AT&T's Tricky Trans-Atlantic Call

Could Verizon Communications' biggest rival end up lending it a hand?

Speculation has been swirling that the timing may soon be right for the telecommunications giant to buy the 45% of Verizon Wireless owned by London-based Vodafone, or even to buy Vodafone itself. The weak British pound and low interest rates that would make financing a deal easier lend credence to the idea. But one recently posited scenario—that AT&T T might partner with Verizon to buy Vodafone's non-U.S. assets—seems an unlikely way to bring it to fruition. For Verizon, which has expressed interest in only the Verizon Wireless stake and has said it doesn't currently have any intention to merge with or make an offer for Vodafone, cobbling together a deal with AT&T would give it a way around the obstacle of a high tax liability for Vodafone shareholders if it sells just its U.S. stake.

In theory, Verizon could buy all of Vodafone and then immediately sell the non-U.S. assets to AT&T. But such a deal looks far from clear-cut for AT&T. For AT&T, getting involved in a Vodafone deal could prove an expensive long-distance call.