Bell deal "best case" for Vodafone -analyst
LONDON, Sept 22 (Reuters) - A planned tie-up of the U.S. mobile phone networks of Britain's Vodafone AirTouch Plc and Bell Atlantic Corp (NYSE:BEL - news) represents a near best case solution for Vodafone in its quest to create a pan-American network, Lehman Brothers said on Wednesday.
In a research note published after Tuesday's announcement of the deal, Lehman analyst Jo Oliver said achieving national U.S. mobile coverage had been the key strategic challenge facing Vodafone. By joining forces with Bell Atlantic, it was taking the best route to creating an entity with clear nationwide market leadership, he said.
``The alternatives could have cost $10 billion to $15 billion and taken two years to implement,' Oliver said in the note. The companies said on Tuesday they expect to launch the service, under a single nationwide brand, in six to 12 months.
The joint entity will serve 20 million wireless and 3.5 million paging customers, making it the largest wireless business in the U.S., but Oliver said the enormous growth potential in the U.S. market made the deal extremely attractive.
``There are few, if any, reasons why the U.S. market should not ultimately experience the levels of penetration and rates of subscriber growth that are being experienced in Europe,' he said.
The combined operation will cover around 90 percent of the U.S. market, which has lagged behind Europe in terms of penetration, giving access to a potential 212 million customers.
Oliver also paid tribute to the quality of Vodafone's management in securing the deal in a timely and positive manner, thereby instilling greater confidence in shareholders that Vodafone's board were well placed to tackle the multitude of strategic and operational challenges that face operators in the fast-moving mobile telephony market.
Lehman upgraded Vodafone shares to ``buy' from ``outperform,' increasing its March 2000 price targe by 1.50 pounds to 16.50 pounds. |
