France's Vivendi and British-U.S. phone operator Vodafone Airtouch on Sunday unveiled plans for a 50-50 joint venture to create a multi-access European Web portal.
The Internet-telecoms alliance, the subject of feverish speculation in recent days, is conditional on Vodafone winning 50 percent of Germany's Mannesmann in its hostile takeover bid which closes in eight days time.
The tie-up, seeking to unlock the massive potential the Internet offers media and telecoms, will complete Vodafone's European Internet platform, in particular expanding its position in the key French market, and give utilities and media group Vivendi access to a potential 70 million subscribers in Europe.
"It is an ideal alliance between two partners with highly complementary profiles and it comes at just the right moment," Vivendi chairman Jean-Marie Messier said in the statement, noting the Internet would be the mass media base of the future.
Mannesmann, contacted shortly after the announcement, said they could not comment until they had studied the statement.
Vodafone chief executive Chris Gent called the joint venture an important step in the phone operator's ambition to become the world's leading mobile multimedia operator.
"This alliance positions [us] to develop one of Europe's leading Internet businesses," he said. "[It] will largely complete the European coverage for our global Internet platform in addition to providing us with exclusive access to additional high quality content and services."
The companies also said they would examine ways to develop a single pan-European fixed-line network business by pooling Vivendi's fixed network activities with those that Vodafone should acquire through Mannesmann.
They would also explore extending cooperation between SFR and Vodafone's respective mobile operations in order to achieve cost synergies, enhanced revenue, and product development.
A signed letter of intent undertakes to negotiate a contract on a branded multi-access European Web portal with a seamless interface with Vodafone's global Internet platform to be signed by 30 June, providing Vodafone's bid for Mannesmann is a success, they said.
In that case Vivendi would acquire a further 7.5 percent stake in Cegetel, which it already controls, from Mannesmann for "fair cash value." The German group currently holds 15 percent of Cegetel, whose mobile unit SFR is France's second-biggest.
The Web portal will provide a seamless base for different platforms -- such as television, computers and mobile handsets -- for Web-based services like e-commerce and access to services like those from Vivendi's pay-TV Canal Plus.
Shares in Vivendi surged 18 percent over the past week as the market cheered reports it had suspended talks with Mannesmann over a possible white knight deal and was interested instead in offers from Vodafone and British Telecom.
Vivendi and Vodafone said the joint venture would become an 80 percent investor in an early stage "wireless Internet" fund to be established with Japanese Internet investor SoftBank, which would hold the remaining 20 percent.
As part of the accord, Vodafone agreed not to acquire interests in Vivendi without the approval of the French conglomerate's board for a three-year period.
That obligation would cease if Vodafone were to withdraw its Mannesmann bid, or if a third party bid for Vivendi, or if a third party bought more than 15 percent of Vivendi.
