Vodafone AirTouch is expected to launch one of the biggest flotations on the Milan stock market this year, issuing up to 49 percent of Infostrada, the Italian fixed line telephone and Internet company.
The larger-than-expected offering, planned for the autumn, could raise up to E7bn (L4.4bn) towards Vodafone's estimated L32bn-L58bn bill for buying and building third generation mobile networks around the world. However, the British group's decision to push ahead with a substantial float comes in spite of concessions agreed at the time of its bid for Mannesmann when it promised to review the flotation plans and keep Infostrada at the centre of a converged strategy involving both mobile and fixed phones.
Vodafone absorbed Infostrada along with Omnitel, an Italian mobile company, following the L113bn takeover of Mannesmann and pledged to keep the fixed line businesses as part of a deal to secure the reluctant recommendation of Mannesmann's chief executive Klaus Esser.
Vodafone now argues that the higher-than-expected cost of bidding for third generation licences has forced it to rethink this strategy and sell a large proportion of both Infostrada and Mannesmann's German fixed-line business, Arcor.
UBS Warburg and Banca Commerciale Italiana have been retained as advisers for the Infostrada listing, while a flotation of Arcor is scheduled for later in the autumn.
In the long term, Vodafone is expected to go back on the agreement with Mr Esser and shed all the fixed line interests acquired through Mannesmann.
Other cash-raising opportunities such as the partial flotation of Vodafone's Australian business have been delayed by falling stock market values.
Infostrada is valued at about E14bn, similar to the market capitalisation of Fiat, the Italian automotive group. However, this remains well below peak estimates of E20bn placed on the business three months ago before the correction in technology stocks. Apart from its fixed-line telephone operations, which compete directly against Telecom Italia, it is also Italy's second largest Internet service provider, operating the Italia On-Line and Libero portals.
At the same time, Vodafone agreed to take control of Airtel Movil SA, Spain's second-largest mobile-phone company, ending a six-month fight with its U.K. competitor, British Telecommunications Plc. BT will support Vodafone, which owns 22 percent of Airtel, in acquiring up to 55 percent of the Spanish company, the companies said. If Vodafone gains more than 55 percent, BT can acquire the excess. "Through this agreement, BT and Vodafone aim to increase their presence in the Spanish market and jointly take a greater role in the long-term development of Airtel,'' the companies said. Reuters
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