The British telecommunications giant Vodafone is at a crossroads.
On Tuesday, investors will gather in a luxury hotel in central London to approve the $130 billion sale of Vodafone’s 45 percent stake in Verizon Wireless to Verizon Communications. The deal â€" the largest last year â€" signals the end of a foray into the United States that lasted for more than a decade. It also raises questions about the future of Vodafone, which remains one of the world’s biggest cellphone operators.
As Europe’s telecommunications sector faces regulatory uncertainty while continuing to consolidate, analysts are divided over whether Vodafone can prosper on its own or whether it would be better off as a takeover target.
That speculation was fueled on Monday after AT&T announced that it was not in talks to buy Vodafone, valued at more than $100 billion.
The rumors had been spurred by a meeting last week between AT&T’s chief executive, Randall L. Stephenson, and Neelie Kroes, the European commissioner who oversees the Continent’s telecommunications sector, during the World Economic Forum in Davos, Switzerland.
The two discussed AT&T’s prospects in Europe, but the meeting also included broader issues like data privacy and the recent revelations in government surveillance, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.
Vodafone’s shares fell nearly 4 percent in trading in London on Monday after AT&T’s announcement. Spokesmen for Vodafone and AT&T declined to comment.
In a brief statement, AT&T added, however, that it reserved the right to make an offer in the future. Under British takeover rules, AT&T, having announced its intentions not to pursue Vodafone, must wait at least six months before announcing any new move.
“If an international telecoms company wants to buy anything big in Europe, Vodafone remains the most likely option,†said Robert Grindle, an analyst at EspÃrito Santo in London.
Mr. Grindle said that Europe’s other large carriers, like Orange of France, were partly owned by governments that were not likely to be supportive of a takeover by an international rival.
Vodafone shareholders will soon get a glimpse of the company’s plans after completing the sale of its stake in Verizon Wireless.
As part of the deal, Vodafone has announced that it will return about $84 billion to investors as well as spend roughly $11.5 billion on upgrades to its equipment over the next two years.
After outpacing the United States on high-speed mobile networks, Europe has fallen behind the United States over the last five years as large carriers like Verizon and AT&T have invested billions of dollars in so-called fourth-generation wireless infrastructure.
In a report last year, GSMA, a telecommunications industry body, said about 20 percent of United States cellphone traffic would be powered by these high-speed networks by the end of 2013, compared with about 2 percent for the European Union.
That comes despite consumers’ increasing use of their smartphones and other connected devices to gain access to data over carriers’ networks.
“Growth in data is putting more demands on companies to invest,†said Tom Phillips, GSMA’s chief regulatory officer.
In response to customers’ appetite for telecommunications services and stiff competition from rival European operators, Vodafone has increased its deal-making to expand its operations into fixed-line and cable services.
Last year, Vodafone bought Kabel Deutschland, Germany’s largest cable operator, for 7.7 billion euros, or $10.5 billion, to bolster its offerings in the country, which has Europe’s largest economy, and compete against rivals like Deutsche Telekom.
Vodafone is also in early discussions to acquire the Spanish cable operator ONO, which is considering an initial public offering, according to a person briefed on the matter, who spoke on the condition of anonymity because he was not authorized to speak publicly.
Analysts said the deal could be worth about $10 billion, though discussions between Vodafone and ONO might not necessarily lead to a deal, the person added.
By adding cable to its existing cellphone and fixed-line services, Vodafone is joining other European telecommunications companies in adding complementary offerings to their traditional mobile operations, analysts say.
The companies hope that these additional services will keep customers satisfied so that they do not move to competitors that can offer extras like pay-TV and high-speed broadband.
“The more services people purchase from a company, the less likely customers will leave for a rival,†said Steven Hartley, who runs the industry, communications and broadband team at the consulting firm Ovum in London. “Vodafone’s legacy has been in mobile, so it’s playing catch-up with television and fixed-line services.â€
European regulators also have called on the Continent’s carriers to improve their equipment to jump-start domestic economies, though antitrust authorities have voiced concern that deal-making in the sector may lead to less competition and higher prices for local consumers.
Despite the recent takeovers to expand its footprint, Vodafone remains highly dependent on European markets that have yet to rebound from the recent economic crisis, according to industry analysts.
After selling its stake in Verizon Wireless, the company also has operations in emerging markets like India and the Middle East. But its core European business still represented almost 70 percent of the company’s revenue in the six months through Sept. 30, the latest figures available.
That reliance on sluggish European economies has led analysts and investors to speculate that the company may be open to a takeover approach from a large international rival that would add Vodafone’s European and developing markets operations to its existing global business.
“Vodafone is working in a much tougher operational environment,†said Mr. Grindle of EspÃrito Santo. “They have found their deal mojo, but only time will tell if the company can survive as an independent entity.â€
