Perhaps it should not matter. The deal is lost either way and Vodafone's share price rocketed 5.6 per cent in London on Tuesday as the market celebrated Vodafone's failure to spend its money.

The recovery went part of the way to recouping the 8 per cent knocked off Vodafone's shares in the weeks since the company first announced its interest in the deal.

From the very beginning, analysts felt the price was too high for an acquisition that would have meant the sale of Vodafone's existing - and lucrative - minority holding in America's largest mobile company, Verizon Wireless.

It does, however, matter whether Mr Sarin walked away from the deal or was tricked out of it.

Mr Sarin took over from the buccaneering Sir Chris Gent last summer, promising to maximise shareholder value and consolidate existing assets. To have bid for AT&T Wireless so early in his tenure suggests his much touted conservatism is only skin-deep.

If he walked away from the deal on the basis of a considered judgment about the value of AT&T Wireless, more power to him. But if he was merely outsmarted, he would seem both less nimble than his predecessor and less reliable than his reputation.

It also raises key questions about Vodafone's future strategy. Perhaps, rather than looking after his shareholders' short-term interests, Mr Sarin now has his sights on another US target. Elsewhere in the world, Vodafone has made a policy of controlling a major company in every market in which it operates. With only a minority stake in Verizon, the company's position in the US does not match that profile.

Some of the wilder speculation would have Vodafone reverting to the mega-deals of the bubble era, perhaps trying to buy out Cingular or even the whole of Verizon's fixed-line and wireless business. Vodafone could then repeat the trick it played with Germany's Mannesmann in 2000, selling off the fixed-line and other non-core businesses to pay down debt.

More plausibly - and less expensively - the British mobile phone giant could launch a bid for the 55 per cent of the Verizon venture it does not already own. That would cost much more than Mr Sarin was prepared to pay for AT&T Wireless and presumably involve a hostile bid for a previously well-disposed partner that would make little sense technically.

Until now, Verizon had been expected to buy out Vodafone. And, unlike both Cingular and AT&T Wireless, Verizon does not use the GSM standard Vodafone needs for full compatibility with the rest of its world-wide network.

Mr Sarin may instead decide to follow the advice of many City analysts and remain with the status quo in America, contenting himself with the handsome dividends the company picks up from its stake in Verizon.

If that is his strategy, Mr Sarin may now find himself turning his attention back to Europe. He has unfinished business in France, where Vodafone owns 44 per cent of the dominant French mobile operator SFR Cegetel but has for years coveted a controlling interest. The rest, owned by Vivendi Universal, only gets more expensive as Vivendi returns to financial health.

However, Vivendi chief executive Jean-Rene Fourtou is not keen to sell, having already blocked a Vodafone takeover last year by acquiring British Telecom's 26 per cent stake in the mobile firm's parent Cegetel.

Buying Vivendi out of SFR Cegetel now would reportedly cost at least Euro18 billion (HK$175 billion). Selling part of the Verizon Wireless holding back to Verizon and using a put option which comes into effect later this year could help Vodafone pay for leadership in France.