The mergers and acquisition scene may be depressed right now, but some big deals are being made in the telecommunications segment. AT&T Inc. (NYSE:T) is considering buying Vodafone Group plc (LON:VOD) according to rumor, and that deal may come sooner than expected according to a report from Bloomberg.
AT&T Inc. (NYSE:T) is considering putting together a Vodafone Group Inc (LON:VOD) merger as soon as next year, according to the report. The report says that the company is laying the groundwork for a deal that would see it acquire the British telecommunications company. The Bloomberg report sourced people familiar with the situation.
AT&T / Vodafone deal
According to Matthew Campbell and Jeffrey McCracken, who authored the report for Bloomberg, the companies have not yet entered formal negotiations about a deal, but AT&T Inc (NYSE:T) is working on finding out which Vodafone Group plc (NYSE:VOD) assets it would keep under a potential deal, and which the company would seek to spin off to third parties.
One of the biggest problems for a merger of this magnitude will be regulatory approval. In order to make the deal go through, AT&T Inc. (NYSE:T) will have to seek approval from regulators in both the United States and Europe. The merger would create the world’s largest telecommunications operator by sales.
Vodafone shares spike on deal
On the New York market shares in Vodafone Group plc (LON:VOD) rose by more than 2% on the report. Vodafone is currently working on the sale of its American joint venture with Verizon Communications Inc. (NYSE:VZ), Verizon Wireless. No deal with AT&T Inc (NYSE:T) is likely until that deal closes, according to Bloomberg.
There has been absolutely no confirmation of any kind of deal from the companies involved, but it may make sense for the companies to merge in the modern telecommunications setting. The business has become increasingly capital intensive, requiring bigger and bigger businesses to support infrastructure spending.