AT&T Goes After International Domination

AT&T (T) and American Movi (AMX)l are offering almost $3.5 billion to take over two-thirds of the holding company that controls Italy’s largest phone company, Telecom Italia (TI).

AT&T is doing the smart thing. Its cell phone business in the US has been a major growth engine, but wireless handset penetration is high and price cutting is almost the only way to pick up market shares. Cable company’s have a much larger beach head in the TV business and can offer most of their customers the dreaded triple play of voice, TV, and broadband service. Dislodging cable from its position with consumers will be expensive, and may not work at all.

AT&T ‘s stock is up almost 70% over the last two years, far out-pacing the shares of rival Verizon (VZ). With slower growth just over the horizon in the US, picking up telecom companies overseas makes sense. All the better to squeezed telecom equipment vendors for better prices.

Buying the Italian phone company may be enough to keep Wall St. interesting in AT&T for a little while longer.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.