Esser opens fire with withering attack on Vodafone strategy and growth prospects

KLAUS ESSER, Mannesmann chief executive, yesterday launched his defence against Vodafone AirTouch's hostile pounds 81bn takeover bid with an attack on the UK company's strategy and prospects. He said Mannesmann expected to boost earnings by more than 30 per cent a year through to 2003.

Mr Esser's remarks, his first in public since the Vodafone bid 10 days ago, seemed designed to reduce the already slim chance that Mannesmann could agree a friendly merger. "Any alliance between Vodafone and Mannesmann creates a vast dis-synergy, " Mr Esser said, adding that a link was "unfeasible" for strategic and growth reasons. "Our shareholders will get richer with an integrated wire and wireless strategy," he said.

He refused to state a higher figure at which Vodafone might get support. "The value of Mannesmann is significantly higher than the offer on the table, by a wide margin," Mr Esser said.

Vodafone stock closed down 3p at 295.25p, valuing its all-share bid at about 252 euros per share. Mannesmann ended down 5 euros at 203 euros.

Mr Esser confirmed that Mannesmann would spin off its automotive and engineering interests next summer, three years earlier than first planned.

Hans Snook, chief executive of Orange, which Mannesmann formally acquired last week for pounds 22bn, claimed in a parallel presentation that Orange, with 30 per cent more sites and more frequency in one block, has a two-year network buildout lead over Vodafone. "In practically every area in the UK market Orange has been the leader, Vodafone the follower," he said.

Christophe Nicholson, an analyst with Oraca, who believes the take-over battle will go the wire, said: "The presentation has helped a lot. Mr Esser's fixed/mobile strategy is plausible, and he showed a lot of good prospects in fixed-line, which hadn't been clear."

Mr Esser said Mannesmann's total earnings before interest, taxation, depreciation and amortisation would reach 3.8bn euros in 2000. He also said Mannesmann's mobile interests, in particular Germany's D2 and Omintel of Italy, would grow this profit by 25 per cent a year for the four years through to 2003.