Investors back Vodafone's pricey cable push despite AT&T risk
By Kate Holton and Leila Abboud
BARCELONA (Reuters) - Shareholders in Vodafone VOD.L say they support Chief Executive Vittorio Colao's plan to rebuild the company with pricey European broadband assets, even though it could complicate a lucrative mooted bid from AT&T T.N.
Fresh from the sale of the company's U.S. arm for $130 billion, Colao has said he could spend up to $40 billion on acquisitions to shore up its recession-hit European operations,
with the initial focus falling on superfast cable networks.
Top of the list is Spain's cable operator Ono, which would help Vodafone keep up with the growing popularity of all-included bundles of mobile to fixed-line services as well as help it carry the ever-increasing data traffic on its networks.
Vodafone shareholders have proven surprisingly unfazed by Ono's eye-popping 7 billion euro-plus price tag, nor do they think Colao should just sit tight and wait for a possible bid from AT&T while his European business deteriorates.
"You cannot stop running a business while you negotiate possible deals," a top 20 shareholder in Vodafone told Reuters, when asked about the likely impact on an AT&T deal.
"Vodafone is in a weak position in Spain. Regardless of AT&T, if Vodafone wants to keep Spain it needs to put more money into capex and fix the business."
One person, however, who does not agree with Colao's strategy of splashing out on broadband is AT&T boss Randall Stephenson. Continued...