Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Vodafone (VOD) -- Ignore unavailable to you. Want to Upgrade?

To: David Wiggins who wrote (38)	1/18/1999 2:07:00 AM
From: Chuzzlewit	Read Replies (1) \| Respond to of 109

Sunday January 17 1:11 PM ET ANALYSIS-Int'l Gems Key To Vodafone-Airtouch By Neal Boudette FRANKFURT, Germany (Reuters) - The $65 billion takeover of AirTouch Communications Inc. by Vodafone Group Plc will link the leading cellular phone carriers in the United States and Britain. But their holdings beyond their home markets are the crown jewels of the deal. The merged group Vodafone AirTouch Plc will command a dominating position in continental Europe and a broad reach across Asia through holdings that are propelling the profit and sales gains on both sides of the marriage. "The international pieces are certainly the heart of the deal and what makes it particularly interesting," John Tysoe at Societe Generale in London said. "This will be a company for the 21st century." Vodafone Friday prevailed in the takeover when Bell Atlantic Corp. (NYSE:BEL - news) gave up after bidding about $48 billion for AirTouch. With a market value of $110 billion, the Vodafone AirTouch Plc will be a cellular powerhouse and the third-largest publicly traded company in Britain. But the highlight of the deal, the largest cross-border merger to date, is the new company's international line up. In Europe, where cellular phone use is surging, Vodafone AirTouch will be comparable to no other provider -- holding leading positions in all of the major economies and a network covering 95 percent of the European Union. The combined firm will have stakes in the No. 1 or No. 2 cellular phone networks in Germany, France, Italy, Spain, the Netherlands, Belgium and Greece, as well as Vodafone's top spot in Britain. "It's almost a contiguous network," Tysoe said. "The only piece missing is Austria." Vodafone and AirTouch are also partners in a growing Swedish carrier. AirTouch is in Portugal, Poland and Romania as well. In Asia, AirTouch is in Japan, South Korea and India. Vodafone has subsidiaries in Australia, New Zealand and Fiji. The British group also has units in South Africa and Uganda. They are partners in an Egyptian carrier. These engagements are the driving forces behind both companies' growth as price-competition erodes gains in their home markets. In the six months to September 1998, for example, Vodafone booked operating profit of 455 million pounds ($800 million), some 129 million ($210 million) more than the year-ago period. But Britain contributed only 23 million pounds ($40 million) to that increase -- while more than four times that amount of profit growth came from international markets, according to Reuters' calculations. Continental Europe alone contributed 78 million pounds ($145 million) to the increase. Vodafone's sales in the period rose 34 percent -- with three-quarters of the growth coming from outside Britain. AirTouch shows similar results. Through the first nine months of 1998, net income climbed to $478 million, a year-on-year rise of $181 million -- with $164 million dollars of the increase from international holdings. In the third quarter, AirTouch added one million new customers -- 74 percent of them from international businesses. "In the U.S., we are feeling the heat of increasing competition, "AirTouch Chief Executive Sam Ginn said when the company reported its third-quarter earnings. Vodafone AirTouch will face competition internationally, but is well positioned to thrive. The world's population of cellular subscribers is expected to rise from 194.6 million in 1997 to 550 million in 2002, according to market researcher International Data Corp. Vodafone AirTouch has networks covering about a billion inhabitants, and its combined customer count is 24 million -- several times the total of any other international mobile player. "No one else has this kind of footprint," Tysoe said. Cable & Wireless Plc is also engaged in mobile carriers around the world, but only has about three million customers. In Europe where mobile phone penetration rates are climbing well ahead of most other regions around the world, the merged group will own stakes in some of the fastest-growing carriers. Through AirTouch, it holds stakes in Omnitel Pronto Italia SpA and Airtel Moviles SA in Spain. Via Vodafone come holdings in France's Societe Francaise du Radiotelephone SA (SFR) and Libertel Group BV in the Netherlands. In Germany, it will sell Vodafone's 17 percent stake in E-Plus Mobilfunk GmbH, which is losing money, and go with AirTouch venture Mannesmann Mobilfunk GmbH, the country's top cellular service. "Vodafone and AirTouch match up very well in Europe, and would be a very powerful combination," Steve Jobber, an analyst at Banque Paribas, said. Worldwide, the only major gaps in its coverage are Latin America and China. But Tysoe said these gaps could be overcome. "I don't think (Latin America) is vital," he said. "But China, yes, long term they would like to be there. And together they have such strength that they will be able to fill in those pieces. They are the partner of choice for anyone."