AT&T Inc. explored potential deals in the last two months including buying part of Telefonica SA or some of its foreign assets, three people familiar with the situation said.

The second-largest U.S. mobile operator informally approached Spanish authorities to discuss its interest in buying as much as 29.9 percent of Telefonica, and was told such a proposal wouldn’t be welcome, said one of the people, who asked not to be identified as they weren’t authorized to speak publicly. AT&T has also evaluated scenarios that include buying assets such as Telefonica’s U.K. unit O2 or Latin American businesses, two of the people said.

The U.S. company remains interested in assets owned by Telefonica and Vodafone Group Plc, two people said. Dallas-based AT&T is looking to Europe for expansion amid competition at home from Verizon Wireless, the largest mobile carrier in the U.S. Chief Executive Officer Randall Stephenson has said Europe is ripe for high-speed Internet growth.

“Their ability to expand in the U.S. is pretty limited in terms of any significant acquisitions,” said David Heger, an analyst at Edward Jones & Co. in St. Louis. “You can have an opportunity to buy into Europe while things are pretty beaten up. They’d be positioned for whenever the economy finally improves.”

Still, Europe’s economic woes make it a “sinking ship,” he said. “Overall, I’m more negative than positive.”

Shopping List

Also on AT&T’s potential shopping list is EE, the U.K. joint venture of France Telecom SA and Deutsche Telekom AG, one of the people familiar with the matter said.

Mark Siegel, a spokesman for AT&T, and Simon Lloyd, a spokesman for Telefonica, declined to comment.

Telefonica’s American depositary receipts fell 2.7 percent to $12.96 at Thursday’s close in New York. AT&T fell 2.6 percent to $34.35.

“I’m not sure why the deal would make a lot of sense” for AT&T, said Jonathan Schildkraut, an analyst at Evercore Partners Inc. in New York. “Making an investment into assets that don’t add to the growth profile, particularly assets in Europe, would be surprising.”

AT&T has also evaluated an outright merger with Telefonica in recent months, one of the people said, though this would be complicated by the Spanish company’s 51 billion euros ($68 billion) in debt.

Slim Relationship

AT&T is also eager to protect its close relationship with billionaire Carlos Slim and would seek his input on any significant deal with Telefonica, two of the people said. The Mexican telecommunications billionaire competes with Telefonica in several Latin American countries with his wireless operator America Movil SAB, in which AT&T is an investor.

A press official for America Movil, who asked not to be named per company policy, declined to comment.

“Regulators in Latin America might have some concerns if America Movil’s strategic partner was also buying a stake in Telefonica,” Walt Piecyk, an analyst at BTIG LLC, said in an e-mail. AT&T may also be more attracted to Vodafone’s assets and could gain leverage in potential negotiations with the U.K.-based carrier by expressing interest in other European companies, he said.

Telefonica Slide

As Telefonica’s shares slid 39 percent over the past three years, its management identified AT&T as one rival that might make an opportunistic bid for the company, one of the people said. Selling assets such as O2 U.K. to AT&T was an idea proposed internally at Telefonica within the past year, though it did not gain wide support, another of the people said.

“This government has not encouraged, blocked or influenced any kind of bid for any of the country’s companies,” Economy Minister Luis de Guindos said Tuesday at seminar in Santander, Spain. Telefonica said this week it didn’t receive any approach.

In an effort to catch up to Verizon in the U.S., AT&T is upgrading its network to a technology called long-term evolution, or LTE. In April, the company reported first-quarter revenue that fell short of analyst estimates, dragged down by slumping landline sales.

An attempt by AT&T to take over Deutsche Telekom AG’s U.S. unit, T-Mobile, creating the largest U.S. operator, was abandoned in 2011 amid opposition from antitrust regulators.

Reduced Independence

A tie-up between AT&T and Telefonica, based in Madrid, could reduce the independence of one of Spain’s most important companies. The firm is the third-largest Spanish company by market capitalization, and is a major telecommunications competitor in fast-growing emerging markets like Brazil. In Spain, shareholders that acquire 30 percent or more of a company are required by law to make a full takeover bid.

AT&T said this month it holds about 9 percent of America Movil, which also operates throughout Latin America. The relationship with America Movil dates back to 1990, when AT&T’s predecessor, Southwestern Bell Corp., helped back Slim’s privatization of Mexico’s state-owned phone company. Two of America Movil’s board members, Mike Viola and Ray Wilkins, are AT&T executives, while Jaime Chico Pardo, an AT&T board member, is the former CEO of America Movil’s Telmex unit.