Vodafone poised to bid for US rival
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Your support makes all the difference.VODAFONE IS considering entering the bidding for its US rival AirTouch in a move which could see the mobile phone group almost double in size.
AirTouch confirmed on Sunday night that it is in talks with Bell Atlantic, the largest local phone company in the US, about a takeover which would probably value the US mobile operator at $45bn (pounds 27bn).
However Vodafone, which has long been seen as an ideal merger partner for AirTouch and briefly held talks with it last year, is poised to enter the fray.
The operator is interested in AirTouch's international assets, but less keen to enter the US market. In Europe, AirTouch complements Vodafone as the companies were members of rival consortia when mobile phone licences were awarded. "It would be a marriage made in heaven," said analyst Jim McCafferty of SG Securities.
One possibility is that Vodafone and Bell Atlantic carve up AirTouch between them. Bell could combine AirTouch's West Coast business with its own mobile operations to create a national operator. Vodafone would take over AirTouch's international businesses.
Vodafone is thought to have been surprised by reports of an AirTouch/Bell deal. The acquisitive US operator is still obtaining regulatory approval for its $53bn acquisition of GTE, its US rival, announced last year.
Chris Gent, Vodafone's chief executive, is currently in Australia watching the fifth Ashes Test. Vodafone sponsors the England team. "We do not comment on market rumour and speculation," a spokesman for Vodafone said last night.
Vodafone's bargaining position will be helped by its strong stock market performance over the past year, during which its shares more than doubled in value, leaving it in a strong position to issue shares as part of any deal. Yesterday Vodafone shares jumped 73p to 1,049p, valuing the company at pounds 32bn, as it confirmed that it had widened its lead over its rivals in the last quarter of last year.
In the final three months of 1998 it signed up 933,000 new customers in the UK. Explosive growth of its pay-as-you-go service, which added 755,000 new customers, accounted for most of the rise.
Cellnet maintained its number two ranking with 658,000 new users, 455,000 of which were pre-paid customers. Orange added 512,000 customers, while One2One signed up 493,000.
Analysts welcomed the growth, but questioned how profitable the new customers would be. "The question is to what extent the operators can gravitate these customers on to fixed contracts in the future," said Chris Godsmark, an analyst at Henderson Crosthwaite.
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