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Vodafone AirTouch, Vivendi to Start New Net Company

Vodafone AirTouch Monday outlined plans with Vivendi to establish an Internet company that will run a multi-access European portal.

The new company is split 50/50 between the two partners who will now look for ways of building cooperation between the duo's respective mobile operations.

Chris Gent, chief executive of Vodafone AirTouch, said that the new Internet company would largely complete the European coverage for Vodafone AirTouch's global Internet platform in addition to providing exclusive access to more content and services.

"It also creates the opportunity to establish a broader fixed-line group in three of Europe's leading markets," said Gent.

One project already on the table is for the new company to become an 80 per cent investor in a wireless Internet fund, with SoftBank holding the remaining 20 per cent. The fund will be capitalized at between 100 and 150 million euros (approx. $100 million to $150 million).

The deal with Vivendi is part of Vodafone's long campaign to acquire the German group Mannesmann. If successful with Mannesman, Vodafone AirTouch has agreed to procure an additional 7.5 per cent interest in French telecoms operator Cegetel.

At the same time, Vodafone AirTouch is giving a guarantee that it will not attempt to acquire interests in Vivendi without approval by Vivendi's board for three years -- a guarantee conditional upon its hostile Mannesmann bid being successful.

Despite all the conditions, Vivendi's Chief Executive Jean Marie Messier said he was extremely happy with the agreement, saying it would create Europe's first company of the Second Generation Internet Age.

"The Internet world is about to experience a high-speed technology revolution that will eventually allow even the most sophisticated content to be transmitted to devices of every type," said Messier.

The alliance will have the largest customer base in Europe with almost 70 million subscribers.