Telecoms giant looks to EU for approval

Mr Chris Gent, chief executive of Vodafone AirTouch, yesterday hailed the formation of a new European telecoms giant and urged Brussels to approve Vodafone's £175 billion sterling (€285 billion) takeover of Mannesmann.

A day after persuading Mannesmann's chairman, Mr Klaus Esser, to accept a friendly takeover offer worth 338p a share, Mr Gent said he had been told "there's cheering going on inside Brussels, because they see this as a European world leader being created".

He added that, even if the European Union's competition watchdog decided to move to a so-called phase two level of inquiry, "you're looking at four to six months for approval to be given, not a two-year process".

However, in Brussels, EU officials stressed they intended to scrutinise the deal to see if it created a dominant position in the telecommunications sector.

Brussels is known to be closely watching the trend towards consolidation in the industry to ensure huge companies are not created that could abuse their power.

Meanwhile, European telecoms groups lined up to declare their interest in acquiring Orange, the British telecoms group recently acquired by Mannesmann, if Vodafone puts Orange up for sale.

France Telecom is widely seen, along with KPN of the Netherlands, as one of the most likely potential buyers.

Vodafone has declared its intention to spin off Orange, the unsuccessful bidder for the Republic's third mobile phone licence. But officials in Brussels have yet to be approached formally about the plan and Mr Jonathan Faull, a senior EU official, said any divestment would have to be "effective". Vodafone-Mannesmann will be Europe's largest telecoms group, with access to more than 42 million customers in 15 countries. EU officials will look closely not just at areas where the two companies' interests overlap, but also at the sheer size of the company.

In Germany, political and business reaction to the takeover of one of the country's brightest corporate stars was low key. IG Metall, Germany's biggest trade union, said the merger was "sensible, as Mr Chris Gent has given up his plan for a hostile takeover and breaking up Mannesmann".

Mr Esser declared: "There is nothing to regret. This is the capital markets and the short-termers can only be in there if there are sellers to sell."