Vodafone weighs up cost of bid for AT&T Wireless

Vodafone is weighing up a bid for AT&T Wireless, the US mobile operator that is up for sale with a $30bn (£16bn) price tag.

AT&T Wireless has set a mid-February deadline for bidders to come forward, having already held merger talks with Cingular, the rival US mobile operator. NTT DoCoMo, the Japanese mobile group, is also expected to bid.

Vodafone is now considering the implications for its shareholders of entering what is likely to be a fierce auction for America's third-biggest mobile phone group.

Arun Sarin, Vodafone's chief executive, yesterday said: "We are watching the developments in the US as you would expect us to. We will look at the developments in the US through the lens of shareholder value creation. That is going to be the major criteria for us to think about our presence in the US."

Mr Sarin said the company did not yet have all the facts and analysis surrounding the AT&T situation. "It is hard for me to have a judgement as to whether it is shareholder value creating or not," said Mr Sarin.

He made his comments as he was delivering Vodafone's latest customer figures for the three months to 31 December. The company said it had generated 4.3 million new customers, increasing its customer base to 130.4 million. In the UK it added 464,000 new customers, resulting in total UK customers of 13.9 million of which 59 per cent were on pre-paid contracts.

Verizon Wireless, the number one US mobile operator, had 16.6 million customers at the end of last year, having added 678,000 customers in the final three months. Vodafone owns 45 per cent of Verizon Wireless.

However, the chance to gain full control of a large US business means Vodafone may be tempted to launch a bid for AT&T Wireless, although the strategy is not without risks.

The acquisition of AT&T Wireless would unite Vodafone's US operations with the same GSM-based network technology that Vodafone uses in Europe. Its US Verizon network uses a different, incompatible network technology. However, the problems of operating on different network platforms could be overcome in the near term by new handsets. So-called dual mode handsets are at an advanced stage of development.

Another reason why Vodafone may stick with its present US arrangements is that Verizon Wireless is further advanced with new third-generation mobile phone services than AT&T Wireless.