NEW YORK (TheStreet) -- TheDeal's Chris Nolter spoke to Mark Stodden, an analyst at Moody's Investors Service, who said that a deal between AT&T (T) and Vodafone (VOD) is definitely possible but not easy.
He added the deal could be completed without AT&T taking a hit to its rating or credit profile because Vodafone is a low-leverage company.
Stodden said the current valuation for Vodafone is roughly 4.5 to 4.7 times enterprise value to Ebitda. If the deal gets done at 5.5 times enterprise value to Ebitda, it would represent a 20% premium to the current price and a total deal worth roughly $115 billion, he said.
But the deal would not be like the Verizon Communications (VZ) deal earlier this year when Verizon bought out the remainder of Verizon Wireless from Vodafone. Stodden said there was virtually no risk in the Verizon-Vodafone deal, but the AT&T takeover would be different.Because Vodafone is a European operator, AT&T would have different regulations to follow, a less-developed 4G network and a different market with a shakier economy. He concluded that AT&T would likely be willing to absorb these "new business risks," along with a lower credit rating, if the right deal came along. -- Written by Bret Kenwell in Petoskey, Mich. Follow @BretKenwell
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV