Vodafone may still be negotiating its $130bn (£84bn) exit from the US, but the prospect of a Verizon Wireless sale is already prompting speculation that the British mobile phone group could itself become a target for a similarly sized acquisition.
With much of Vodafone's value tied up in its 45% stake in Verizon, speculation is now focusing on what will happen to the corporate rump that remains once the transaction is complete.
Chief executive Vittorio Colao has embarked on a strategy to take Vodafone into the fixed-line broadband and TV market in Europe, and industry observers say he has two choices: to continue building the company he first worked for 13 years ago, or to sell it.
America's AT&T and Japan's Softbank, which recently acquired a US network, are both embracing international expansion and their names are now being touted as potential Vodafone suitors. "Vodafone might also now be in play," wrote strategists at Olivetree. They added: "[AT&T] have been actively on the search for European deals and reportedly have already been rebuffed in their attempts to do some form of transaction with [O2 owner] Telefonica … Vodafone would not only be a smaller deal but come with a better balance sheet."
Robin Bienenstock, an analyst at Bernstein Research, said AT&T could pay £80bn for the remaining Vodafone business, which stretches from the UK to Italy, and from Turkey to South Africa. "With all that is happening in Europe AT&T's appetite to use its shares to do a deal must be rising," Bienenstock wrote. "The global M&A context and the likelihood that Vodafone would immediately be in play mean that Vodafone requires a solid post-deal plan beyond a special dividend and a few European acquisitions," she warned.
For now, the plan involves adding to the miles of internet cables Vodafone already owns following its purchase last year of the UK parts of Cable & Wireless. Next up is Kabel Deutschland, a deal that awaits approval by European regulators. For James Barford at Enders Analysis, the best strategy for Vodafone is to improve the assets it owns. That means increasing the amount of cash spent upgrading the network to 4G, ensuring mobile internet coverage is faster and more widespread.
"The best choice is to invest more in being aggressive around 4G because if anyone is going to buy Vodafone, that is what they would do," said Barford. "AT&T has already said very publicly it doesn't think the Europeans are investing enough in 4G."
It is a strategy that has already allowed AT&T and Verizon to become America's largest mobile providers, with subscribers flocking to their superior networks as they upgrade in a way that smaller operators simply cannot afford.
"The opportunity is to create a clear blue water between your network quality and the network quality offered by discount operators," said Barford.
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