 21, 2011

2 Min Read
Vodafone Shares Rise on AT&T/T-Mobile Deal

1:05 PM -- Deutsche Telekom AG (NYSE: DT) isn't the only European operator today with a share price that shows how ecstatic investors are about AT&T Inc. (NYSE: T)'s plans to buy T-Mobile US Inc. for US$39 billion. The deal boosted Vodafone Group plc (NYSE: VOD)'s share price too, which was up more than 6 percent on the London Stock Exchange on Monday afternoon. (See DT's Shares Rocket on AT&T Deal and AT&T to Buy T-Mobile USA for $39B.)

That's because the deal is expected to be good news for Verizon Wireless , and Vodafone owns 45 percent of Verizon Wireless. Verizon Communications Inc. (NYSE: VZ) owns the remaining 55 percent.

It is thought that Verizon Wireless would benefit from AT&T buying T-Mobile because there would be one less competitor in the market, and AT&T and T-Mobile are likely to become mired in their efforts to win regulatory approval for their deal over the next year, as The Wall Street Journal reports. (See AT&T/T-Mobile: Riddled With Regulatory Risk.)

Also, as Heavy Reading Senior Analyst Gabriel Brown points out, AT&T's $39 billion offer for T-Mobile will help to establish a valuation for Vodafone's stake in Verizon Wireless, the lack of which has frustrated some Vodafone investors. But the picture is not entirely rosy for Vodafone. Brown also noted that if Verizon responds to AT&T's move with an acquisition of its own, Verizon might have to take on more debt to do it, and that could jeopardize the dividend payments to Vodafone that are supposed to start at the end of 2012. Such an outcome would certainly not go down well with some Vodafone investors.

For more of Light Reading Mobile's coverage of the AT&T/T-Mobile deal, please see these stories:

  • What Happens to Sprint After AT&T/T-Mobile Merger?

  • Could AT&T/T-Mobile Deal Mean an HSPA+ iPhone?

— Michelle Donegan, European Editor, Light Reading Mobile

About the Author(s)

Michelle Donegan

Contributing Editor, Light Reading

Michelle Donegan is an independent technology writer who has covered the communications industry on both sides of the Pond for the past twenty years.

Her career began in Chicago in 1993 when Telephony magazine launched an international title, aptly named Global Telephony. Since then, she has upped sticks (as they say) to the UK and has written for various publications, including Communications Week International, Total Telecom, Light Reading, Telecom Titans and more.

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