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To: Jon Koplik who wrote (21622)	1/19/1999 8:57:00 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 152472

Another WSJ piece (Vodafone, AirTouch stuff). Last paragraph is definitely worth reading. Sorry if already posted. January 19, 1999 Market Lifts Vodafone Shares, Approving AirTouch Purchase By WILLIAM BOSTON, MATTHEW ROSE and BRANDON MITCHENER Staff Reporters of THE WALL STREET JOURNAL Investors gave Vodafone Group PLC and AirTouch Communications Inc. a ringing endorsement of their proposed $58 billion merger, driving shares in Vodafone up 15% in London trading Monday and electrifying stock prices across the European telecommunications sector. The markets had reason to cheer. Assuming that Vodafone completes its acquisition as planned, the resulting mobile-phone behemoth will not only become the world's largest cellular group. It will also overtake former state monopoly British Telecommunications PLC as Britain's biggest phone company and become the third-largest stock on the Financial Times-Stock Exchange 100-Share Index. "Ten years ago, you had never heard the name Vodafone," said Sam Ginn, AirTouch's chairman and chief executive, at a London news conference called to outline details of the deal. "And five years ago you had never heard the name AirTouch. That suggests to me that there is a revolution going on in our industry." The new company, to be called Vodafone AirTouch PLC, would have an estimated market capitalization of more than $110 billion and annual revenue of $9.9 billion. It will aim, the companies said, to become the "Coca-Cola" of global wireless communications and the main brand recognized by consumers world-wide. Vodafone outbid Bell Atlantic Corp., which withdrew an offer of about $45 billion for AirTouch on Friday, paving the way for Vodafone and AirTouch to make a deal. Completing 'Footprint' Without Bell Atlantic, however, AirTouch still lacks national coverage in the U.S. But Mr. Ginn repeated that he still hopes to complete the company's nationwide "footprint" through the PrimeCo joint venture it shares with Bell Atlantic, its own properties or buying more licenses. Bell Atlantic and AirTouch have a noncompete clause in their PrimeCo contract, but Bell Atlantic has filed suit to void the agreement. Given the pending lawsuit, Mr. Ginn said the companies will go back into negotiations over U.S. markets. "It is in everyone's interests for that to happen. We have a symbiotic relationship with Bell Atlantic," he said. Meanwhile, the chief executives of the two companies also said at a London news conference that they had already begun talks to sell Vodafone's 17% stake in Germany's E-Plus Mobilfunk GmbH and hope instead to raise AirTouch's 35% stake in the more successful Mannesmann Mobilfunk GmbH. "E-Plus is a good business, but Mannesmann is outstanding," said Chris Gent, Vodafone's chief executive, who has been designated head of the new company. New Acquisitions The two companies also said that they plan to raise their holdings in mobile-phone businesses to obtain control in as many of the 23 countries they operate in as possible. The next step, Mr. Gent said, will be to make new acquisitions and bid for new licenses. He declined to put a dollar figure on new acquisitions but said they would be financed out of cash resources. Ken Hydon, Vodafone's finance director, said digesting the takeover will mean taking an annual charge of between $2 billion and $2.5 billion and that the new company won't post pretax profit for another three years. That's because of an estimated $32 billion in goodwill amortization. Total debt will be about $7.5 billion by March 2000. On the London Stock Exchange Monday, Vodafone stock jumped 1.57 British pounds ($2.59) to 12.255 pounds. Lack of Standard The new company will be one of the first truly global wireless enterprises. But the lack of a single wireless standard remains an obstacle to offering services that allow customers to be reached on one phone number anywhere in the world. There is a move afoot to use development of the next generation of mobile communications, which will make it possible for mobile-phone networks to offer fast Internet access and mulitmedia services, to create just such a global standard. But the U.S. and Europe are at loggerheads over its development. Europe is championing a third-generation digital mobile-phone system called WCDMA, largely developed by Telefon AB L.M. Ericsson of Sweden. But Qualcomm Inc. of the U.S. claims the intellectual property rights for the technology. While Qualcomm has successfully licensed its own version world-wide under the name CDMA, it has been effectively shut out of the lucrative European marketplace with the argument that European service providers and consumers don't want to support two incompatible cellular-phone technologies. March 31 Deadline The battle will heat up in the coming weeks as the U.S. and European Union press their cases before the International Telecommunications Union of the United Nations, which has set a March 31 deadline for making a decision on which system to use world-wide. People in the industry increasingly expect a messy compromise in which the ITU will back a family of standards rather than just one. Commenting on the dispute, Mr. Ginn of AirTouch notes that it is this sort of squabbling that Vodafone AirTouch hopes to resolve and pledges the new company will lobby hard to prevent the disagreement from blocking creation of a global mobile-phone standard. "The solution is pretty obvious: allow the next generation to have a single world standard," he says. "The consumer has been lost in the current debate. We will put as much pressure as we can on the ITU to seize this wonderful opportunity to harmonize technological standards." Copyright © 1999 Dow Jones & Company, Inc. All Rights Reserved.