AT&T prepares ground for Vodafone takeover - report

AT&T is preparing the groundwork for a potential takeover of Vodafone next year, people familiar with the situation told Bloomberg. The company has stepped up its plans for European expansion after concluding there are cost and strategic advantages to global scale as technological change becomes more rapid, the report said. 

While the companies haven’t entered formal negotiations, AT&T is working on which Vodafone assets it would retain after a deal and who could buy others. The US operator is thought to be more interested in Vodafone's European activities than Africa and India. It could spin off the non-European activities into a new company and then seek a buyer, such as America Movil, Orange or China Mobile. Such a plan was the basis for AT&T’s approach to Verizon earlier this year, when it suggested they divide up the Vodafone assets, according to Bloomberg. 

Any transaction would have to wait for the conclusion of Vodafone's sale of its Verizon Wireless stake, which the companies expect to close in early 2014. AT&T also remains interested in UK carrier EE as an alternative target, and EE could be used as a platform for further acquisitions in Europe, the people said.