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Tuesday, September 21, 1999 Published at 15:58 GMT 16:58 UK


Business: The Company File

Mobile phone giant created

Vodafone has become a leading player in the US this year

Vodafone AirTouch and Bell Atlantic have agreed to create a new mobile phone business in the US.

The new firm will have a value of more than $70bn (43bn), and will serve around 20 million customers.

The deal will bring together Vodafone's US mobile operations with Bell Atlantic Mobile and will also draw in another American telecoms group, GTE, which is currently being acquired by Bell.

This will make it the largest wireless business in the US and cover more than 90% of the population.

Bell Atlantic will own 55% of the company and Vodafone AirTouch will take a 45% stake.

Billions of savings

The transaction is expected to be completed in six to twelve months.

The deal follows Vodafone's move into the US market in January this year when it bought the American mobile company AirTouch for 36bn.

Bell believes that the new wireless business will realise revenue enhancements, cost savings and capital efficiencies of around $7.4bn. Vodafone also expects cost savings from the venture

The board of the new enterprise will consist of seven members, four nominated by Bell Atlantic and three by Vodafone AirTouch.


[ image: Bell Atlantic's chairman will take a seat on the board]
Bell Atlantic's chairman will take a seat on the board
Ivan Seidenberg, chairman and chief executive of Bell Atlantic, and Chris Gent, the chief executive of Vodafone AirTouch will both be on the board of the venture.

The network that Vodafone inherited in its $62bn takeover in January of San Francisco's Airtouch covers most of the western states, while Bell's covers most of the east.

The tie-up is the fast track both of them sought towards a ready-made coast-to-coast network, better able to compete with existing pan-US wireless companies such as AT&T, Sprint PCS Group and Nextel Communications Inc.

"This is a logical fit, naturally uniting our US properties and strong management teams and enhancing the benefits of Bell Atlantic's merger with GTE," said Bell's Mr Seidenberg.

The new business will be managed by Bell and based alongside it in New York. It will cover more than 90% of the population and 49 of the top 50 state wireless markets.

Follows BT and AT&T

Included in the new venture will be the wireless assets of Texas-based GTE, whose merger with Bell is expected to be completed by the first quarter of 2000.

Vodafone chief executive Chris Gent said: "In a market where penetration levels are relatively low but growth looks set to take off, gaining a nationwide footprint with common technology is of paramount importance in order to remain competitive," he said.

Bell and Vodafone also agreed to work together on global business synergies, such as coordinated handset and equipment purchases, corporate account programs and roaming agreements.

The deal comes days after British Telecom and its US partner AT&T announced a global wireless alliance to attract lucrative business customers and world travellers as the industry consolidates further.

Bell Atlantic has more than 43 million telephone access lines and 10 million wireless customers worldwide.

Vodafone has mobile operations in 23 countries, with more than 28 million customers. Its ventures cover a population of nearly 900 million people.



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