Leader: Vodafone escapes bad deal

It is a bit of a stretch to say 'We told you so' but we're going to do it anyway.

Vodafone won't be buying AT&T Wireless in the US. Cingular - the combined mobile businesses of BellSouth and SBC Communications - will be, at a hefty $41bn plus $6bn of assumed debt.

The broadsheets have already poured a lot of effort into detailing overnight negotiations, the drama of lawyers' offices and last-ditch phone calls.

But there are two big questions that emerge for readers of this publication. First, why should we care about all this? Second, where does this leave Vodafone - and is this exactly where they should be?

We care, for one thing, because Vodafone is one of the UK's few national champions. A world beater in one of the most important sectors and the largest presence on the London Stock Exchange, what happens to this company affects corporate communications strategies, pension funds, the image of UK companies and more.

Vodafone is also incredibly influential technologically. For example, its 3G launches around Europe will be a benchmark for other operators and its buying power will have an impact on even the most powerful equipment companies. Yes, we include Nokia in that.

So much for Vodafone's standing. On the subject of how this leaves CEO Arun Sarin and his cohorts, we refer back to our leader of 13 February. We wrote:

"It still may be that Vodafone's best option is to hold tight for now. And if it does put in an offer? Make sure the execs at Verizon Wireless know if it's not serious."

It didn't hold tight but - in line with another prediction about it being driven to do something (it's the company's culture) - a bid did drive up the price for the eventual winner, some would say to a ridiculous level for an unhealthy company that just weeks ago was valued at half as much.

Now there is widespread speculation that Vodafone won't be able to survive as the 45 per cent stakeholder in Verizon Wireless. Although a sale of that stake would have been a prerequisite of any AT&T Wireless deal, as we mentioned, if it has made the right noises with partner Verizon during the AT&T Wireless negotiations there needn't be a problem.

Vodafone's shares on the London Stock Exchange benefited yesterday from Cingular's win. Let us not fool ourselves into thinking that many traders look beyond the short-term to growing a global brand over years - Vodafone's strategy. But there is generally widespread relief Vodafone didn't come away with an acquisition this time.

AT&T Wireless may be Cingular's win but it is not Vodafone's loss. Time for a catch-up with the executives at Verizon, we think, and maybe a look at other deals to be done.