AT&T is weighing European carrier acquisition options, insiders claim, hoping to boost its performance by reaching outside of the increasingly smartphone-saturated US market, despite the risks inherent in such expansion. Potential targets – with the UK, Germany, and the Netherlands cited as likely candidates – are being explored, sources tell the WSJ, though AT&T’s executive team isn’t entirely convinced that it’s even the best strategy. UK carrier Everything Everywhere – the UK’s first 4G network – and the Netherlands’ Royal KPN are tipped to be on the watch-list.
For those in favor of such a deal, it’s said that the lure of international expansion is its potential to unlock a new market of smartphone-upgraders and push AT&T’s strategy of tiered data plans. AT&T’s thinking, so the suggestion goes, is that while European carriers still rely on voice call and SMS messaging revenue, it could carve itself a new business by pushing 4G adoption and more revenue from data plans.
On the flip-side, however, is the potential risk of diluting AT&T’s focus on the US market. There, while AT&T spars with Verizon for the biggest subscriber base, the segment grows increasingly cut-throat, particularly as the potential market for smartphone and/or data plan adopters narrows. AT&T also faces increasingly organized competition, with US rivals being acquired by foreign firms, such as Softbank’s grab of Sprint.
No confirmation of whether any talks have begun, or which exact carriers are in AT&T’s sights, could be garnered, the newspaper reports. It’s also unclear as to how well AT&T’s traditional US pricing strategy – which demands both an upfront payment for the handset as well as a two-year agreement – would work in the European market, where it’s common for devices to be free-on-contract.
Nonetheless, word from the top is that international expansion is pretty much a certainty. “I think it is inevitable” AT&T CEO Randall Stephenson told Texas Monthly [subscription required] earlier in January, when asked whether an overseas acquisition was on the cards to ensure the company’s growth.