AT&T-Vonage Merger a Silly Rumor?

Vonage has certainly been on an upswing lately. Its stock has been shooting up over the past couple of weeks. But does that mean it could be snatched up by a giant in the telco world, namely AT&T?

That’s been a hot rumor the last few days. But it seems likely that it’s nothing more than that when you look at the evidence.

Writing for Barron’s, Eric Savitz calls it the “dumbest rumor [he’s] ever heard.”

The reasons appear to be obvious. AT&T’s own VoIP service, CallVantage, floundered and will shut down next month. Sure, landlines are going away in record numbers, but that’s due more to wireless plans, says Savitz. Add to that the previous bad blood between the companies – AT&T’s lawsuit against Vonage over technology issues a couple of years ago – and it seems like you’d be trying to mix oil and water. AT&T would also have to take on Vonage’s legal issues.

Referring to a report from an Auriga USA analyst, the Barron’s blog also suggests that the success of Vonage’s iPhone app really isn’t a major threat to AT&T Wireless. “We note that Skype and other free VoIP applications are already available on the iPhone, and thus do not see this Vonage application either as a threat to AT&T’s wireless prospects or a significant financial opportunity for Vonage at AT&T’s expense,” wrote analyst Chandan Sarkar.

Still, we’ve seen stranger bedfellows before, have we not?