Vodafone may be stung to bid for Mannesmann
By Kirstin Ridley
LONDON, Oct 19 (Reuters) - Takeover talks between Mannesmann AG and British mobile phone group Orange Plc (quote from Yahoo! UK & Ireland: ORA.L) deal a blow to the European aspirations of Vodafone AirTouch Plc and might trigger a defensive bid for Mannesmann.
Analysts said on Tuesday that British-based Vodafone, the world's biggest cellphone group, could see its key German and Italian operations unravel if its former German ally buys Orange -- and Vodafone should do what it could to stop it.
Vodafone shares were the biggest losers in the FTSE 100 index, sinking 3.6 percent or 10-1/4p to 273-3/4p by 1436 GMT as investors fretted over the fallout of a Mannesmann bid for Orange.
Vodafone and Mannesmann are partners in Germany, Italy and France and analysts had expected the UK company to move closer to its German partner after securing nationwide U.S. coverage and a key Japanese deal in October.
Vodafone's ambitious Chief Executive Chris Gent said in June that he would ride to Mannesmann's rescue as a white knight should it attract a hostile bid -- unless there were a material change in circumstances.
Some analysts believe news on Tuesday that Mannesmann is in bid talks for Vodafone's arch-rival Orange could constitute such a difference. After all, it is not the first time that the aggressive German firm has tried to buy a UK cellphone group.
Mannesmann also expressed an interest in One2One, the smallest of Britain's four mobile phone companies, which was sold to Deutsche Telekom for 8.4 billion pounds ($14.03 billion) in August.
``If Mannesmann persists in this, it demonstrates quite clearly that it is more interested in building its own creation across Europe rather than in collaborating with Vodafone,' said John Tysoe, telecoms analyst at WestLB Panmure.
``And I think they (Vodafone) will bid.'
TO COMPETE OR COLLABORATE?
Although the compete and collaborate model is alive and well in the telecoms industry, some analysts believe that Vodafone may have little choice but to launch a defensive bid to secure its presence in two of Europe's most crucial markets -- Germany and Italy.
Mannesmann controls D2-Mobilfunk, the leading German mobile phone group and Vodafone holds a 34.8 percent stake. The German group also has a 55 percent stake in the number two carrier in Italy, Omnitel Pronto Italia Spa, while Vodafone holds a 21.6 percent stake.
Less at issue is a joint holding in SFR (Societe Francaise du Radiotelefon), the number two cellular carrier, in which Vodafone holds a 20 percent stake and Mannesmann has around 12 percent.
``These relationships are completely untenable if Mannesmann buys Orange,' said another analyst.
Vodafone declined to comment.
A company spokesman merely noted that Vodafone had only heard about Mannesmann's planned bid hours before from ``various different sources.' But he added: ``As far as I'm aware we (Mannesmann and Vodafone) are still friends.'
``You get conflicts in all aspects of telecoms so it is not an absolute certainty they would have to unwind their relationships,' noted another analyst.
``But I can't believe that a bid would not raise the stakes massively on a pan-European basis. It's an aggressive move against Vodafone AirTouch.' |
