DENVER, United States-While Vodafone AirTouch recently advanced its merger with Germany’s Mannesmann AG, the company indicated it may look to fill in its footprint with some smaller acquisitions.
In particular, the company has been closing in on a bid for a stake in Spain’s second-largest mobile phone company, Airtel. Vodafone and British Telecom have been competing for several months to buy the 30.5-percent stake in Airtel now held by Banco Santander Central Hispano. Vodafone currently owns 21.7 percent of Airtel.
In addition, the company’s footprint is limited in the Nordic markets, and analysts speculate the company may look for opportunities to enter those markets, as well as to increase its presence in markets where it has limited ownership, such as in France and Belgium. The company likely would have to build its presence in those markets through small acquisitions to avoid additional overlaps.
“I think Vodafone AirTouch might be satisfied with what it has for the short term,” said Phil Kendall, senior industry analyst at U.K.-based Strategy Analytics. “Of all the Western European operators, I think Vodafone AirTouch is least likely to have board members thinking, `We really must sort out our European footprint-look at all those gaps in coverage.’ “
“The priority for them is probably thinking about how to prepare their main markets for 3G,” said Dirk Bout, senior analyst at Dataquest in Amsterdam.
Meanwhile, the US$180 billion stock transaction will put the United Kingdom’s third-largest mobile operator back on the auction block. Mannesmann was in the process of acquiring Orange when it agreed to the Vodafone bid.
France Telecom and Netherlands-based KPN Telecom have been named as likely suitors for Orange, as have MCI WorldCom and Japan’s leading wireless operator, NTT DoCoMo.
The deal is expected to spur further consolidation among European players.
“The Vodafone AirTouch/Mannesmann deal is just confirmation, if it was needed, that the cellular market will inevitably consolidate around a small number of global or pan-regional players,” said Kendall, noting that public money and government influence in many PTTs could slow European consolidation.
Potential consolidators include Deutsche Telekom, British Telecom, Telecom Italia, France Telecom and KPN.
Jake Saunders, European regional director at the Strategis Group in London, said he believes it will come down to five to 10 major pan-European carriers, with a few islands of individual carriers in between.
