AT&T, the largest US telecommunications group, is continuing to eye possible overseas acquisitions in spite of dropping out of the bidding for a controlling stake in Telecom Italia last month.

Randall Stephenson, the chief operating officer who will take over as AT&T’s chief executive on June 3 when Ed Whitacre retires, told investors on Wednesday the company already had the assets it needed to compete domestically following a string of acquisitions culminating in the $68bn purchase of BellSouth at the end of last year.

“Internationally there might be opportunistic opportunities over time that will enhance our international product set and capabilities,” he said.

AT&T withdrew from the bidding for a 33 per cent of Olimpia, the Italian holding company which held an 18 per cent controlling interest in Telecom Italia. ”Those opportunities will always be attractive to us,” he said.

Mr Stephensen’s comment comes just days after shares in Vodafone, the UK-based carrier, surged on market speculation that it might become a bid target and that AT&T might be a potential bidder. Both AT&T and Vodafone declined to comment on the rumours. It is likely to be seen as further evidence that the US telecoms giant has switched its M&A attention from the domestic market to overseas opportunities.

AT&T already had an ”impressive” domestic footprint after its acquisition of BellSouth - a move that consolidated AT&T’s ownership of the Cingular wireless joint venture, now renamed AT&T wireless.

”I think we have the assets now that we need to compete effectively across the industry,” Mr Stephenson said, when asked about the company’s M&A strategy. ”Quite frankly, it’s about operating excellence right now more than industry-transforming transactions.”

He confirmed that AT&T had decided not to bid for Alltel, the fifth largest US mobile operator now the subject of a private equity buyout led by TPG Capital and the buyout arm of Goldman Sachs, because of conflicting technology standards.

Some analysts have speculated that AT&T might acquire EchoStar Communications, its US satellite television partner, as part of its effort to compete more effectively against its cable TV rivals. However, Mr Stephenson has repeatedly indicated that AT&T is happy with the current arrangement designed to supplement its U-verse IPTV roll-out.

On Wednesday he indicated that the uptake of the U-verse bundle of broadband and video services continues to accelerate, with about 500 new subscribers signing up per day, up from around 2,000 a week in April. AT&T now has more than 30,000 U-verse users.

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