Vodafone May Look to Buy U.S. Wireless Company, Analysts Say
By Dana Cimilluca
Vodafone May Look to Buy U.S. Wireless Company, Analysts Say
Newbury, England, Feb. 7 (Bloomberg) -- Vodafone AirTouch
Plc, the world's No. 1 wireless company, may acquire a U.S.
cellular company or add to its stake in its U.S. affiliate
following the purchase of Mannesmann AG, analysts said.
The $192 billion takeover of Germany's biggest cellular
operator, the largest-ever acquisition, indicates that Newbury,
England-based Vodafone wants to own assets around the world,
analysts said. It follows last year's purchase of AirTouch
Communications Inc., which gave Vodafone millions of U.S.
customers and some international networks.
Possible targets include VoiceStream Wireless Corp. and
Nextel Communications Inc., analysts said. Vodafone also could
expand by boosting its 45 percent stake in a proposed joint
venture with Bell Atlantic Corp. and GTE Corp. that will be the
biggest U.S. wireless phone company with an expected 27 million
customers by 2001.
The Mannesmann acquisition ``shows that Vodafone places a
greater importance on controlling the network than they had
previously said,' said David Freedman, a wireless analyst at
Bear, Stearns & Co. who doesn't have a rating on Vodafone.
Vodafone's American depositary receipts fell 4 1/8 to 53
11/16 in New York Stock Exchange trading. New York-based Bell
Atlantic's shares rose 1 3/16 to 59 3/4, while Irving, Texas-based
GTE rose 1 7/16 to 70 1/2. Mannesmann ADRs rose 3 9/16 to 325 on
Friday.
Bellevue, Washington-based VoiceStream rose 7 7/8 to 139
13/16 in Nasdaq trading. Chicago-based Aerial rose 3 7/16 to 61
13/16. Omnipoint, based in Bethesda, Maryland, rose 6 5/8 to 122
1/8. Reston, Virginia-based Nextel rose 1 9/16 to 119 7/16.
Options
The September agreement between Vodafone and Bell Atlantic
will create a national wireless network, a prized asset that many
carriers have been scrambling to assemble. Bell Atlantic is the
No. 2 U.S. local-telephone company. GTE, which is set to be
acquired by Bell Atlantic in an $85.1 billion transaction,
provides local-telephone and wireless service in 29 states and
long-distance service and Internet access nationwide.
Mark Lowenstein of Boston-based market researcher Yankee
Group said Vodafone may attempt to negotiate a greater ownership
stake in the Bell Atlantic joint venture, possibly next year.
Regulatory obstacles could prevent Vodafone from making other
U.S. acquisitions as long as it's a partner in a national carrier,
analysts said. If a greater ownership stake isn't available,
Vodafone may look to exit the joint venture and pursue
acquisitions on its own, they said.
VoiceStream and Nextel could be targets. Nextel, controlled
by cellular pioneer Craig McCaw, operates a nationwide wireless
network, while VoiceStream is building a national presence through
acquisitions of Omnipoint Corp. and Aerial Communications Inc.
VoiceStream, Omnipoint and Aerial use the same wireless-
communications technology that Vodafone does in Europe, called
global system for mobile communications, or GSM. Nextel uses
integrated digital enhanced network, which is based on the GSM
standard.
The Bell Atlantic joint venture uses code division multiple
access, or CDMA. Phones that work on one technology don't work on
the other.
Little Pricing Impact
While Vodafone may look to do other acquisitions in the U.S.,
consumers aren't likely to see benefits from them in the near
future.
The Mannesmann acquisition shouldn't have a major impact on
the pricing of wireless services in the U.S., analysts said.
Because of the technological differences between Vodafone's
European and U.S. assets, economy of scale improvements will be
slow in coming. For instance, the transaction will not immediately
lead to increased equipment purchasing power.
The Yankee Group's Lowenstein foresees a decline of less than
10 percent in average U.S. prices this year, following a
16 percent decline in 1998 and a 10 percent drop last year. He
said he expects Vodafone and its partners and others to focus more
on offering new features and additional minutes than lowering the
average customer's monthly bill. |
