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Technology Stocks : Vodafone-Airtouch (NYSE: VOD)
VOD 14.17+1.6%Jan 23 9:30 AM EST
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To: MrGreenJeans who wrote (1929)9/14/1999 10:18:00 PM
From: MrGreenJeans  Read Replies (1) of 3175
 
VODAFONE/BELL ATLANTIC: Joint venture
Financial Times, Lex

The mooted tie-up between the US mobile assets of Vodafone and Bell Atlantic looks a coup for both companies. It would give Bell the national footprint it originally sought when it bid unsuccessfully last year for AirTouch - an increasing necessity given the emergence of AT&T and Sprint's countrywide networks. And for Vodafone - the victor in the bidding war for AirTouch - it would offer a neat way to avoid the management distraction involved in bulking up its sub-scale US business.

Indeed, Vodafone looks to have made a virtue of necessity. In theory, the deal could have been a negative. Vodafone's US assets, with 9m subscribers, are smaller than Bell's (14m). The deal therefore involves Vodafone putting wholly-owned assets valued at about $40bn (œ25bn) into a minority-controlled joint venture.

But Vodafone seems to have found two methods to deal with this. First, it is seeking an insurance clause either allowing it to put its shares in the venture back on Bell, or else force a flotation of the business.

And second, if the figures bandied about are to be believed, it would receive a premium for its US business. Given the two businesses have similar margins and revenues per subscriber, Vodafone could have expected to receive 40 per cent of the combined operation. Its mooted 45 per cent share implies a 30 per cent premium. If Vodafone can close a deal on these terms, investors should be grateful.
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