graphic
News > International
EU clears Vodafone deal
April 12, 2000: 10:07 a.m. ET

Regulators approve $173B Mannesmann buy; relief fuels share rally
graphic
graphic graphic
graphic
LONDON (CNNfn) - European Union antitrust regulators approved Vodafone AirTouch's $173 billion acquisition of German telecom operator Mannesmann Wednesday, attaching conditions that analysts said would not significantly damage the world's biggest mobile-phone company.
    However, more deals in the European phone sector seem sure to follow after the EU ruled that Vodafone must immediately sell the German company's U.K. cellphone unit Orange. Its other main requirement was that Vodafone open its networks to competitors for three years.
    Vodafone secured control of Mannesmann in February after a hostile, four-month battle. Chief Executive Chris Gent had promised he would do whatever it took to secure approval from competition authorities.
    In approving the takeover, the European Commission, the Brussels-based executive arm of the European Union, imposed conditions that it said would ensure the enlarged company's position does not distort competition in the U.K. and Belgian markets. After buying Mannesmann, Vodafone will be Europe's most popular cellular operator with 31 million subscribers in the region, and a total of 42 million worldwide.
    "There is nothing nasty there," said a London-based cellphone industry analyst who declined to be named.
    
Worst fears not realized

    Analysts were reassured that the EU's conditions would have little commercial impact.
    Their biggest concern was that in ordering Vodafone to give rival cellphone companies access to its networks, the Commission could have prevented the dominant company from earning a profit on carrying rivals' calls, while giving competing companies unlimited access to its infrastructure. That could have flooded its network capacity and generated minimal revenue, as call transmission costs are near zero once the infrastructure has been installed. The Commission, though, gave Vodafone a free hand to set charges for access to its networks.
    Regarding the EU's other main condition, the requirement that the U.K. company immediately divest Orange as a standalone unit was expected. Mannesmann last year bought Orange, Britain's third-largest cellular network, for $32 billion, and Vodafone's purchase of the German company brought Orange under the same ownership as Vodafone's own U.K. mobile network, already the country's largest. France Telecom (PFTE) has expressed firm interest in buying Orange to extend its European reach.
    
Atecs fate still undecided

    The Commission's ruling also opens the way for a final decision on the fate of Atecs, Mannesmann's electronic components business. The Mannesmann board originally said the unit was slated for a flotation later this year. However, there have already been two cash offers for the company: a joint bid from German industrial and electronics firms Siemens (FSIE) and privatekty owned Bosch, as well as a smaller offer from German industrial firm ThyssenKrupp (FTKA).
    graphicAlthough Vodafone is believed to favor a trade sale, Mannesmann has legal responsibility for deciding the future of Atecs. The U.K. firm said it would consider the offers for Atecs after the Brussels ruling. The Mannesmann board is due to discuss the matter on Monday.
    Vodafone (VOD) shares rose 2.8 percent to 322 pence immediately after the Commission decision. That lifted its valuation to £200 billion ($344 billion), making it by far Europe's largest company by market capitalization.
    Separately, Vodafone continued to top the bidding Wednesday in the auction for the five third-generation mobile-phone operating licenses that the British government is selling by auction. It bid £4.55 billion for the coveted B license, which offers the broadest spectrum of the five licenses up form sale. Orange topped the bidding for the E license, with a £3.35 billion offer. Back to top

  RELATED STORIES

Atecs chase revs up - Apr. 05, 2000

France Telecom eyes Orange - Apr. 05, 2000

Vodafone seals Mannesmann deal - Feb. 04, 2000

Mannesmann speeds split - Nov. 23, 1999

  RELATED SITES

Vodafone AirTouch

Mannesmann

European Commission

France Telecom

Orange

ThyssenKrupp

Atecs


Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney




graphic

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.