Vodafone-Airtouch spends $1.36bn on US outfit

The cellular giant starts to throw its weight around

The European invasion of the US wireless business has gathered pace, with Vodafone Airtouch spending $1.36 billion on CommNet Cellular. The move will expand Vodafone's coverage of the rural west of America and is part of the company's plan to plug the gaps in its coverage. (See also Euro giants poised to pounce) CommNet made a loss of $60 million last year on sales of $170 million. The company's previous owner, Blackstone, says that the red ink reflects exceptional costs related to its earlier leveraged buyout. The $1.36 billion payment includes $764 million in cash and $600 million in assumed debt. It values the shares at around $31 each. Vodafone's chief executive, Chris Gent, said that CommNet fitted into Vodafone's operations "like a hand in a glove." CommNet has 360,000 customers, primarily in Colorado, Montana, North and South Dakota, Utah, Wyoming, Idaho, Iowa and New Mexico. Vodafone is also negotiating with Bell Atlantic to fill in other gaps in its network. In the States, service providers must pay each other a cut of any call cost if their customer wanders into a competitor's territory. Vodafone says that this can increase costs to customers. Bell Atlantic has cast a shadow over the attempted network sharing by pulling out of previous agreements. Two separate deals have been worked out to co-operate, but Bell Atlantic wants to dissolve the agreements. Observers have put this down to sour grapes over Vodafone's (so far) successful invasion. merger with Airtouch. But even without deals, Vodafone will be able to fill out its coverage by gobbling up small companies. ®

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