Mannesmann set to gain from Olivetti bid victory

ONLY A month ago, Deutsche Telekom and Telecom Italia predicted a new force was about to emerge in Europe's telecommunications landscape.

They were right, but what they didn't anticipate was that it would be not Deutsche, but its chief German rival, Mannesmann. The victory late on Friday by Olivetti in its hostile takeover bid for Telecom Italia doesn't just topple the proposed merger of the Germany and Italy's former monopoly phone companies. It also upsets the balance of telecoms power in Europe, leaving no clear leader among the incumbent carriers, and turning Mannesmann, Olivetti's ally in Italy, into a new heavyweight at the heart of the Continent. "Mannesmann is the clear winner from all this, the laughing third party," said Holger Grawe, an analyst at WestLB Panmure in Duesseldorf.

Mannesmann will now pay Olivetti 14.9bn marks (pounds 5bn) for Olivetti's stakes in the fast growing mobile carrier Omnitel Pronto Italia and the fixed line, long-distance carrier Infostrada.

The company, which was already a partner in Omnitel and Infostrada, ends up with majority holdings in both ventures.

Omnitel and its German counterpart, Mobilfunk, are Europe's second and third largest cellular carriers behind Telecom Italia Mobile. Mannesmann also has a stake in the French group SFR and a mobile licence in Austria.

Mannesmann Arcor is Deutsche Telekom's biggest long-distance rival, while Infostrada is No 2 in Italy. Mannesmann also has minority stakes in the second-largest mobile and fixed-line carriers in France. At 131 euros, Mannesmann shares have nearly quadrupled in 24 months.

None of this is good for Deutsche Telekom. Its planned merger with Telecom Italia would have lifted it into the telecom elite. But its Italian romance poisoned relations with France Telecom, previously a key ally, leaving its international strategy in tatters at a time when intense competition is eroding German market share. German newspapers have already speculated that Ron Sommer's job as chief executive might be in jeopardy.

"This purchase of Olivetti's telecommunications assets will leave Mannesmann with an unrivalled pan-European footprint and leadership in two of Europe's three largest wireless markets," Mannesmann's chief executive designate said in a statement. The company expects the acquisitions to contribute to the group's 1999 profit growth.

Another possible loser in Olivetti's win is Rupert Murdoch's News Corporation, which recently agreed to take a minority stake in Telecom Italia's pay TV company, Stream. "That will be up for negotiation", an Olivetti spokesman said yesterday.

Stabbed in the back by their own shareholders, Telecom Italia managers on Saturday cleared their desks to make way for Olivetti's victorious team after its dramatic takeover triumph.

Staff said the former state monopoly's Rome headquarters was largely empty as the reality sank in that the upstart former typewriter maker had won one of Italy's corporate crown jewels. "Maybe I made some mistakes, but I'd do it all again", Telecom Italia's managing director Franco Bernabe said after Olivetti snapped up 51.02 per cent of Europe's fourth biggest telecoms group.

The big-name allies he had boasted were right behind him on the eve of the deadline began to jump ship one by one on Friday - including the IFIL holding company of his former boss Gianni Agnelli of Fiat, who had previously vowed to have nothing to do with Olivetti's offer.

In the end, all but one of the so-called core shareholders assembled at the time of Telecom's privatisation in 1997 defected to Olivetti. "They stabbed us in the back." said one source close to Telecom Italia. "It's shameful."

A spokesman said Mr Bernabe planned to keep a low profile for a few days, but there was no word on when he would quit. "We'll have to see what happens on Tuesday," he said.

Olivetti's managing director, Roberto Colaninno, has made clear he will run the show himself and there was no place for the 50-year-old manager, who had been parachuted in to save the company just six months ago.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
tvThe C-Word, TV review
Arts and Entertainment
The Ridiculous Six has been produced by Adam Sandler, who also stars in it
filmNew controversy after nine Native American actors walked off set
Sport
Danny Jones was in the Wales squad for the 2013 World Cup
rugby leagueKeighley Cougars half-back was taken off after just four minutes
Life and Style
The original ZX Spectrum was simple to plug into your TV and get playing on
techThirty years on, the ZX Spectrum is back, after a fashion
ebooks
ebooksA celebration of British elections
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Recruitment Genius: Online Customer Service Administrator

£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...

Recruitment Genius: Digital Marketing Executive

£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...

Day In a Page

'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Russell Brand's interview with Ed Miliband has got everyone talking about The Trews

Everyone is talking about The Trews

Russell Brand's 'true news' videos attract millions of viewers. But today's 'Milibrand' interview introduced his resolutely amateurish style to a whole new crowd
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before
'Queer saint' Peter Watson left his mark on British culture by bankrolling artworld giants

'Queer saint' who bankrolled artworld giants

British culture owes a huge debt to Peter Watson, says Michael Prodger
Pushkin Prizes: Unusual exchange programme aims to bring countries together through culture

Pushkin Prizes brings countries together

Ten Scottish schoolchildren and their Russian peers attended a creative writing workshop in the Highlands this week
14 best kids' hoodies

14 best kids' hoodies

Don't get caught out by that wind on the beach. Zip them up in a lightweight top to see them through summer to autumn
Robert Fisk in Abu Dhabi: The acceptable face of the Emirates

The acceptable face of the Emirates

Has Abu Dhabi found a way to blend petrodollars with principles, asks Robert Fisk