Spotlight – Vodafone dials M for merger

Ken Hydon, finance director of Vodafone, will have good reason to smile at next Tuesday’s unveiling of the company’s annual results – he will soon be finance chief of a much larger company.

Vodafone has just received preliminary approval for a merger with US-based AirTouch Communications in a move that will form a corporate giant with a combined turnover of e10.3bn (£6.75bn).

Full regulatory approval has yet to be granted, but at an emergency meeting with shareholders held at the end of last month, the company said it expected completion by the beginning of July at the latest.

And analysts do not expect accounting issues to be at all problematic – it is taken as read that the deal will go through subject to the disposal of a German asset with insignificant capitalisation.

Not bad for a man who was appointed to the board back when Vodafone was born from a twinkle in Racal Electronics’ eye in 1985.

Hydon is now not only group finance director, but also director of several group companies including Vodafone Europe Holdings.

Next week, analysts will be looking forward to pre-tax profits of £855m, with predictions of £1.1bn for the first set of results in the next millennium.

And there seems little indication that the darling of the Stock Exchange will cease performing.

One analyst from a top investment bank said: ‘I would imagine that Hydon is delighted given that Vodafone is buying into the US market when it is far below its peak. It is very positive.’

The US mobile phone sector has previously been stifled by regulation, but moves are currently under way that will open up a relatively untapped audience in terms of both changes to the law and changes to technology.

It is likely that the US will be forced to scrap the charging structure that means mobile phone owners currently have to pay for incoming calls.

Advanced technology will mean that phones will no longer be used for just voice communication.

According to one insider: ‘The US market will turn around. Mobile phone penetration is very low, but technological changes will be the impetus for change.’

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