Since the middle of 2011, there are more wireless connections in the U.S. than there are people with whom to connect.
That means the only means by which American mobile operators can grow their revenue are by selling increasingly expensive products (smartphones with data plans to feed those phones), snatching subscribers away from competitors, and expanding to greener pastures.
AT&T (NYSE:T), after trying the first two methods, is now tempted by the last, according to knowledgeable people who spoke with The Wall Street Journal. The target market is said to be Europe, specifically the U.K., Germany, or the Netherlands, said the Journal's sources.
The companies AT&T are said to be sniffing around include Royal KPN, the largest telecom in the Netherlands, which is 28% owned by America Movil, and Everything Everywhere, a large U.K. carrier, which is a joint venture of France Telecom's Orange subsidiary, and Deutsche Telekom's T-Mobile U.K. unit.
AT&T's alleged European window-shopping comes a year after the Federal Communications Commission lambasted the giant carrier's proposed $39 billion buyout of T-Mobile USA. That made it quite clear any major wireless acquisition by AT&T would not likely be a domestic one.
But the European market is even more competitive than the U.S. market, and just as regulated, not to mention it being under an economic cloud that is causing big problems for carriers such as Vodafone.
At least one analyst doesn't think expansion into Europe is a great idea. As reported by Forbes, Bernstein Research's Robin Bienenstock wrote a note in response to the Journal's story, saying, "The logic of diversifying into European telecom as a solution for a growth deficit in the U.S. is [un]clear."
He is especially dismissive of considering the acquisition of KPN: "The Netherlands is dense, flat and small, its spectrum has been given to four players, and wireless prices are still high, making it one of the least attractive markets in Europe if not the world."
However, AT&T chairman and CEO Randall Stephenson, in an interview earlier this month with Texas Monthly, said that in light of the domestic market's saturation, acquiring companies overseas is "inevitable."
Fool contributor Dan Radovsky owns shares of AT&T. The Motley Fool recommends France Telecom and Vodafone. The Motley Fool owns shares of France Telecom. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.