Vodafone pays $1.36bn to buy CommNet of US

Click to follow
The Independent Online
VODAFONE AIRTOUCH, the global mobile phone leader, yesterday agreed to pay $1.36bn in cash and debt for CommNet Cellular, a US-based company with 360,000 customers in nine western states.

Vodafone will pay $764m in cash, or $31 for each CommNet share. The UK company will also assume $600m in debt.

"They are clearly moving quickly to consolidate their position in the US," said Kevin Lapwood, an analyst with Charterhouse Tilney, said. "This is an indication that they want to move sooner rather than later to get full US coverage."

Buying CommNet extends the already strong presence of the San Francisco- based Airtouch business. It does not, however, address the potential hole in Vodafone's eastern US coverage should its PrimeCo Personal Communications venture with Bell Atlantic unravel.

Earlier this year, Bell Atlantic failed in a US court hearing to end the pact with Vodafone. Prior to that Vodafone out bid Bell Atlantic for Airtouch.

Buying Commnet, majority owned by private equity fund Blackstone Capital, Partners II, will provide access to 3.6 million potential customers. It provides mobile services in Colorado, Montana, the Dakotas, Utah, Wyoming and parts of Idaho, Iowa and New Mexico. Vodafone has more than 28 million customers worldwide following its pounds 38bn merger with Airtouch.

Last month, chief executive Chris Gent put the odds of the PrimeCo venture surviving at less than 50-50.

Some analysts said they were surprised to see the company making a purchase in the western US. "This looks more like an opportunity at the right price," said Steve Jobber, analyst with Paribas Capital Markets.

Vodafone stock fell 3p to 1,356p.