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Vodafone To Take Stake in Swisscom

November 8, 2000

BERN, Switzerland (AP) _ Britain’s Vodafone AirTouch is buying a 25 percent stake in the mobile phone operations of Switzerland’s biggest telecommunications company, Swisscom AG, for $2.54 billion.

The announcement Wednesday by the Swiss government comes ahead of next week’s auction of four 15-year licenses to operate new-generation mobile services.

Swisscom and Vodafone had been expected to announce a partnership ahead of the auction.

The deal, involving the establishment of a separate mobile phone unit _ Swiss Mobile AG _ has to be approved by Swisscom shareholders at an extraordinary meeting next March, the Swiss finance ministry said.

Swiss regulators must approve the alliance and Swisscom must gain one of the new licenses in the upcoming auction.

Swisscom has been battling for market share with aggressive rivals in the deregulated home market. The former telecommunications arm of the Swiss post office has sold shares to the public, but is still 65.5 percent owned by the government.

Wednesday’s deal also involves a cooperation agreement between Vodafone’s German unit Mannesmann D2 and Swisscom’s German unit, Debitel.

The government expects overall proceeds from the auction of between $1.7 billion and $3.4 billion, with a minimum price per concession of $28.4 million.

Ten groups were cleared to bid for the licenses to operate a new mobile phone standard, known as the Universal Mobile Telecommunications System, although one, Teldotcom AG, has dropped out.

The bidding, which will be carried out on the Internet, is expected to last between two and four weeks.

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