Telecoms giant AT&T has ruled out a bid for mobile operator Vodafone, following speculation it was mulling a £60 billion swoop for the group.
Vodafone’s shares fell 9p or nearly 4 per cent to 223.55p last night after the US firm said it had no plans to make an offer, while analysts said they could remain under pressure given the “tumultuous” state of the telecoms industry in Europe.
AT&T, the second-largest mobile provider in the US, has previously said there was a “huge opportunity” to invest in mobile broadband in Europe, sparking speculation that it wanted to buy Vodafone.
However, following a request from the UK’s Takeover Panel, AT&T said yesterday that “it does not intend to make an offer”.
Under City takeover rules, the US group is now barred from making an approach for at least six months, unless Vodafone invites it to do so or a separate bidder enters the fray.
Rumours over a potential bid had intensified as Vodafone nears completion on the £84bn sale of its stake in US mobile joint venture Verizon Wireless. The bulk of the proceeds will go to Vodafone shareholders, while the Berkshire-based company plans to invest £7bn in its networks over the next two years. Investors are due to vote on the Verizon Wireless deal today and Mike van Dulken, head of research at Accendo Markets, said the confirmation that AT&T would not be pressing ahead with a takeover approach was a “setback” for shareholders.
Analysts at Espirito Santo added: “We suspect that [AT&T] could not get comfortable with an offer given the still tumultuous state of European telecoms from a regulatory, competitive and economic perspective.”
The broker said the recent strength of the pound “further makes Vodafone shares vulnerable”.
A combination with AT&T would have created a telecoms giant with a market value in the region of £150bn. The US group’s chairman and chief executive, Randall Stephenson, is believed to have discussed his European ambitions with EU telecoms commissioner Neelie Kroes at the World Economic Forum in Davos last week.