France Tel woos BellSouth
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June 7, 1999: 8:24 a.m. ET
U.S. carrier holds key to German mobile market as French giant seeks entry
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LONDON (CNNfn) - BellSouth has emerged with a decisive role in the restructuring of the European telecom market amid reports Monday that France Telecom is seeking to break into the German cellular market.
The French company wants to buy the 17.5 percent stake in Germany's E-Plus Mobilfunk that Britain's Vodafone must sell to win regulatory approval for its takeover of AirTouch Communications.
However, BellSouth, which has a 22.5 percent stake in E-Plus, holds right of first refusal over the Vodafone stake along with Veba and RWE, the German utilities that control 60 percent of E-Plus between them.
"If there is a potential buyer, BellSouth would have the right to decide to buy the Vodafone stake instead of the other company," a Veba official told Reuters. "If BellSouth passes, then Veba and RWE would have that right."
France Telecom is willing to pay four billion marks ($2.10 billion) for the E-Plus stake, according to the German business magazine Focus. The French company declined to comment.
France Telecom has avoided the German market because of its alliance with Deutsche Telekom. However, relations between the two have soured in the wake of Deutsche's failed bid for Telecom Italia, a deal which would have derailed its relations with the French company.
Vodafone must withdraw from E-Plus because of the stake held by AirTouch in Germany's top mobile group, Mannesmann Mobilfunk. The departure would leave E-Plus without an international partner, and France Telecom is seen as a good fit by analysts.
The French company will be looking for Bell South to outline its intentions in the German market. Last year Bell backed out of a plan to fold E-Plus into o.tel.o Communication, a long-distance carrier started by the Veba and RWE.
BellSouth (BLS) shares closed Friday up 1/2 at 46-1/2 while Vodafone (VODFF) added 3.1 percent to 1,264 pence ahead of its annual results Tuesday. France Telecom (PFTE) added 0.55 euro at 73.65 cents.
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