Vodafone plans Italian float

The sale could break an agreement with Mannesmann

Vodafone Airtouch is planning to float up to 49% of its Italian unit, Infostrada, on the Milan Stock Exchange later this year, according to a report in the Financial Times.

The offering, which would be one of the largest floatations on the Milan market this year, is estimated to raise £4.4bn for the company.

The money will go toward financing Vodafone's push to buy and build third-generation mobile networks throughout the world, estimated to cost the company between £32bn and £58bn.

Infostrada is a fixed-line telephone provider Italy's second largest internet service provider with Italia Online and Libero portals.

Vodafone took control of the company following its takeover of Germany's Mannesmann.

Mannesmann agreement

If the floatation does go ahead, Vodafone will be turning its back on an agreement reached with Mannesmann that helped seal Vodafone's takeover of the company.

The UK telecoms group had pledged to secure fixed-line units as part of a deal to secure the reluctant recommendation of Mannesmann's chief executive Klaus Esser, the Financial Times said.

But Vodafone has been forced to rethink this strategy and sell a large proportion of Infostrada and Mannesmann's German fixed-line business, Arcor, to finance its bids for third-generation licences.

The FT said Infostrada is worth about 14bn euros at the moment, below the 20bn euro price tag estimated about three months ago before the slump in technology stocks.

Vodafone AirTouch abandoned plans to float its Australian subsidiary earlier this year because of the current stock market volatility.

Spanish acquisition

In a separate announcement, Vodafone and BT said they would cooperate to increase their holdings in Airtel, the second largest Spanish cellphone company.

BT said it would support any actions by Vodafone's to raise its stake in Airtel to 55%.

BT has an option to increase its stake after that.

BT owns 17.8% and Vodaone holds 21.7% of Airtel, but wants to buy the 30.45% stake owned by Banco Santander Central Hispano, according to Spanish reports.