BellSouth Eyes German Phone Company
Dec. 10, 1999
BERLIN (AP) _ BellSouth Corp. is teaming up with a Dutch company to buy Germany's third-largest mobile phone operator, blocking France Telecom's bid to enter Europe's largest telecommunications market and potentially setting off a price war.
Under the $9.2 billion deal announced late Thursday, BellSouth agreed to buy a 60 percent stake in E-Plus from two German utility companies, Veba and RWE. France Telecom had sought to buy the shares.
BellSouth, the Atlanta-based phone company, is also buying a 17 percent stake in E-Plus from Vodafone Airtouch of Britain. Adding in BellSouth's existing 22.5 percent ownership of E-Plus, the new stakes add up to complete control of the company.
Dutch telecom company Royal KPN is providing BellSouth a $9.4 billion loan to purchase the Vodafone and Veba-RWE shares. KPN will subsequently convert the loan into a 77.5 percent share of BellSouth GmbH, the holding company that will own and operate E-Plus. Following the closing, BellSouth and KPN will share control of E-Plus.
Ever since its global partnership with Deutsche Telekom broke up in May over the German company's bungled merger plan with Telecom Italia, France Telecom has been trying to gain a foothold in Germany. The French company could still pull off a deal if it comes up with a counter-offer for E-Plus.
``It looks like France Telecom has to start at zero again,'' said Theo Kitz, an analyst at HypoVereinsbank in Munich.
France Telecom said from Paris it was reviewing the conditions the BellSouth deal, adding that it ``will take all measures to defend its rights and protect the interests of shareholders.''
Duesseldorf-based E-Plus is the third largest mobile operator in Germany, with a market share of 20 percent.