Vodafone in talks with Bell

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The Independent Online
VODAFONE AIRTOUCH, the world's largest mobile phone group, confirmed yesterday that it is in talks with Bell Atlantic that could lead to the companies joining their US networks.

The options are understood to range from rebuilding operational links to an outright merger of the companies' US arms. In the latter case Bell Atlantic would hold the majority stake, although analysts believe Vodafone's minority interest in the holding company would be worth more than the AirTouch business on its own.

Vodafone shares climbed 3.9 per cent to 1,290p as investors warmed to the possibility the company might enhance its US presence without spending billions on a takeover or expanding AirTouch's network.

"Vodafone AirTouch confirms that it is continuing to review a number of options for developing its US mobile operations, including a possible alliance with the US mobile network of Bell Atlantic," the company said. "Discussions with Bell Atlantic are continuing but there can be no assurance that any agreement will be reached."

Vodafone's relations with Bell Atlantic have been strained since it outbid the US company in the $62bn (pounds 39bn) takeover of AirTouch in January.

The two companies were partners in a joint venture called PrimeCo that provided network service in the central and mid-western US. Last month PrimeCo's assets were divided between the companies, although talks have continued about ways to create a national US mobile network that offers coast-to-coast coverage.

Vodafone's management is thought to favour agreeing some form of deal with Bell Atlantic. However, any alliance would involve complicated commercial and regulatory issues that could take up to a year to resolve.

The alternative could be for Vodafone to buy out one or more smaller eastern operators. Two networks, Omnipoint and Nextwave, have eastern US mobile franchises, although buying out either would be a complex proposition.

Omnipoint - in the process of being taken over by rival Voicestream - has different network technology to AirTouch. Nextwave is in court-administered bankruptcy protection and is being stalked by another US mobile operator, Nextel.