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Wednesday, 8 November, 2000, 11:55 GMT
Vodafone buys Swiss share
Mobile phone user
Through mergers and strategic partnerships, Vodafone is extending its pan-European reach
UK mobile phone giant Vodafone has bought a strategic stake in Swisscom Mobile, securing access to third-generation mobile phone networks in Switzerland and gaining new customers in Germany.

The much-rumoured deal will see Swisscom spin off its mobile phone division and sell 25% of the subsidiary to Vodafone, for 1.8bn ($2.6bn, 4.5bn Swiss francs) in cash and shares.

Vodafone will gain access to a network used by more than three-million subscribers - or two-thirds of the mobile phone market of one of Europe's wealthiest countries.

It will also gain extra customers for its UMTS or third-generation mobile phone network in Germany, where Swisscom owns mobile phone provider Debitel.

The Swiss firm withdrew from the German UMTS auction.

Swisscom in turn will use the extra cash to secure one of the Swiss licences for next-generation mobile phone networks when the auction starts next week.

European footprint

Markus Rauh, Swisscom's chairman, said the deal would "secure our future growth in the highly competitive Swiss mobile communications market".

For Vodafone, it is yet another expansion of its "European footprint.

"Benefits will accrue to Vodafone customers roaming in Switzerland and Swisscom Mobile customers will be able to benefit from the extensive international operations of Vodafone Group, which span 25 countries," said Julian Horn-Smith, chief executive of Vodafone Europe.

The revenues generated by Swisscom's wealthy clientele will be another benefit to the UK company.

The Swiss government, which owns nearly two-thirds of Swisscom, approved the deal at a cabinet meeting.

The cost to Vodafone is very much in line with expectations by analysts, and should do little to upset worries about the firm's exposure to debt.

Vodafone's share price slipped on the news, down 6 pence to 252p by the late morning.

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