Vodafone sells Arcor Telematik

Vodafone, Europe's biggest mobile phone company, yesterday sold its remaining 50.1 per cent stake in Arcor Telematik, which runs phone lines along Germany's railway tracks, to the country's state-owned rail operator.

Deutsche Bahn has paid €1.15bn (£742m) to take control of the business that Vodafone acquired in 2000 as part of its takeover of German telecoms and industrial group Mannesmann. Vodafone initially sold Telematik's physical infrastructure and a 49.9 per cent shareholding to Deutsche Bahn in January.

Shares in Vodafone rose 2 per cent – or 1.75p – to 91.75p yesterday. But the stock remains well below the 399p peak it hit at the end of 1999 before the completion of the massive Mannesmann deal. The share price has more than halved over the past six months.

Deutsche Bahn remains an 18 per cent shareholder in Arcor but it will lose its special rights, including its veto rights.

Completion of the disposal leaves the way open for Vodafone to float Arcor, which has Germany's second biggest fixed-line telecoms network. A flotation, however, would be tough in the current markets.

A fall in the value of Arcor was the main factor behind Vodafone's £4.5bn asset write-down in November. Telematik generated sales of €430m in 2000, accounting for 25 per cent of Arcor revenues.