• silicon.com
• Technology
• Mobile

By silicon.com, 12 February 2004 17:10

The speculation surrounding AT&T Wireless and whether Vodafone will make a bid for the on-the-auction-block US operator has reached fever pitch.

By 13 February (when you may be reading this article) interested parties will have had to declare their interest.

All week long, the line from Vodafone HQ in Newbury has been one of "We're watching developments", to paraphrase.

This morning's FT boldly states a bid of around $30bn will be forthcoming, throwing the UK mobile giant's hat into the ring with Cingular and perhaps even NTT DoCoMo of Japan (a current AT&T Wireless stakeholder) and Nextel, also of the US.

Nothing is certain. Until now, this publication has been of the opinion that Vodafone is most likely to do nothing. Not since the height of the bubble has a telecoms takeover been so talked about, so costly or so significant.

Vodafone of course has a history of doing something. Most pertinently, back in 1999 it out-manoeuvred Bell Atlantic to win AirTouch. It subsequently turned around to Bell Atlantic - which was buying multifaceted telco GTE - to form Verizon Wireless, America's current largest mobile operator and one in which Vodafone is a 45 per cent stakeholder.

Back then, current Vodafone CEO Arun Sarin was on the AirTouch side of the fence. He witnessed the juggernaut coming over the Atlantic and, the story goes, there was mutual admiration.

Now, however, there is barely the pressure to do a similar deal. True, it would be great for Vodafone users, wherever they're from, to know they can roam internationally using GSM. (Verizon Wireless uses competing standard CDMA.) However, multimode handsets and data cards will increasingly make that less of an issue as we move over to 3G.

Plus we have heard about strong and far-reaching shareholder opposition to any Vodafone investment - not for the first time - given AT&T Wireless's third-place position and the sale of the Verizon stake that would be forced. And Sarin, for all the acumen he brings to the role, is still finding his way, six months into his job.

So, today's speculation is that Vodafone might make an initial bid, one idea being this would drive up the price to an eventual winner. If Cingular does win AT&T Wireless - leapfrogging Verizon Wireless into the US number one spot - Verizon's natural counter-move would be a bid for Sprint PCS. That may take time and is hardly a given.

It still may be that Vodafone's best option is to hold tight for now. And if it does put in an offer? Make sure the execs at Verizon Wireless know if it's not serious.