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Technology Stocks : Vodafone-Airtouch (NYSE: VOD)
VOD 11.98+1.1%11:44 AM EST
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To: David Wiggins who wrote (1938)9/16/1999 10:07:00 PM
From: MrGreenJeans  Read Replies (1) of 3175
 
Cellular Bells-Financial Times

Yesterday's global mobile telephony alliance between British Telecommunications and AT&T is a glorified marketing pact. There is no talk of a formal combination of assets, such as Vodafone AirTouch and Bell Atlantic are planning in the US. Even the promise of a seamless global service across 150 countries is no more than talk until next year, when the first handsets are launched that can cope with both US and European cellular standards.

In one sense, the looseness of the alliance is a plus, because it requires no regulatory approvals. AT&T and BT are still awaiting clearance for last July's $10bn joint venture of their international fixed-line operations. But it limits synergies. While there will be some from joint purchasing and eliminating roaming charges on each others' networks, the companies refused to quantify them.

Nor is it clear whether keeping mobile and fixed-line businesses under one roof is strategically sensible. Vodafone's success, both operationally and on the stock market, makes a strong case for focus. AT&T and BT have to prove that integration will create more long-term value than a quick spin-off of a rapidly-growing, highly-rated cellular business. What is clear is that the two are drawing closer together. Certainly, links such as yesterday's make it difficult for either to strike a deal with a third party. Fear of the regulators and corporate activity on other fronts, such as AT&T's cable purchases, have probably forced this drawn-out mating dance. But in a consolidating industry, a full merger looks ever more likely.
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