One of the unexpected side effects of the recent spying revelations by former US National Security Agency (NSA) contractor Edward Snowden is its impact on the global business M&A market. Specifically, doubts are now being raised about whether major corporate acquisitions by US companies of European or Asia firms will get national regulatory approval.

The latest casualty could well by US telco AT&T, which is reportedly preparing a bid to buy the UK’s Vodafone Group. The Wall Street Journal says AT&T’s European ambitions have been jeopardised by its involvement in the scandal, but Bloomberg says that a takeover bid will still go ahead. And if that fails, Everything Everywhere (EE) could become a target.

Despite AT&T’s apparent keenness to finally get into the European market in a major way, it’s chances may have been scuppered by Snowden’s leaked revelations (although as you would expect, AT&T is saying nothing). AT&T was cited by Snowden as one of the US telcos that provide calling data to the NSA to further it surveillance programmes.

This isn’t the first time that AT&T has faced allegations of cosying up to the NSA. Back in 2006 there were allegations about a secret room in San Francisco through which AT&T would allegedly route Internet traffic for NSA inspection. Here we are today, and the allegations persist, with Verizon and Sprint also being caught up in the media storm.

Bloomberg has published a lengthy and detailed article that is well worth reading (although its description of Newbury as “a quiet village” raised a laugh or two). To summarise, it believes a potential takeover of Vodafone Group – Europe’s largest mobile carrier – could happen next year. Meanwhile, preparatory work is being done to identify those assets it will keep and those it will sell.

A merger would create the world’s largest telecoms operator (by sales), with over 500 million subscribers and a market capitalisation exceeding $250bn. Bloomberg believes AT&T is looking to international expansion as it is facing more intense competition in its home country, with a newly revitalised Verizon and a SoftBank-backed Sprint. There’s also very little room left for domestic expansion.

But according to the WSJ, European officials (especially those from Germany) told its reporter that any attempt by AT&T to acquire a major wireless operator would face intense scrutiny. To say that Europe’s politicians are a little upset over the NSA’s communications eavesdropping would be an understatement.

“One would really have to ask: Should this be allowed? Does this make sense? What does this mean for our standards of data privacy?” Anton Hofreiter, co-leader of the Green Party in the German parliament, told the WSJ when asked about the proposed AT&T deal.

Vodafone and its shareholders are already sitting pretty have sold the company’s 45 per cent stake in its joint venture with Verizon Wireless for $130bn (the deal is expected to close and clear all remaining regulatory approvals by early 2014). It might now be time for the final payoff, provided Edward Snowden’s allegations of AT&T’s involvement in spying don’t scupper the plan.

And please, nobody mention Concert, that’s a history lesson for another day…