Verizon and Vodafone could be eyeing some sort of collaboration even as AT&T faces a challenge pushing through its proposed acquisition of T-Mobile.

A Verizon executive recently raised the possibility that a merger with Vodafone could happen sometime in the future, in an interview with the Financial Times. Verizon Communications CEO Lowell McAdam did not rule out the possibility of a merger with Vodafone, but said such a move is also not on the company?s immediate horizon.

?I think the possibility of a merger going through is kind of small at this point,? said Jagdish Rebello, senior director and principal analyst of communications and consumer electronics at IHS iSuppli, El Segundo, CA.

?I do believe that there could be some sort of a global roaming agreement,? he said. ?That would be a huge step forward.?

The power of LTE
Vodafone Group plc is a global telecommunications company headquartered in London, Britain. It operates networks in more than 30 countries and owns 45 percent of Verizon Wireless.

Verizon Communications owns the remaining 55 percent.

Verizon CEO Mr. McAdam also stressed during his interview with the Financial Times that the two companies are working closely together to service multinational customers and enterprises.

Additionally, Verizon Wireless will not pay annual dividend to Vodafone and Verizon Communications on an ongoing basis because it may need to the money to buy spectrum or make an acquisition, the CEO said.

While the two companies appear to be working closely together, a merger is unlikely at this point because of the regulatory issues such a deal would come up against.

?There are a lot of regulatory issues that would have to be dealt with,? Mr. Rebello said.

?When you are looking at mergers across different markets, you have to look at the regulatory bodies in both counties ? this is an additional challenge,? he said.

?The dynamics of the European market is very different than the dynamics for the U.S. You have to have different strategies for each and that can be a challenge.?

AT&T is currently facing regulatory scrutiny as it tries to acquire T-Mobile USA. The Department of Justice recently filed a lawsuit seeking to block the deal on the basis that it would reduce competition and raises prices for consumers.

One possible scenario for Verizon is that it would buy out Vodafone?s stake in Verizon Wireless.

However, with both carriers investing in LTE technology, it seems just as possible that they would create an alliance and bring lower roaming charges for data to consumers.

Currently, the cost can be significant for users accessing data on a cellular device in a foreign country.

?When both carriers are offering LTE, it makes sense to unleash the power of LTE, which is a data centric technology,? Mr. Rebello said.

?If you have a global roaming agreement with respect to data, it would be a great way for Verizon to differentiate itself,? he said. 

Business travelers
A global roaming agreement could attract business travelers to Verizon Wireless.

Carriers can use lower roaming charges to appeal to business travelers who have a need for easy access to mobile broad band data when they are traveling and are willing to pay a reasonable amount for it.

?If you are traveling on business and it is not prohibitively expensive, you might be willing to pay a small premium to get full access to data,? Mr. Rebello said.

A global roaming alliance between Verizon Wireless and Vodafone might be bad news for other carriers.
?It would put AT&T back at a disadvantage,? he said. ?They would have to start looking at some global partners.?

?Maybe they could look at partnering with Deutsche Telekom if AT&T manages to acquire T-Mobile.?

Overall, carriers are increasingly looking at expanding beyond their existing territories to international alliance, acquisitions and other deals as a way to continue to build their businesses now that mobile saturation is in sight. 

Carriers are keeping an eye on the proposed AT&T, T-Mobile merger because they want to see how regulators respond as they themselves look for ways to expand. 

?Many European carriers are moving into Latin America, Africa and emerging markets to continue to grow their businesses,? Mr. Rebello said.

?I would hope the carriers would move in the direction of global alliances,? he said.

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York