Vodafone and Bell Atlantic Merge Wireless Assets in Historic Deal

Strategic Insights -

Vodafone AirTouch of the UK and Bell Atlantic of the US have announced a groundbreaking merger of their wireless assets, creating the largest mobile telephone business in the US. The new company, valued at $70-$80 billion, aims to compete with AT&T Wireless for brand dominance in the US wireless market. The deal, which requires regulatory approval, brings together 20 million wireless customers across the US, exceeding AT&T Wireless' current 11 million subscribers.

Key Takeaways:

  • The merged company will have a single brand name and will be worth $70-$80 billion, with Bell Atlantic holding a 55% stake and Vodafone contributing 40% of the subscribers.
  • The deal will result in increased revenues and cost savings of approximately $7.4 billion, with Vodafone transferring $4.5 billion of debt to the new company.
  • The merged entity will have the potential for global cooperation, with Vodafone having the right to sell shares in the US wireless company after three years.
  • The deal marks a significant milestone in the wireless industry, with the merged company expected to compete with AT&T Wireless for brand dominance.
  • Vodafone's share price rose 16p to £13.19 in London, while Bell Atlantic's shares increased by $1.50 in New York.
  • The companies' shared standard, CDMA, is expected to facilitate growth and efficiency in the new company.

Statistics:

  • The new company will have 20 million wireless customers across the US, exceeding AT&T Wireless' current 11 million subscribers.
  • The deal is valued at $70-$80 billion, with Bell Atlantic's stake estimated at £43-£49 billion.
  • Increased revenues and cost savings are expected to be worth approximately $7.4 billion.
  • Vodafone will transfer $4.5 billion of debt to the new company as part of the deal.
  • The deal requires regulatory approval and involves the participation of high-profile financial advisors, including Merrill Lynch, Warburg Dillon Read, Goldman Sachs, Chase Securities, and Salomon Smith Barney.

Sources:

  • Financial Times Limited, Lex, Page 24, Copyright 1999. All Rights Reserved.
  • Vodafone AirTouch press release
  • Bell Atlantic press release