Vodafone: call waiting - FT.com As M&A rumours swirl about the UK telecoms company, investors need to be discerning The M&A folks at Vodafone may be busy - but not busy enough for the market. The UK group has been rumoured to be considering bids for cable groups Kabel Deutschland and Ono; for TeliaSonera's Spanish unit Yoigo; and/or a deal involving its 45 per cent-owned mobile partnership Verizon Wireless in the US. This has made Vodafone's shares - otherwise in the doldrums due to the difficult European telecoms market - very playable. Verizon chatter provided a 7 per cent lift on Wednesday. Investors need to be discerning. The European speculation is driven largely by signs of accelerated convergence. Mobile services are being bundled up increasingly with internet, pay-TV and fixed line telephony. And it is not just cable operators who are pushing this; in Spain and Portugal, incumbents have also launched quad-play offers. But there are various ways besides acquisition to stay in this game including, as Vodafone has noted, commercial deals and co-investment. As for consolidation between telcos - the potential Yoigo-type situation - that is constrained by regulatory attitudes. Austria moved from a four to three-player market last year. But it is far from clear that regulators generally want to endorse any lessening of competition. The Verizon Wireless stake, meanwhile, is a longstanding quandary. Strong organic revenue growth arguably makes it Vodafone's best asset right now, worth over $100bn. Verizon would like to buy Vodafone out. But a cash sale would present Vodafone with a big tax bill: Citibank reckons $25bn-$30bn. The stake, moreover, has been monetised thanks to resumed dividends (even if Vodafone has no control over their size or timing). Nor are European plans necessarily tied to a US deal: Vodafone's end-2012 net debt was £23bn, less than twice consensus earnings for 2012/2013. The status quo may not be the worst option.