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
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones