Should Vodafone buy BT?

ZDNet UK News reports that "speculation over the future of Vodafone intensified on Monday after Sir Christopher Gent resigned as life president amid allegations that he been part of a conspiracy to remove chief executive Arun Sarin." The article writes that "Vodafone is poised at a very important point in its history. With chairman Lord MacLaurin also leaving in the summer to be replaced by Sir John Bond of HSBC, it may be time for the company to consider appointing someone from outside the mobile world."

Also suggested in the article is that Vodafone "could even look to purchase a fixed-line company such as BT." Dean Bubley at Disruptive Analysis said, "Vodafone painted themselves into a corner with their mobile-only strategy. I think they should buy BT — this gives them a platform for future growth. But if they are going to do it, they must do it quickly — they need to do it before everybody starts implementing their core strategies. We know that BT is a candidate for private equity and Vodafone needs a fixed voice and data strategy."

Regarding Vodafone's investment in Verizon in the U.S., Bubley thought "buying a share in Verizon was exactly the wrong thing for Vodafone to do." He said, "The future is in other markets like China, or even Japan. Verizon sits very uncomfortably there."

Bubley added,"Sarin is a mobile man, he comes from the world of mobile. The problem with people who spend that much time in mobile-land is that sometimes there is the hint of the ostrich about them. They think that to be any good, something has to be mobile and that may not be the right attitude at this time."

Tony Lockat Bloor Research, agreed that "Gent's sudden departure takes place at a challenging time for Vodafone." He said, "A lot depends on who replaces him on the board, but not so much who it is but what kind of person they are. Is it someone hands-on, or someone who is going to be right for the City. In the medium and longer term, that becomes more important."

Lock added, "The convergence of mobile and fixed-line and the whole issue around IP is crucial. Shareholders and customers will need to know how a new chairman plans to deal with those issues."

Regarding Gent, Lock said, "It wouldn't surprise me at all to see him turn up somewhere and soon. Customers don't notice or care about these things. In the medium to longer term and especially among the larger customers you will see some concern. The issues around where Vodafone goes next need to be sorted out. People will want to know."