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Enel buys $11B Infostrada
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October 11, 2000: 6:44 a.m. ET
Italian power firm nabs Infostrada telecom unit to add to Wind joint venture
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LONDON (CNNfn) - Italian power company Enel SpA strengthened its position in Europe's fourth-largest telecom market Wednesday by agreeing to buy Infostrada SpA from Britain's Vodafone Group PLC for  12.1 billion ($10.6 billion) in cash, bonds, and assumed debt.
Enel will pay 5.5 billion in cash, an equal amount in bonds and assume debts of about 1.1 billion.
Infostrada, an Internet service provider and Italy's No. 2 fixed-line phone operator, will be merged with Wind, a joint venture between Enel and France Telecom SA that provides cellular and fixed services. After the transaction, Enel's stake in Wind will rise to 73.4 percent, with France Telecom holding the remainder.
 The companies plan to sell a quarter of Wind to the public in an initial public offering in mid-2001, at which time France Telecom may increase is holding to 32.5 percent, leaving Enel with 42.5 percent of the company.
Vodafone, the world's biggest cellphone operator, inherited Infostrada after its takeover of Germany's Mannesmann AG in February, and is selling the unit to finance the acquisition of third-generation mobile phone permits in Europe and to reduce debt.
The sale price could increase or decrease by 600 million depending on how telecommunication stocks perform over the next nine months, Vodafone said. The sale is expected to be completed in the first quarter of 2001.
The merger of Wind and Infostrada will create Italy's second-largest fixed-line telephone company, with 5.1 million customers, and the No. 3 provider of mobile services company, with 4 million cellular users. In the Internet service arena, Wind will be Italy's market leaders, boasting 3.4 million subscribers.
Italy's dominant player in the telephone industry continues to be Telecom Italia SpA.
 According to Vodafone, Infostrada had revenue of 451 million in the 6 months ended June 30, but made a net loss of 109 million.
Shares in Vodafone (VOD) fell 3.3 percent to 240.75 pence in London, France Telecom (FTE) dropped 6.3 percent to 96.40 and Enel rose 1 percent to 4.42. 
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