NEW YORK-With AT&T Wireless Services Inc.’s self-imposed Feb. 13 deadline for buyout bids fast approaching, Vodafone Group plc’s plans to divest itself from current U.S. wireless network partner Verizon Wireless ahead of a possible stab at acquiring AWS has hit a “tense junction,” according to a Wall Street Journal report citing people close to the situation.
The report noted that Verizon Wireless’ parent company Verizon Communications Inc. is concerned that if Vodafone buys AWS, it could emerge as a strong competitor for Verizon Wireless.
The Wall Street Journal also reported sources at Cingular Wireless L.L.C., which is ready to increase its initial $30 billion all-cash offer for AWS, said the company eventually could save between $2 billion and $3 billion per year through cost reductions if it acquires AWS.
While Vodafone and Cingular are increasing their presence in the AWS sweepstakes, Deutsche Telekom AG, which currently owns T-Mobile USA Inc. through its T-Mobile International division, is backing away from the bidding war.
“For our group, the improvement of the balance sheet and organic growth still have priority,” T-Mobile International chief executive Rene Obermann told a German business weekly. “Therefore there is no reason for us to file a takeover offer for [AWS] now-against the backdrop of a bidding war.”
Analysts have noted that T-Mobile USA’s continued strong growth over the past year, which included the addition of 3 million customers that was only second to industry powerhouse Verizon Wireless, has diminished DT’s need to seek a stronger presence in the U.S. market.
Obermann added that he preferred if a current U.S. wireless carrier would take over AWS citing the reduced competition in the market that would not occur if Vodafone were to purchase AWS.
“For the market as a whole, it would be a good step if there were only five instead of six operators,” Obermann said. “If Vodafone struck the deal, there would still be six.”
Published reports earlier this week also indicated that Cingular was continuing talks with DT about a possible merger with T-Mobile USA should Cingular fail to acquire AWS.
