A bid could be feasible. Austria is a gap in Vodafone’s coverage, and Telekom Austria’s mobile operations are large enough that Vodafone might be interested. However, now is not the time for Telekom shareholders to get excited. Austria is not a strategic priority for Vodafone, and the UK firm is currently focusing on countries where it already has a presence.
A German magazine has reported that Vodafone is planning to buy Telekom Austria.
German magazine Wirtschaftswoche reported on Wednesday that the world’s largest mobile operator, Vodafone, was in talks with Telekom Austria over a potential buyout deal. The Austrian government, which owns 47.8% of the fixed and mobile telecoms firm, has denied it has received an approach. Vodafone has refused to comment on the deal.
It’s not surprising the names are being put together. Telekom Austria is known to be up for sale: 30% shareholder Telecom Italia is looking for a buyer for its stake, and the state holding company said in October that if Telecom Italia sold out, it might well follow suit.
Vodafone, meanwhile, is notoriously acquisitive. It has followed a strategy in recent years of buying integrated telecoms firms to get its hands on their mobile units – most obviously, Mannesmann and Japan Telecom. And after last year’s sale of its stake in tele.ring, the predominantly fixed-line Austrian telecoms firm it acquired when it bought Mannessmann, Vodafone has no operations in Austria.
Some see Vodafone’s decision to sell tele.ring as a sign that it is uninterested in Austria – but in itself, this would be a mistake. Vodafone is not interested in fixed telephony, or in markets where it has no realistic prospect of being the number one or number two operator. Tele.ring’s mobile operations, which only launched in 2000, are tiny – but Telekom Austria’s Mobilkom unit has 50% of the country’s mobile market.
This doesn’t mean the deal is on the cards, however. Although it would expand Vodafone’s coverage, Austria is not a strategically important market. And the company’s current focus is on boosting revenue per customer and on gaining control of existing joint ventures (with Japan Telecom the most recent example).
It is possible Vodafone will buy Telekom Austria, or at least Mobilkom, if it is offered a good price. However, it is unlikely to push particularly hard for a deal. Telekom’s investors shouldn’t expect a windfall.