Vodafone still mulling AT&T Wireless bid

Vodafone reiterated yesterday that it was looking at a bid for AT&T Wireless, the US mobile phone operator, but continued to stress that any move would have to be in the interest of shareholder value.

Arun Sarin, the chief executive of Vodafone, first said the company was evaluating a bid two weeks ago, saying a deal was being looked at "through the lens of shareholder value creation."

Vodafone's share price has fallen 9.3 per cent since speculation emerged last month of a possible bid from the company, suggesting some investors are uncomfortable with the idea. Mr Sarin's initial comments were made in response to press questions at a briefing about customer numbers. The statement was its first formal stock exchange announcement on the matter. "We felt we ought to put something on the record," said a Vodafone spokesman.

However, speculation has continued to swirl unchecked for several weeks that Vodafone might make a move, intensifying in the past few days as an AT&T Wireless deadline for offers looms this Friday.

A move would involve Vodafone selling its 45 per cent share in Verizon Wireless, America's number one mobile company.

Analysts warned that a bid for AT&T Wireless would cost at least $30bn (£16bn) with Vodafone facing stiff competition from US rivals such as Cingular, which could generate higher cost savings.

Analysts also said a Vodafone bid would be earnings dilutive until March 2008 and would result in a reduction of Vodafone's earnings per share figures for March next year of 7.5 per cent.

Fanos Hira, at Bear Stearns, said: "We believe Cingular will ultimately be successful in acquiring AT&T Wireless."