AT&T Could Struggle to Roam in Europe

AT&T has set its sights across the pond. But could Europe prove to be a sinkhole? The US telecom giant hasn't officially announced its intention to buy the rest of Vodafone's assets after the London-based company completes a deal to sell its 45% stake in Verizon Wireless to Verizon Communications. But anyone listening to recent public comments by AT&T Chief Executive Randall Stephenson could hardly reach any other conclusion.

Stephenson has signaled he would likely pursue heavy investment in wireless networks. That could position AT&T to lead Europe's shift to next-generation LTE technology, where the Continent lags behind the US. Buying Vodafone, which gets more than two-thirds of earnings before interest, taxes, depreciation and amortization from Europe, would also make AT&T less reliant on its increasingly competitive home market. But Europe could prove to be a quagmire. Buying Vodafone now would effectively be a bet that this is as bad as things can get there. Stephenson is also wagering that regulators' desire for investment will get them to lend a hand, perhaps one reason he has been so vocal about his deal-making intentions.