Mannesmann begins defence

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The Independent Online
KLAUS ESSER, chairman of Mannesmann, officially launches his defence against Vodafone AirTouch's pounds 82bn unsolicited takeover offer with a withering attack this morning in London.

The attack was previewed last night by the German company's 20-member supervisory board in Dusseldorf. The board, which features top German industrialists such as DaimlerChrysler's Jurgen Schrempp and Deutsche Bank's Josef Ackermann, is backing Mr Esser at the level of the 253-euro- per-share all-paper offer launched 10 days ago by Vodafone.

Mr Esser and Hans Snook, chief executive of Orange, which Mannesmann formally acquired last week for pounds 22bn, are expected to argue in separate presentations to City analysts, fund managers and bondholders that Vodafone has erred by taking minority stakes in most of its subsidiaries. They are also likely to criticise Vodafone for agreeing last month to insert its US interests in a new venture in which Bell Atlantic is controlling shareholder.

Mr Esser is likely to say that Mannesmann is better positioned for growth by combining its fixed-line businesses in German and Italy, with mobile operations in there and in Britain. Mr Snook, in his presentation, will stress that Orange has a better record in attracting high-use customers in Britain and that its brand, already being rolled out in Austria, Belgium and Switzerland, has more potential for expansion.

Analysts note that Internet traffic is not only the fastest growing, but also the most profitable segment of the telecoms market, and that fixed-line operators are drawing most of the benefit.

Although the next generation of wireless networks will have significant data capability, those systems are unlikely to be operating until 2002 and are unlikely to have a significant mass-market presence until at least 2004. That could mean that Vodafone will remain a laggard in the booming Internet sector.

Mr Snook is also expected to compare Orange's robust growth prospects, particularly in gaining market share and boosting usage, with Vodafone's relatively flat performance and falling market share in the subscription market.

He will also stress that Orange is ahead of Vodafone in building a dense, data-capable network that will allow significant interactivity even before the next generation networks come on stream.