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Vivendi, Vodafone in European Net venture

The French conglomerate and the Anglo-American telecommunications giant agree to form a pan-European Internet portal and cooperate in mobile and fixed-line telecommunications.

PARIS--French conglomerate Vivendi and Anglo-American telecommunications giant Vodafone AirTouch agreed to form a pan-European Internet portal and cooperate in mobile and fixed-line telecommunications.

The 50-50 Vivendi-Vodafone joint venture is conditional on the success of Vodafone's $170 billion hostile bid for Germany's Mannesmann, Vodafone chief executive officer Chris Gent said Sunday at a joint news conference with Vivendi chairman Jean-Marie Messier.

Messier said the venture, provisionally named MAP, for "multi-access portal," will allow Vivendi's and Vodafone's 70 million pay-TV, mobile and fixed-line telecommunications customers access to content on the Web.

"This is the most compelling alliance of the Internet age in Europe and beyond," Messier said, adding that the MAP venture is potentially worth tens of billions of dollars.

Gent and Messier said they will also consider a stock exchange listing for MAP.

"This is another important step in achieving our objective to become the world's leading mobile multimedia operator," Gent said.

If Vodafone wins more than 50 percent control of Mannesmann, Gent said, it will sell a 7.5 percent interest in French telecommunications company Cegetel to Vivendi "at a fair price."

"We will thus put our equity holding (in Cegetel) in accordance with our management rights," Messier said.

Vivendi has an indirect 44 percent stake in Cegetel, France's No. 2 mobile phone operator; Mannesmann has a 15 percent share.

In Germany, a Mannesmann spokesman declined to comment on the Vodafone-Vivendi link.

Vivendi and Vodafone will consider potential cooperation in fixed-line telecommunications through their existing operations in France, Germany and Italy, Gent said.

Sunday's pact is a blow for Mannesmann, which as late as Saturday was still pushing for its own alliance with Vivendi on media and telecommunications projects in Europe. Vivendi's board met Saturday to discuss a potential link with Mannesmann, and Messier confirmed that Vivendi had considered a full merger with the German company.

But Messier said he chose Vodafone instead because the British company offers the best solutions for helping Vivendi save as much as three years in bringing new Internet services to market.

Gent said later in a conference call with journalists that the deal underpins the logic of Vodafone's bid for Mannesmann. The bid closes Feb. 7.

"What it says is they (Vivendi) think we're going to win...," Gent said. "Everyone was focusing on Mannesmann doing a deal with Vivendi, but I think they liked our approach in terms of partnership."

Gent said he has not yet discussed the Vivendi deal with Mannesmann chief executive Klaus Esser. He confirmed that Vodafone is prepared to make a "modest increase" in the bid if Esser agrees to back Vodafone.

Messier said at the news conference that he is convinced Vodafone will succeed in taking over Mannesmann.

The alliance with Vodafone, he added, would not prevent Vivendi from bidding for British mobile phone operator Orange, which Mannesmann took over last year, helping spark Vodafone's hostile bid.

If it wins control of Mannesmann, Vodafone will spin off Orange to meet competition concerns.

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