According to the Wall Street Journal yesterday, European officials are throwing some serious cold water on AT&T's possible plans to expand inorganically into Europe. The main thrust of the opposition relates to the continuing rumors of a bid for Vodafone, but the problem could be a more general one.
Europe, if you haven't heard, is pissed off at the US government over spying allegations, where access to the infrastructure (with or without permission) is at issue. Officials, with German ones mentioned specifically, are suggesting in advance that any European telecommunications purchase by AT&T would face extra scrutiny.
Now AT&T may have been specifically named both in M&A rumors and in providing data to the NSA by the Snowden leaks, but I seriously doubt that the potential roadblocks are different for another US acquirer. Valuations in Europe right now are attractive, and AT&T isn't the only one out there for whom potential deals could be viable.
Verizon, Sprint, CenturyLink, and Windstream probably aren't interested right now anyway. But could Level 3 face additional hurdles if it were to bid for, say, Colt or Interoute, despite their already extensive presence in Europe? Might Zayo even for a smaller regional dark fiber asset? What about in the data center, might Equinix have questions to answer if they want to buy another asset like Kleyer 90 earlier this month?
The real issues might be completely different at a different layer of the network, but when current events and talking heads take over I'm not sure it matters anymore. We've already seen some resistance to foreign ownership lately in the KPN-America Movil saga. I suspect the NSA backlash could provide it with some real ammunition.
Or perhaps cooler heads will prevail when the news cycle moves on to whatever disastrous thing happens next week.
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