Financial Times 9/13
BELL-VODAFONE: Mobiles IPO eyed up
By Daniel B”gler in New York
Vodafone AirTouch and Bell Atlantic are negotiating to merge their US mobile telephone units into a separate company valued at $70bn to $80bn (œ49bn) - and are likely to take the new company public within one to two years.
Bell Atlantic confirmed yesterday that the companies were in talks "regarding the possibility of a US business relationship", though it said there could be no assurance that the discussions would be successful. Vodafone confirmed last week that the two were holding talks.
The new company would unite the cellular phone assets of AirTouch, which holds licences in 25 western states of the US, with those of Bell Atlantic, whose strength is in 24 states in the east. By linking their networks, the companies would gain instant nationwide coverage, allowing them to compete against other national operators such as AT&T and Sprint.
Bell Atlantic would own about 55 per cent of the new company, according to people close to the talks, even though it is contributing 14m or about 60 per cent of the joint subscribers, while Vodafone is bringing 9.5m.
But since the UK group will have a minority shareholding, it is understood to be insisting on a rapid initial public offering of the new business, to provide it with an exit route in case relationships between the companies sour.
The two managements are still discussing who would run the new company and sit on its board, though Bell Atlantic is expected to have at least one more board seat to reflect its majority control.
While negotiations between Bell Atlantic and Vodafone have made progress over the past week, the two have had a tense relationship since Vodafone's $62bn bid for AirTouch trumped a previous offer from Bell Atlantic in January. Bell Atlantic then dissolved its PrimeCo joint venture with AirTouch in April.
Chris Gent, Vodafone's chief executive, has sought to restart talks because he is eager to avoid the time and expense of buying or building a network to cover the whole country. If the talks fail, leaving Vodafone without coverage in the eastern US, the group is likely to seek an acquisition of a smaller US rival.
Bell Atlantic is expected to complete its $53bn merger with GTE, another local phone company, early next year. GTE's wireless properties, some of which compete with AirTouch, are expected to be incorporated into the new company in a second phase of the deal.
Both Vodafone and Bell Atlantic declined to comment on reports of the talks. |
