Spain
Aritcle from the European Press
Banco Santander Central Hispano SA holds the trump card in the long-standing battle between British Telecommunications PLC and Vodafone Airtouch PLC for control of Airtel Movil SA, analysts said.
Vodafone Airtouch currently has 21.7 pct of the fast growing mobile phone operator, while BT is a close third with 17.8 and BSCH the largest shareholder with a direct 30.5 pct stake.
Over the past two years, Airtel's two technological partners have been vying unsuccessfully to win undisputed control of the company.
This has resulted in the delay, on more than one occasion to plans for an initial public offer of about 30 pct of the operator, approved by shareholders last year.
"The problem is that both BT and Vodafone Airtouch want to increase their presence in Airtel, not reduce it by floating part of their stake," an analyst at a leading Spanish bank who asked not to be named said.
As for BSCH's holding, the bank has always considered this to be a financial investment, "as is the case with its other industrial stakes," she said.
"The most likely scenario was that the bank would sell in the public offer, but with that on an indefinite back-burner, speculation has been mounting that it will cut a deal with BT or Vodafone Airtouch," she said.
"In this case, BT should have the upper hand because of its long-standing links with Banco Santander," she added.
An analyst at a leading Dutch bank who asked not to be named, said BT, with its strong cash flow and low borrowings, has the financial muscle to go for a controlling stake in Airtel.
"BT has low gearing, while in the case of Vodafone, it's fairly high," he said.
Since the collapse of its alliance with Telefonica, following WorldCom Inc's knockout bid for MCI Communications Corp, BT has been actively seeking to boost its presence in the Spanish market. Last month, the UK group's BT Espana SA unit began fixed line telephone operations.
"BT is keen to expand its presence in Airtel, a small to medium-sized group which has performed better than a lot of people thought and is proving to be a very strong competitor for Telefonica," the Dutch bank analyst said.
"And, Spain is a key strategic play for BT. It only has a minority stake in the French (mobile telephone) market, nothing in Germany and the Spanish mobile telephone market is still very much in the growth phase," he added.
In April, Airtel chairman Juan Abello said the market penetration of mobile phones is expected to increase to 25-30 pct of the population in 1999, up from 18 pct a year earlier.
The upbeat outlook for the mobile phone business in Spain has led to recent valuations of Airtel ranging from 2-3 trln ptas, analysts said.
"And while this may seem high, look at the price paid by Deutsche Telekom for One-2-One," the Spanish bank analyst said, adding that "at these prices, BSCH stands to make a killing from the sale of its Airtel stake."
So, when BSCH raised its stake in Airtel to 30.5 pct, by acquiring Empresa Nacional de Electricidad SA and Union Electrica Fenosa's joint 16.8 pct stake, speculation was rife that the bank's final goal was to sell its holding to BT.
With nearly 50 pct of the operator, BT would effectively have won control of Airtel.
But BT's ambitions were thwarted by BSCH's decision to hold on to its shares for the time being, and sign an agreement with the Spanish savings banks, which jointly owns 13 pct of the company, to form a new group of shareholders within Airtel.
"BSCH's move is a smart one. It, and the savings banks, have strengthened their respective positions by forming a 44 pct-strong shareholder group, and if BT wants to increase its stake in Airtel it is going to have to negotiate with that block - It's good for all concerned," Beta Capital analyst Juan Berberana said.
But besides creating a new shareholders' group within Airtel, BSCH has been lobbying to increase its number of members on the telephone company's board to six from two, corresponding to the size of its current stake in the company.
The request was rejected at the EGM last month by the group of shareholders which controls 56 pct of the company, and includes BT, Vodafone Airtouch, Corp Financiera Alba SA, Acciona SA and chairman Juan Abello's holding company Grupo Abello.
They argued that BSCH should first relinquish those seats it occupies on the management boards of other telecommunications companies, such as Retevision SA and Amena, before tightening its grip on Airtel.
"But I don't think this move (on the part of BSCH) is significant in terms of the bank's medium-term plans for Airtel. It's just a way of ensuring more of a say in the management of the company," Beta Capital's Berberana said.
He also disagreed that the bank's recent sale of its 15.8 pct of fixed line operator Uni2 and its imminent disposal of its 5.5 pct of Retevision SA reflects any change in strategy.
"The government's decision last month to limit BSCH's holdings in key strategic sectors such as telecoms gave it no choice but to reduce its stakes. But given the bright outlook for Airtel, it's logical that it would hang on to these shares for the time being," Berberana said.
On recent press reports suggesting that BSCH might be in talks with BT, or Vodafone Airtouch, with the aim of acquiring a stake in one of the operators and becoming a major player in a global telecoms group, Berberana said: "It doesn't make a lot of sense."
"The bank's not looking for an active role in the telecoms sector, or any other apart from finance. It will sell the Airtel stake sooner or later." |
