AirTouch Rings Up Rival Bid

Bell Atlantic is getting some competition in its bid to acquire AirTouch Communications: Britain's largest mobile-phone carrier, Vodafone Group PLC, has made an offer, the companies confirmed Tuesday.

Vodafone has bid more than the $45 billion that Bell Atlantic has apparently offered, The Wall Street Journal reported. The British concern and Baby Bell have long been considered the best matches for AirTouch.

Vodafone operates in a handful of countries in Europe but an acquisition of AirTouch would allow it to blanket the continent. The two companies are already partners in Globalstar, a satellite-based mobile-phone carrier, and hold stakes in wireless concerns in Egypt and Sweden.

"Certainly Vodafone has long been speculated as a potential suitor for AirTouch," said Jeffrey Hines, an analyst at Bankers Trust/BT Alex. Brown. "It would make a lot of sense, particularly in Europe."

Vodafone and AirTouch issued brief statements Tuesday acknowledging that an offer has been made, but that there can be no assurances an agreement will be reached. Bell Atlantic declined to comment.

Vodafone American depositary receipts rose 7 1/8 to 181 3/4 in recent trading. Bell Atlantic rose 1 3/8 to 53 5/16. AirTouch jumped 4 5/8 to 72 7/8.

One complication to a Vodafone deal, however, is that Bell Atlantic and AirTouch operate an overseas wireless joint-venture, PrimeCo. That could make a Vodafone acquisition more difficult and a union with Bell Atlantic easier to bring off.

Bell Atlantic has its own problems. The company is in the process of acquiring GTE Corp. for $61 billion, which still needs to pass regulatory muster, and its investors are worried that an AirTouch acquisition would dilute earnings. That may also prevent the Bell company from sharply boosting its offer.

Moreover, an agreement with AirTouch is reportedly being held up by key accounting differences. If those differences were settled in AirTouch's favor, that could further undercut earnings.

While a bidding war with Vodafone is possible, Hines suggests another outcome: Bell Atlantic could acquire the domestic business of AirTouch and Vodafone could acquire the international portion.

Vodafone, which doesn't have great interest in the U.S. operations, is rumored to have previously tried to get AirTouch to sell off its international assets.

Large shareholders of AirTouch could also figure prominently in any deal. Many think Bell Atlantic's purported offer -- it would value AirTouch at about $72 a share based on Monday's closing prices -- is too low and want more money.

Regardless of what happens, analysts expect the sale of AirTouch to set off an explosion of wireless mergers and acquisitions.

"It's the continued march of consolidation in the industry," said Brian Cotton, research director of wireless communications at Frost & Sullivan.