Vodafone up as U.S. alliance hopes continue
LONDON, Sept 13 (Reuters) - Shares in Vodafone AirTouch Plc gained on Monday amid continuing hopes for a possible link-up with Bell Atlantic Corp (NYSE:BEL - news) in the United States, and as a sizeable seller backed away from the market, dealers said.
Vodafone stock rose 26p or 2.2 percent to 12.19 pounds by 0837 GMT in volume of around 2.1 million shares.
The shares received a fresh upward push after Bell Atlantic on Sunday confirmed in a statement it was in talks with Vodafone about establishing a ``U.S. business relationship.'
The Bell Atlantic statement came after one from Vodafone on Sept 6 about the discussions. It also followed a New York Times article on Sunday saying that, if the talks went well, the companies could form a nationwide wireless company valued at between $70 billion and $80 billion.
Dealers said they were surprised Vodafone stock had not gained last week following the Vodafone statement, but said it had been pegged back by a large seller of the shares.
Analysts said a deal with Bell Atlantic would help fill Vodafone's gaps in the U.S. market, particularly on the east coast. It would also solve the problem faster and more cheaply than other alternative strategies, they said.
``The other options are to buy another U.S. operator, or attain licences and build its own network,' said an analyst.
``The first option is very expensive, and the second would take time and would incur start-up costs. Vodafone has said it wants to have a national footprint and be able to compete with the big guys when the U.S. really market takes off. And they think will happen in 18 months.'
Meanwhile, Vodafone on Monday said the talks with Bell Atlantic could lead to a new U.S. cellphone giant which might be demerged.
Vodafone's comments followed press reports the two groups might float the newly merged U.S. mobile phone business, with Vodafone and Bell Atlantic taking 45 and 55 percent stakes respectively. The reports said the new group would be worth between $70 and $80 billion.
Analysts at Credit Suisse First Boston questioned the logic of a flotation in a morning meeting note, adding the $70 to $80 billion price tag looked rich.
CSFB analysts also said the two groups were under pressure to gain a nationwide footprint, resist competitive pressures and boost subscriber growth.
Analysts at the investment bank were not immediately available to comment.
CSFB rates Vodafone stock as a ``buy' and has a 12-month price target on the shares of 15.00 pounds. |
