Vodafone seen in U.S. split

March 28, 2001
Web posted at: 655 GMT

LONDON (CNN) -- Vodafone, the world's No. 1 mobile operator, and U.S. partner Verizon are in dispute over U.S. third-generation technology, a report said.

Verizon Wireless, 45 percent owned by Vodafone, announced plans to build a 3G network using CDMA2000 rather than the UMTS standard employed by Vodafone elsewhere, the Financial Times reported on Wednesday.

This would make it impossible for business travellers to use the same phone on both sides of the Atlantic, the report said. Vodafone fears Verizon's decision could undermine its global strategy.

The report cited "one insider" as saying the lack of an agreement could force Vodafone to sell its Verizon stake, although this was described as unlikely.

People outside the company have suggested Vodafone (VOD) could react in the same way it did with Mannesmann of Germany - another foreign partner perceived disloyal - and launch a bid for control of the company, the report said.

In a statement last week, Verizon said it would launch a high-speed data service based on the CDMA2000 wireless standard and "also will deploy" the full CDMA2000 3G technology because it was compatible with its existing infrastructure.

On Tuesday, Verizon (VZ: Research, Estimates) said it might eventually opt for the UMTS standard, which Vodafone and other European carriers plan to adopt.

A decision was unlikely for two or three years, it said, given the pace of technology change in the wireless industry.

The report cited Frank Marsalla, an analyst at ING Barings in New York, as saying Verizon is "making a pretty big investment [this year] and going down the road of CDMA2000." That made it highly unlikely it would switch course towards UMTS later.  

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