BT and Vodafone square up over Spanish operator

BRITISH TELECOM and Vodafone AirTouch are preparing for a showdown on the Iberian peninsula with competing bids to win control of Airtel, Spain's second largest mobile operator.

The battle is focused on striking a deal with Banco Santander Central Hispano (BSCH), which is the biggest shareholder in Airtel with a 30.5 per cent stake. Airtel, which has 4.3 million customers, is valued at about pounds 15bn, making BSCH's stake worth around pounds 5bn.

Spain has one of the fasting growing mobile markets in Europe. Airtel's clients nearly doubled to 4.12 million between January and October.

Vodafone, with a 21.7 per cent stake in Airtel, has been reported in the Spanish press as being close to a deal that would close by the year- end. Vodafone last night would not comment on the matter.

For BT, which has a 17.8 per cent share in the Spanish mobile operator, acquiring Airtel would leave it with 48.3 per cent. Should it outmanoeuvre Vodafone, BT could gain outright control by acquiring any of at least three stakes that range in size from 2 per cent to almost 11 per cent.

BT also declined to comment on the issue last night. However, BT executives have stressed that the company is actively looking to build on its stakes in several European ventures.

Though BSCH's stake is likely to be sold, industry watchers say a secret shareholders' agreement makes it uncertain what terms would govern a stake sale.

Some analysts believe that remaining shareholders could have an option to buy the Spanish bank's interest on a pro rata basis related to the size of their existing interest. Alternatively, shareholders could have an option to force the buyer of another stake to offer them the same proportionate amount for their interest.

According to Spanish reports, Banco Santander may trade its Airtel position for a 5.5 per cent stake in Vodafone, making it the biggest shareholder in the world's largest mobile firm.

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