Telecommunications corporation Vodafone Group, the largest mobile operator in Europe, is seriously considering the possibility of buying the American mobile operator AT&T Wireless. The deadline for submitting bids for a deal with this operator expires on February 13.

Vodafone currently owns 45% of another American operator, Verizon Wireless, with the remaining 55% owned by Verizon Communications. In the event of a deal with AT&T Wireless, the European corporation would have to give up its stake in Verizon Wireless - Vodafone and Verizon are currently discussing their future relationship. If Vodafone makes an official bid to acquire AT&T Wireless, but the deal falls through, the European corporation would still like to maintain a presence in the American market.

However, informed sources say that Vodafone management has not yet made a final decision on whether to file a bid. Negotiations with AT&T Wireless, the third-largest US cellular operator after Verizon Wireless and Cingular Wireless, have been ongoing for several weeks.

The bidding for AT&T Wireless was officially announced two weeks ago, with Cingular being one of the main contenders, offering $30 billion in cash for the deal. Japanese corporation NTT DoCoMo and American Nextel Communications are also named as possible contenders for the acquisition of the American operator.

Verizon and Vodafone officials say they both feel the current relationship is acceptable. At the same time, Verizon executives have made no secret of their desire to gain full control of Verizon Wireless. Verizon and Vodafone are also known to have disagreements over technology issues. Many analysts believe that Verizon executives would prefer Vodafone to acquire AT&T Wireless, which would not only give them 100% of Verizon Wireless but would also prevent their main competitor, Cingular, from expanding.

For Verizon, acquiring the missing Verizon Wireless shares will be quite expensive - under the terms of the exit from the partnership, the corporation must pay Vodafone $ 20 billion within a year. But in order to have time to file for a merger with AT&T Wireless and exit the partnership with Verizon, Vodafone will need to revise the terms of the agreement, which prohibits the participants from acquiring competing companies. If Vodafone has a need to get rid of Verizon Wireless shares in a short time, this will give Verizon management additional trump cards in determining the terms of the exit from the joint venture. Verizon Wireless pays dividends to both parent companies annually - last year Vodafone received a little more than $ 1 billion in this way. Under the terms of the agreement between the participants of the joint venture, such dividend payments end in 2005.

Since the announcement of AT&T Wireless's sale, Verizon shares have remained virtually unchanged, while Vodafone shares have fallen 9%. (WSJ, 6. 02. 2004, Alexander Safin)

Vodafone May Part With Verizon