Vodafone and BT settle dispute

Vodafone makes roads into the Spanish market

Vodafone Airtouch and British Telecommunications have settled a dispute over control of Spain's second-largest mobile telephone company, Airtel.

BT has agreed to support any move by Vodafone to raise its stake in Airtel to about 55%, ending a year's battle over who would take control of the Spanish company.

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

In return for BT's support, Vodafone has agreed to allow BT equal representation on Airtel's board if it does indeed increase its stake.

End of uncertainty

In addition, BT has an option to increase its stake in the company.

"This removes a lot of uncertainty over the situation with Airtel, and it's more in BT's favour than expected. BT gets a lot of management control," said ABN AMRO analyst James Ross.

"For Vodafone it really does consolidate their position in Spain where Airtel is number two, and it's a key business to have a presence in," he said.

Both companies shares rose on news of the deal, with Vodafone up 2.8% to 320 pence and BT.

Airtel holds about one third of the Spanish mobile market.

It has introduced fixed-line telephones and Internet products as part of a strategy to become a full telecommunications company.

Milan float

In another move on Monday, Vodafone said it was still examining the prospect of floating its Italian unit, Infostrada, on the Milan Stock Exchange later this year.

A report in the Financial Times said the company was planning to float 49% of Infostrada on the Milan market.

But a Vodafone spokesman said the company was still "exploring opportunities", adding that the company had yet to fix the timing and size of such an offering.

The FT said Vodafone wanted to float the company to finance its 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.

If the flotation 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.