FOCUS-Vodafone may spin off any U.S. tie-up
(Adds analyst comment para 10, 11, 17, share price para 10, details)
By Kirstin Ridley
LONDON, Sept 13 (Reuters) - Vodafone AirTouch Plc, the world's biggest mobile phone company, said on Monday it might spin off any U.S. joint venture with east coast carrier Bell Atlantic (NYSE:BEL - news) if negotiations about a tie-up were successful.
``There are a number of different options and I don't think either side would like to comment on what those options would be,' a company spokesman said. But he added: ``Clearly that (a separate listing) is one that we wouldn't rule out -- but equally there are others.'
Amid mounting speculation that the British-based group was wooing Bell Atlantic to win national coverage of the world's biggest cellphone market, Vodafone last week confirmed talks after being prodded for a statement by the Stock Exchange.
Just two months after completing its $62 billion takeover of west coast carrier AirTouch, Vodafone is hoping to beef up U.S. operations so it has enough market clout to fight heavyweight rivals Sprint Corp (NYSE:FON - news) and AT&T Corp (NYSE:T - news).
But the group said it had set no deadline for a deal after giving current negotiations with Bell only a 20 to 30 percent chance of success. Bell Atlantic also confirmed on Sunday the two were negotiating a possible ``a U.S. business relationship.'
``Doing something in the States is a clear option and it is something we want to do. But it is not a 'drop dead we have to do it now' scenario,' the Vodafone spokesman said.
KEEN DEMAND SEEN FOR U.S. IPO
Analysts said they would welcome any decision to merge the two companies' U.S. businesses into a separate operation, tipped to be worth $70 billion to $80 billion, and take it public.
The cellular industry has become one of the world's fastest growth markets and analysts believe investors would show keen interest in what could become America's only large, pure mobile telephone company.
``There will be investor demand for it,' said John Tysoe, telecoms analyst at WestLB Panmure, as Vodafone shares climbed by almost three percent to 12.26 pounds by 1050 GMT.
``It is something I would very much hope would go ahead. And the idea of having a quoted associate is not at all contrary within the context of Vodafone, which already has four, quoted subsidiaries,' he added.
The Financial Times said Bell Atlantic, which in January saw its own bid for AirTouch trumped by Vodafone, would own around 55 percent of the new company.
PRESSURE MOUNTS TO PATCH UP DIFFERENCES
Analysts believe relationships between the two companies have been soured by the bid battle, and Bell Atlantic has already moved to dissolve a joint venture with AirTouch called PrimeCo., which operates mainly in the midwest of the U.S.
Analysts are keen for Vodafone to patch up any differences and secure a deal that would save it from the hefty investment needed to build out its own network or launch further acquisitions.
Chief Executive Chris Gent in June put the investment cost of building out its U.S. network at between $2.0 billion and $3.0 billion if PrimeCo were abandoned.
The development of the nationwide digital networks by AT&T and Sprint is expected to significantly boost projected U.S. cellular growth rates -- and prompt other operators to seek similar coverage.
``Vodafone has said it wants to have a national (U.S.) footprint and be able to compete with the big guys when the U.S. really market takes off -- and that they think that will happen in 18 months,' noted another analyst.
Vodafone has interests in 12 other international cellular networks in countries including the Netherlands, France, Greece, Sweden, Malta, Australia, New Zealand, Egypt and Fiji. |
