Verizon, AT&T, Vodafone Merger Denied by Verizon

The Financial Times speculated that Verizon VZ and AT&T T were considering a joint offer to aquire U.K. carrier, Vodafone Group VOD. The blog cited “usually reliable sources” that were not named.

Verizon issued a statement denying the rumor. Or, at least part of it.

While saying the company had no plans to buy all of Vodafone, Verizon did leave open the possibility of buying Vodaphone’s 45 percent stake in Verizon Wireless.

The AT&T piece would give Verizon full control of Verizon Wireless, while letting AT&T take the rest of Vodafone’s European assets. AT&T wireless head Ralph de la Vega said in an interview with Businessweek in February that the company was looking at expansion opportunities internationally.

Analysts were skeptical about AT&T’s participation in the deal. Robin Bienenstock of Sanford C. Bernstein said that although the company may want into Europe, the deal would be especially expensive and complicated.

As for Vodafone’s motives, the carrier is looking for ways to add scale. Chief executive officer Vittorio Colao says he wants to gain assets in order to be able to offer bundled Internet, mobile and landline phone services across Europe.

Reuters reports that Bernstein analyst Robin Bienenstock said in a research note that any deal "other than a merger is unwelcome by Vodafone's management" adding that Vodafone management believes that the U.S. market is more attractive than Europe for wireless.

In addition, there are tax implications for Vodafone that come with a buyout versus a merger that make such a deal unlikely.

If an AT&T-Verizon takeover of Vodafone actually did happen, it could represent a seismic shift in mobile roaming. The acquisition of Vodafone’s carriers would give AT&T the means to offer American customers new roaming prices to not only the U.K., Germany and Italy, but also Australia, Turkey, South Africa and Egypt, according to BGR.

The big question seems to be, why would Verizon agree to an arrangement that would give AT&T such transformational European access? The lack of a suitable answer to that question, plus Verizon’s vehement denial that a deal is in the making, resulted in a drop in Vodafone share prices Wednesday, according to a late report by Reuters.