Vodafone AirTouch Gains Momentum in Battle for Mannesmann

Vodafone AirTouch may be poised to claim victory in its takeover bid for German rival Mannesmann, with analysts suggesting that its offer, worth pounds 95 billion, is gaining momentum. The company's projection for 20-25 per cent subscriber revenue growth over the next three years, driven by the provision of mobile data and Internet services, is helping to underpin upward valuation revisions and boost the value of its all-share offer. Mannesmann chairman Klaus Esser and his team are eager to secure a transaction that can turn perceptions around, and speculation has focused on discussions with Vivendi to buy out its stake in France's second-largest mobile phone group, Cegetel.

Key Takeaways:

• Vodafone's takeover bid for Mannesmann is gaining momentum, with analysts suggesting that its offer, worth pounds 95 billion, is becoming increasingly attractive.
• Vodafone's projection for 20-25 per cent subscriber revenue growth over the next three years, driven by the provision of mobile data and Internet services, is a key factor in the bid's success.
• Mannesmann chairman Klaus Esser and his team are eager to secure a transaction that can turn perceptions around, with speculation focusing on potential discussions with Vivendi.
• International institutions, who own around 60-70 per cent of Mannesmann, are likely to back Vodafone's offer, citing the potential for value creation and the risk of value destruction if the takeover fails.
• German domestic institutions may be more difficult to bring on board, with Commerzbank advising Mannesmann shareholders with no exposure to Vodafone to reject the offer.
• The chief threat to Vodafone's ambitions is the risk that Mannesmann secures an 11th-hour alliance with another leading continental mobile operator, potentially strengthening its pan-European platform.

Statistics:

• Pounds 95 billion (value of Vodafone's takeover bid for Mannesmann)
• 20-25 per cent (subscriber revenue growth projected by Vodafone over the next three years)
• 60-70 per cent (international institutions' ownership stake in Mannesmann)
• 30 per cent (average customer revenue growth rate projected by Vodafone by 2004, assuming the merger proceeds)

Sources:

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Vodafone group chief executive Chris Gent

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Mr. Steve Trowbridge at Teather & Greenwood

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Mr. Stephen Wreford at Charterhouse Securities

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Douglas White at Commerzbank

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Vivendi spokesman