During the last five weeks, merger and acquisition announcements have flooded the telecommunications arena. Carriers in Asia, Europe and North America continue to jockey for positions in an industry that promises to exclude players without multinational footprints.
Telia/Telenor
The merger of Telia of Sweden and Telenor of Norway was finalized, following last-minute differences over control of the company and its capital structure.
To secure European Commission approval, the two companies consented to selling their cable TV operations and eliminating overlapping activities in Sweden, Norway and Ireland.
The merger will create a company valued at US$49 billion.
The entities agreed to limit the role of Jan-Ake Kark, the newly appointed chairman of the combined company. He will have a non-operative function and report to the chief executive, Telenor’s Tormod Hermansen.
The combined company plans an initial public offering, which could raise up to US$12 billion, in May 2000. Between 15 percent and 25 percent of the company could be offered, according to a Financial Times report.
France Telecom/E-Plus
Veba and RWE, German utility companies, said they plan to sell their 60.25-percent stake in the E-Plus Mobilfunk German mobile telephone network to France Telecom for US$7.9 billion.
BellSouth, which owns 22.5 percent of E-Plus, has pre-emptive rights over the utilities’ sale of their stakes and must approve the deal. France Telecom said it hopes to reach a quick agreement with BellSouth.
E-Plus is Germany’s third-largest mobile operator with 3.2 million customers. France Telecom plans to finance the purchase by selling its US$9.3 billion stake in Sprint and its 2-percent stake in Deutsche Telekom, valued at about US$2.5 billion.
Of the sale price, US$4.1 billion will go to Veba and US$3.8 billion to RWE, Veba said.
Earlier in October, France Telecom agreed to buy Vodafone AirTouch’s 17.24-percent interest in E-Plus for US$1.86 billion.
Mannesmann/Orange
Germany’s Mannesmann AG said it agreed to buy Orange plc, Britain’s third-largest mobile telephone operator, for about $33 billion in cash and stock. Mannesmann said Hutchison Whampoa, which owns almost 45 percent of Orange, accepted the offer.
Under the agreement, Orange shareholders will receive 0.0965 new Mannesmann shares and $10.70 in cash for each Orange share held. Hutchison Whampoa will have a 10-percent interest in Mannesmann.
Mannesmann is Germany’s second-largest telecommunications operator, and with the Orange acquisition, it now holds wireless operations in Germany, Italy and the United Kingdom.
As of 30 June, Orange had 2.96 million subscribers, followed by One 2 One with 2.65 million. Vodafone AirTouch leads the U.K. with 6.16 million, and BT Cellnet has 5.02 million.
If the bid is successful, Mannesmann will have more than 20 million mobile subscribers in Europe. Analysts say the hefty price paid-nearly three times the price Deutsche Telekom said it would pay for the United Kingdom’s One 2 One in August-is based on the fact that the acquisition could be the last opportunity to gain access to the lucrative U.K. wireless market.
The deal would challenge the relationship between Mannesmann and its partner in key European markets, Vodafone AirTouch, which would be Mannesmann’s U.K. competitor following the acquisition.
MCI WorldCom/Sprint
MCI WorldCom and Sprint agreed to a definitive merger agreement that will combine the second- and third-largest U.S. long-distance carriers and give MCI WorldCom a much-needed nationwide wireless presence.
According to the agreement, each share of Sprint will be exchanged for US$76 of MCI WorldCom common stock. In addition, each share of Sprint PCS Group will be exchanged for one share of a new WorldCom PCS tracking stock and 0.1547 shares of MCI WorldCom common stock.
The deal is valued at US$129 billion, including US$14 billion in debt.
Ever since WorldCom and MCI agreed to merge two years ago, analysts have indicated the company still needed a nationwide U.S. wireless presence to compete with its long-distance rival AT&T. The Sprint deal would give MCI WorldCom an instant national wireless presence with 270 million pops and a subscriber base of about 4 million people.
