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BT, Vodafone to buy Airtel
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June 12, 2000: 8:09 a.m. ET
UK telecom firms agree to take control of Spanish cellular operator
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LONDON (CNNfn) - Britain's largest telephone companies agreed Monday to carve up control of Spain's second-largest mobile phone operator Airtel Móvil, ending months of uncertainty over the  24 billion ($23 billion) company.
Under the agreement, Vodafone AirTouch has the right to increase its holding in Airtel to 55 percent, after which BT has the option to acquire the rest and to obtain an equal say with Vodafone in the Spanish company's management. Vodafone currently owns 21.7 percent of Airtel, although in January in acquired options for an additional 16.9 percent. BT owns 17.8 percent.
A 30 percent stake in Airtel is up for grabs after Banco Santander Central Hispano, Spain's largest bank, indicated it would consider swapping the holding for a stake in an international telecom firm. Vodafone (VOD) has long been reported to be a buyer of the holding. 
BT (BT-A) blocked Vodafone's purchase of the BSCH holding in December, reportedly making an offer of its own and citing a shareholder agreement whereby the two U.K. firms had agreed to maintain matching stakes in Airtel.
Airtel is Spain's second-ranked cellular operator, behind dominant former state-owned monopoly Telefónica, with more than 5.6 million subscribers at the end of March. In the year to the end of December 1999 Airtel generated revenue of 333.4 billion pesetas ($1.9 billion) and operating earnings of 75 billion pesetas.
"Spain is one of Europe's fastest-growing mobile markets," Vodafone chief executive Chris Gent said in a statement.
A bigger presence in Spain would bolster Vodafone's position as the largest cellular company in Europe. It owns the most popular network in Britain, and is a leading player in Germany and Italy, Europe's largest markets.
In March the Spanish government granted Airtel one of four licenses to operate next-generation cellular services such as high-speed Internet access. 
"This removes a lot of uncertainty over the situation with Airtel, and it's more in BT's favor than expected," ABN Amro analyst James Ross told Reuters. "BT gets a lot of management control."
BT stock slipped 1 percent to 973 pence in London Monday, while Vodafone shares gained more than 2 percent to 318.75 pence. 
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