The world's largest mobile phone company, Vodafone AirTouch PLC of Britain, said yesterday it is discussing the possibility of a joint venture with Bell Atlantic Corp., a deal that could make Vodafone a major national wireless provider in the United States.
"The company is looking at a number of options" to develop its presence in this country, said Mike Caldwell, corporate communications director for Newbury, England-based Vodafone. "There is no time scale on this, and there is no assurance that an agreement will be reached."
Bell Atlantic spokesman David Frail declined to comment on the talks.
At a meeting with analysts Friday, Vodafone officials said there was a 20 percent to 30 percent chance of the deal going through, analysts said. Vodafone did not confirm the figure.
Vodafone serves 29 million wireless customers worldwide, including 9 million served by AirTouch in the western and midwestern United States. Vodafone acquired AirTouch for $62 billion in January.
A deal with Bell Atlantic Mobile, which serves 6.6 million mobile phone customers in 18 states, mostly on the East Coast, would give the British company access to the East Coast and the coveted New York area, making it a key player in the U.S. national market.
Combining forces with Bell Atlantic also would let Vodafone compete head to head against Sprint PCS and AT&T Corp., the largest national networks for wireless telecommunication.
Vodafone's announcement came in response to speculation in the London press about a Bell Atlantic deal, which has been pushing Vodafone's stock prices up in London over the past few days, Caldwell said. Vodafone's shares rose 48 pence, or 3.86 percent, to close at 1,290 pence ($20.73) in London trading yesterday. The company's American depositary receipts closed at $202.50, up $8, Friday on the New York Stock Exchange, which was closed yesterday for the Labor Day holiday.
Vodafone completed its takeover of AirTouch Communications Inc. nearly three months ago. It is considering several options for further growth in the U.S. market, including building a network of its own, acquiring networks, or setting up joint ventures, Caldwell said.
"There appears to be commercial logic in this deal, as there was in the AirTouch deal," said Mark Lambert, a Merrill Lynch Global Securities analyst in London.
The Guardian newspaper reported that Vodafone chief executive Chris Gent told analysts that other potential bid targets with eastern networks were struggling Nextwave and Omnipoint. Nextwave has filed for bankruptcy protection from creditors and Omnipoint has agreed to a $1.7 billion sale to Hutchison Telecom's Voicestream, which Vodafone would have to race to derail. Caldwell declined to comment.
Vodafone, like Bell Atlantic, is searching for a more comprehensive network, to cut costs incurred when customers roam onto other companies' networks, Lambert said. But before a deal could go through, issues of control, management and strategy would need to be ironed out, he said.
Bell Atlantic, meanwhile, is in its own push to expand its coverage. Earlier this year, the company bid to buy AirTouch for $45 billion, but lost out to Vodafone. Last year, the New York-based company announced a $53 billion merger with GTE Corp., which has 5 million mobile-phone customers nationally. Combined they will serve about 10.6 million mobile customers.