No Bid from Vodafone - So Far

Last Friday's deadline for bids to buy AT&T Wireless passed without the expected takeover bid from Vodafone. The company has however reportedly submitted a private offer for the company. According to published reports, its bid is worth in the region of US$35 billion.

Cingular Wireless is also understood to have raised its own bid to around the US$35 billion mark.

There is however, concern that the company may be overpriced following leaks to Reuters that say the company lost nearly 4% of its customer base in January and that its operating income plunged by 20% compared to a year ago. If the figures are correct, then it would be an ideal opportunity for the bidders to demand more time to complete due-diligence on the company, possibly explaining the lack of public action from Vodafone last Friday.

One potential bidder, NTT DoCoMo, appears to have dropped out of the race. The company, which already owns 16% of AT&T Wireless has decided not to try to buy the entire company, according to news reports from Japan.

Vodafone would however face a huge bill associated with completing the overlay of AT&T Wireless's network with a GSM platform, and its ongoing 3G commitments.

In a research note, Guy Zibi, director of EMEA analysis at Pyramid Research, said "Only about 15% to 20% of AT&T's customers use the company's GSM network...Vodafone would need to expand the footprint of the GSM/GPRS/EDGE network in the extensive U.S. market, and migrate more customers to GSM even as it struggles to expand AT&T Wireless' subscriber base."

Posted to the site on 16th February 2004