Response to Mannesmann's Defence

Vodafone AirTouch PLC 18 January 2000 PART I Vodafone AirTouch Responds to Mannesmann's Defence Mannesmann is avoiding the real strategic issues Demerger of Orange supported by independent legal opinions Vodafone AirTouch is today publishing a letter to Mannesmann Shareholders from its Chief Executive, Chris Gent. This letter reminds Mannesmann Shareholders of the real choice they have to make before the Vodafone AirTouch Offer closes. It also responds in detail to the claims made by Mannesmann in its defence document. By 7 February 2000, Mannesmann Shareholders must choose between owning 100 per cent of Mannesmann and owning 47.2 per cent of a combined Mannesmann and Vodafone AirTouch. Their decision should focus on the enhanced growth opportunities provided by the global presence of the Combined Group. Creating this global scale and reach today will deliver to Mannesmann Shareholders who accept the Offer, more growth and proportionate telecoms EBITDA than Mannesmann's go it alone strategy. Vodafone is a stronger platform in the UK than Orange Mannesmann has made a number of claims that do not stand up to scrutiny. In particular, it has argued that Orange is better placed in the UK than Vodafone UK. As the firmly established market leader, Vodafone offers the best platform in the UK. Vodafone UK: * has a 33 per cent share of the market as compared to only 20 per cent for Orange, the third operator * has 50 per cent more customers than Orange in both the contract and the pre-pay markets * added 3.1 million customers in 1999 while Orange added only 2.7 million * is a leader in the provision of data services * is significantly more profitable than Orange, generating 70 per cent more EBITDA per customer Orange can be demerged with only 50 per cent Mannesmann has also argued that Vodafone AirTouch will not be able to demerge Orange without a domination agreement requiring a substantial cash payment. This is simply not true. * There is no requirement for a domination agreement to demerge Orange and, accordingly, there is no requirement for a cash payment. Even Mannesmann argues that a domination agreement would only be required if Vodafone AirTouch intends to disadvantage Mannesmann. Vodafone AirTouch intends to demerge Orange without disadvantaging Mannesmann. * Vodafone AirTouch intends to effect the demerger of Orange by the transfer of Orange from Mannesmann to Vodafone AirTouch in exchange for cash and assets equal to the fair value of Orange to Mannesmann as determined in accordance with German law. As a result, this transfer will not disadvantage Mannesmann or any minority shareholders. Vodafone AirTouch would then distribute Orange shares to the enlarged shareholder base of Vodafone AirTouch (including the former Mannesmann Shareholders who have accepted the Offer). * Vodafone AirTouch has received clear advice from its German legal advisers and four leading German Professors of Corporate Law (Professors Hirte, Huffer, Noack and Ulmer) that it can demerge Orange with a simple 50 per cent majority and without a domination agreement. Chris Gent, Chief Executive of Vodafone AirTouch commented. 'My letter to Mannesmann Shareholders highlights once again the outstanding opportunity for them in creating a global mobile telecoms leader. Mannesmann Shareholders should not be distracted by the structural issues raised by Mannesmann. We have received clear advice from leading German Professors that our plan to demerge Orange works. Mannesmann Shareholders should now focus on the real strategic choice. I urge them to accept our Offer without delay' Enquiries: Vodafone AirTouch Terry Barwick, Corporate Affairs Director Tim Brown, Investor Relations Director Melissa Stimpson, Senior Investor Relations Manager Mike Caldwell, Corporate Communications Director Tel: +44 (0) 1635 33 251 Goldman Sachs International Scott Mead Simon Dingemans Tel: +44 (0) 171 774 1000 Warburg Dillon Read Warren Finegold Mark Lewisohn Tel: +44 (0) 171 567 8000 Tavistock Communications Lulu Bridges Tel: +44 (0) 171 600 2288 Financial Dynamics Perry Hall Tel: +49 (0) 69 971 68123 PART II Letter from the Chief Executive of Vodafone AirTouch Dear Mannesmann Shareholder, On 14 January, Mannesmann published its formal response to Vodafone AirTouch's Offer. Mannesmann has failed to address the real comparison shareholders need to make - between Mannesmann alone and Mannesmann combined with Vodafone AirTouch. Not one of the arguments Mannesmann presented in its defence has addressed the key advantages a combined Vodafone AirTouch and Mannesmann would have as the world's leading global mobile operator. A combination of the two companies will bring Mannesmann the scale and geographic presence it currently lacks by creating a global footprint covering 25 countries, including a leading presence in the key US market. By 7 February 2000, you must choose between owning 100 per cent of Mannesmann and owning 47.2 per cent of a combined Mannesmann and Vodafone AirTouch. Your decision should focus on the enhanced growth opportunities provided by the global presence of the Combined Group. Creating this global scale and reach today will deliver to Mannesmann Shareholders who accept the Offer, more growth and proportionate telecoms EBITDA than Mannesmann's go it alone strategy. Mannesmann's defence has made a number of claims: Claim Number 1 - Superior Growth Mannesmann has taken a selective and inconsistent sample of analysts' forecasts to suggest that Vodafone AirTouch is growing at a significantly slower rate. The forecasts Mannesmann is using for Vodafone AirTouch largely exclude data and internet revenues. Mannesmann has also recently increased its growth forecasts for the period 2000 to 2003 from 30 per cent to 34 per cent and now 39 per cent. The differences between these forecasts for Vodafone AirTouch and Mannesmann are not credible. * The businesses of Vodafone AirTouch and Mannesmann are essentially similar and have similar growth prospects - Mannesmann expects almost all of its proportionate telecoms EBITDA in 2000 to come from mobile services. * Any difference in growth is largely short term as Mannesmann's immature fixed line businesses and Orange move from loss to profit. * Both Vodafone AirTouch and Mannesmann are strongly placed to benefit from the fast growing data and internet markets. Mannesmann's comparison also misses the point. Mannesmann Shareholders are not being offered a share in Vodafone AirTouch today but a share in the combined businesses of the two groups. In addition to similar growth prospects to start with, the Combined Group will enjoy substantial revenue benefits from voice, data and internet services that will significantly enhance its growth prospects. This is why 100 per cent of Mannesmann alone cannot match the 47.2 per cent share of the Combined Group's proportionate EBITDA that Mannesmann's Shareholders are being offered. This is true today and will be true tomorrow. Claim Number 2 - Superior Assets Europe Mannesmann claims an outstanding platform in Europe. * Mannesmann controls operators in only 4 of its 7 markets in Europe. * A combined Vodafone AirTouch and Mannesmann would control operators in 10 out of its 15 markets in Europe including in all 3 of Mannesmann's major markets as well as a much broader range of other growth markets around Europe. Europe's telecommunications markets are important, but increasingly global coverage will be an essential requirement for the future leaders in the market for mobile internet services. Partners and suppliers will focus on those operators able to access the largest customer base and customers will demand a seamless service wherever they travel. Vodafone AirTouch is the only operator with that global coverage today, with interests in 24 markets and over 35 million proportionate customers. A combined Vodafone AirTouch and Mannesmann would provide Mannesmann Shareholders with immediate access to a global network. Mannesmann's go it alone strategy cannot come close to matching the reach and opportunities available to the Combined Group. Orange Mannesmann also claims that Orange is the best platform in the UK. * Vodafone UK remains firmly established as the UK market leader with a 33 per cent market share compared with only 20 per cent for Orange, which is in third place behind Vodafone UK and BT Cellnet. * Vodafone UK has 50 per cent more customers than Orange in both the contract and pre-pay markets. * Vodafone UK added 3.1 million customers in 1999, more than any other operator (Orange added only 2.7 million). * Vodafone UK has always been a leader in the development of data services and currently operates the UK's only commercially successful packet radio network, handling over 1 billion data calls per year. * Vodafone UK tests show the GSM call completion success rate for data calls to ISDN services is significantly greater on Vodafone UK's network than on Orange's network. * Vodafone UK is currently holding the largest 3G trials outside Japan. * Vodafone UK is significantly more profitable than Orange. Vodafone UK achieves higher ARPU in both the contract and pre- pay markets and generates over 70 per cent more EBITDA per customer. In creating a global network with the most effective positioning for the future mobile data and internet markets, Vodafone UK is clearly better placed in the UK than the country's third operator, Orange. Mannesmann has also failed to explain that shareholders who accept the Offer will get exposure to the benefits and growth of both networks given that Vodafone AirTouch intends to demerge Orange to its enlarged shareholder base following its Offer. Claim Number 3 - Superior Strategy Data and Internet Mannesmann claims to be a leader in internet and has focused its shareholders' attention on the 2.6 million fixed line internet subscribers it suggests it has in Germany and Italy. Vodafone AirTouch believes that the real growth opportunity is in the market for mobile internet, which is expected to reach 350 million users globally by the year 2003. * While customers will require access to the internet via both fixed and mobile devices, their choice of internet service provider will increasingly be determined by the quality, security and reliability of the mobile network. * In targeting the mobile internet opportunity, Vodafone AirTouch's global internet platform will enhance its competitive position, allowing its customers to access personalised internet content and to undertake transactions anywhere in the world. * Vodafone AirTouch's global mobile internet platform will also allow content providers to access globally the largest mobile customer base in the world. * Mannesmann has at present no alternative global mobile internet platform on offer to D2, Omnitel, Orange or their customers. * Vodafone AirTouch is already a leader in mobile internet services. Operators in which Vodafone AirTouch has an interest have launched mobile internet based services in 10 countries. One of Europe's leading operators of advanced mobile data and internet services is Europolitan, Vodafone AirTouch's subsidiary in Sweden. Vodafone AirTouch has recently appointed Tomas Isaksson, President and CEO of Europolitan, as President of its global platform and internet services. Fixed and Mobile Integration Mannesmann claims that Vodafone AirTouch fails to understand the potential of the integration of fixed line services with mobile. * Vodafone AirTouch believes that voice and data traffic will increasingly migrate to mobile as transmission speeds increase. Vodafone AirTouch fully understands that some customers will continue to want fixed line access and that some may want integrated services. * Vodafone AirTouch already provides integrated services to customers in a number of markets, including the UK, and intends to continue to do so in the future. Vodafone AirTouch believes that it is not necessary to own the fixed infrastructure to provide an integrated service. In Germany and Italy, however, the economics of owning fixed infrastructure are attractive and Vodafone AirTouch will therefore retain a majority interest in these businesses following their planned initial public offering. Ownership of Mannesmann's fixed line businesses within the new group is wholly consistent with Vodafone AirTouch's strategy of providing integrated services on the best terms to its customers. * Mannesmann has confirmed that it intends to operate Orange in the UK without owning a fixed line network. This is consistent with Vodafone AirTouch's own approach to fixed and mobile integration. * Vodafone AirTouch's new global mobile internet platform has been specifically designed to be fully accessible by both mobile and fixed line devices in order to provide the broadest range of customers with a seamless service from any device, anytime, anywhere. Claim Number 4 - Control Mannesmann argues that its control of 4 European markets is the key to delivering greater value to its shareholders than Vodafone AirTouch's Offer. Vodafone AirTouch agrees that control does have value. The value of control is, however subject to the terms of the relevant shareholder agreements. In fact, Mannesmann shares control in D2 and Omnitel with Vodafone AirTouch. Vodafone AirTouch has a 34.8 per cent stake in D2 and a 21.6 per cent stake in Omnitel. These stakes give Vodafone AirTouch appropriate minority rights, including for instance the right to approve the business plan. As a result, in certain key areas, Mannesmann is not able to force D2 into arrangements to which Vodafone AirTouch might object. Just as control will not allow Vodafone AirTouch to disadvantage any minority in Mannesmann, so Mannesmann's control in D2 and Omnitel must also respect its partners' rights. Claim Number 5 - Superior Value Mannesmann argues that its shares have a potential value of EUR350 despite being prepared to issue over EUR18 billion of new equity at EUR157.8 per share for the recent acquisition of Orange. This increase in projected value is not credible without also increasing the projected value of the entire mobile telecoms sector, including Vodafone AirTouch, on the same basis. Mannesmann's projected share price is subject to risks and uncertainties not fully disclosed by Mannesmann. Mannesmann compares this target price to the value of Vodafone AirTouch's Offer based on Vodafone AirTouch's current share price. This comparison is misleading. A more appropriate comparison with Mannesmann's projected share price is the projected value for shares in the Combined Group over a similar timescale. The projected value of Vodafone AirTouch shares following a combination with Mannesmann must take into account; (i) the greater potential upside from internet and data opportunities available to the Combined Group compared with that available to Mannesmann on a standalone basis; and (ii) the greater revenue benefits and synergies available to the Combined Group compared with those available from the combination of Mannesmann and Orange. Another objective measure of the value of Vodafone AirTouch's Offer would compare the relative values of Vodafone AirTouch's business and Mannesmann's business. * Vodafone AirTouch and Mannesmann operate similar businesses with similar growth prospects and should be valued on a similar basis, as indeed they were before Vodafone AirTouch's Offer. * Mannesmann contributes only 31 per cent of the new group's proportionate telecoms EBITDA and 36 per cent of the Combined Group's pre-bid market capitalisation. Vodafone AirTouch's Offer would provide Mannesmann Shareholders with 47.2 per cent of the Combined Group, which represents a substantial premium to any other measure of Mannesmann's contribution to the combination. This highlights why Mannesmann Shareholders should accept the Offer. Claim Number 6 - Value Destruction Mannesmann argues that accepting the Offer will lead to significant value destruction for its shareholders. Mannesmann's claims do not stand up to scrutiny. * Mannesmann's EUR200 million (£125 million) of cost and capital expenditure synergies are pre tax and compare to estimated post tax cost and capital expenditure synergies of EUR717 million (£450 million) (75 per cent of the estimated £600 million total) for Vodafone AirTouch and Mannesmann by 2004. * Mannesmann has estimated EUR1 billion of pre tax revenue synergies with Orange. Vodafone AirTouch's revenue synergies do not include the potential benefit of a global platform for internet and data. The potential revenue benefits between Vodafone AirTouch and Mannesmann should be greater than the synergies achievable between Mannesmann and Orange given that Vodafone AirTouch has 7 times more proportionate customers than Orange, and a larger UK business. * Vodafone AirTouch intends to retain a majority interest in Mannesmann's fixed line businesses, so synergies available from fixed line mobile convergence will be preserved. * While certain categories of shareholders may be liable for capital gains tax costs, Vodafone AirTouch believes that the actual percentage of shareholders affected is relatively small. Mannesmann makes no mention of the substantial costs of implementing its own independent strategy and of completing its footprint in Europe alone. * Just buying Orange cost over EUR18 billion in new equity and EUR12 billion in additional debt. Mannesmann's share price fell approximately 8 per cent on the announcement of the offer for Orange and its credit rating was downgraded, restricting Mannesmann's access to the capital markets and increasing the cost of future borrowings. * Funding required for further acquisitions is likely to dilute Mannesmann Shareholders' interests. Claim Number 7 - Uncertainty Vodafone AirTouch has already provided detailed answers to the areas of uncertainty that Mannesmann highlights. Demerger of Orange Mannesmann argues that Vodafone AirTouch will not be able to demerge Orange without a domination agreement requiring a substantial cash payment. Mannesmann has also argued that there are significant competition issues involved in a combination of Vodafone AirTouch and Mannesmann. * There is no requirement for a domination agreement to demerge Orange and accordingly, there is no requirement for a cash payment. Even Mannesmann argues that a domination agreement would only be required if Vodafone AirTouch intends to disadvantage Mannesmann. Vodafone AirTouch intends to demerge Orange without disadvantaging Mannesmann. * Vodafone AirTouch intends to effect the demerger of Orange by the transfer of Orange from Mannesmann to Vodafone AirTouch in exchange for cash and assets equal to the fair value of Orange to Mannesmann as determined in accordance with German law. As a result, this transfer will not disadvantage Mannesmann or any minority shareholders. Vodafone AirTouch would then distribute Orange shares to the enlarged shareholder base of Vodafone AirTouch (including the former Mannesmann Shareholders who have accepted the Offer). * Vodafone AirTouch has received clear advice from its German legal advisers and four leading German Professors of Corporate Law (Professors Hirte, Huffer, Noack and Ulmer) that it can demerge Orange with a simple 50 per cent majority and without a domination agreement. * Vodafone AirTouch remains confident in the advice it has received from its lawyers that the EU competition issues can be dealt with during the course of a Phase I enquiry. * Vodafone AirTouch has always made it clear that its views on EU competition matters are entirely its own, supported by its legal advisers. Mannesmann instead provides a number of quotes from members of the European Commission, taken out of context, designed to suggest that the Brussels competition authorities have indicated a view on this issue. 3G Condition One of the conditions of the Offer, as set out in the Offer Document of 23 December 1999, relates to the entitlement of affiliates of Vodafone AirTouch and Orange to prequalify for and, if successful in the auction, to be granted a licence in the UK auction of 3G spectrum. Vodafone AirTouch has received advice from its legal advisers that they believe Vodafone AirTouch can meet the requirements of the Secretary of State such that, if successful in its Offer for Mannesmann, both Vodafone UK and Orange will be eligible to bid for 3G spectrum. On this basis, Vodafone AirTouch has decided that the Offer will no longer be conditional on confirmation by the Secretary of State of the entitlement of Vodafone AirTouch and Orange, or their affiliates, to bid for 3G spectrum. Minority Position Mannesmann has suggested that Vodafone AirTouch might only achieve a minority position in Mannesmann. Vodafone AirTouch's stated objective since the original announcement of its Offer for Mannesmann has been to acquire more than 50 per cent of the shares of Mannesmann. This remains Vodafone AirTouch's objective. Withdrawal Rights Mannesmann states that Vodafone AirTouch could reduce the value of its Offer without allowing shareholders to withdraw their acceptances. This is not true. Under German law, Vodafone AirTouch is not entitled to reduce the value of its Offer. Further, under the terms of the German Takeover Code, Mannesmann Shareholders who have tendered their shares will have the right to withdraw their acceptances in the event of a higher competing offer that is not matched by Vodafone AirTouch within 10 days of such other offer. Tendering shareholders will also have the ability to trade tendered shares under a separate Mannesmann Tendered Shares trading line in accordance with German practice. Summary Mannesmann's response failed to address adequately the real strategic choices facing its shareholders. 1. Who else can offer Mannesmann Shareholders the global reach that Vodafone AirTouch delivers in voice, data and internet services? 2. How much more capital will Mannesmann need to implement its strategy across Europe? 3. How can Mannesmann be a leading technology business without a US presence and apparently with no interest in obtaining one? 4. Which will provide Mannesmann Shareholders with more proportionate EBITDA now and in the future: owning 47.2 per cent of the Combined Group or owning 100 per cent of Mannesmann? 5. What are the risks to Mannesmann Shareholders of not accepting the Offer? 6. What can Mannesmann do alone that it cannot do better together with Vodafone AirTouch? We urge shareholders to focus on the strategic issues and the premium we are offering. Accept Vodafone AirTouch's Offer without delay. Yours sincerely, Chris Gent Copies of this press release and the documentation published in connection with the Offer can be obtained from the Vodafone AirTouch merger website, www.vodafone-update.com, or by calling one of the dedicated helplines, toll-free, on 0800 169 2853 in the United Kingdom or 0800 088 77 66 in Germany. Enquiries: Vodafone AirTouch Terry Barwick, Corporate Affairs Director Tim Brown, Investor Relations Director Melissa Stimpson, Senior Investor Relations Manager Mike Caldwell, Corporate Communications Director Tel: +44 (0) 1635 33 251 Goldman Sachs International Scott Mead Simon Dingemans Tel: +44 (0) 171 774 1000 Warburg Dillon Read Warren Finegold Mark Lewisohn Tel: +44 (0) 171 567 8000 Tavistock Communications Lulu Bridges Tel: +44 (0) 171 600 2288 Financial Dynamics Perry Hall Tel: +49 (0) 69 971 68123 This press release does not constitute an offer to exchange or sell or an offer to exchange or buy any securities. The contents of this announcement have been approved by Goldman Sachs International and Warburg Dillon Read, the investment banking division of UBS AG, solely for the purposes of Section 57 of the Financial Services Act 1986. Goldman Sachs International and Warburg Dillon Read, each of which is regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for Vodafone AirTouch and for no one else in connection with the Offer and will not be responsible to anyone other than Vodafone AirTouch for providing the protections afforded to customers of Goldman Sachs International or Warburg Dillon Read or for giving advice in relation to the Offer. The Offer in the United States is being made through a prospectus which is part of an effective registration statement filed with the U.S. Securities and Exchange Commission. Mannesmann Shareholders who are U.S. persons or are located in the United States are advised to read the registration statement because it contains important information relating to the Offer. You can inspect and copy the registration statement relating to the Offer and documents incorporated by reference therein at the public reference facilities maintained by the U.S. Securities and Exchange Commission at 450 Fifth Street, N.W., Room 1024, Washington D.C. 20549. In addition, copies of the US Offer Document are available from The Bank of New York, 101 Barclay Street, Lobby Window, New York, NY 10286. For additional information regarding risks, see the Registration Statement on Form F-4 and other reports of Vodafone AirTouch Plc on file with the Securities and Exchange Commission. Copies of these filings are available on request directed to Vodafone AirTouch, Investor Relations, Tim Brown (tel: + 44 1635 682 373). It is the responsibility of any person receiving a copy of this announcement in any jurisdiction other than the United Kingdom, Germany and the United States to satisfy themselves as to the full observance of the laws and regulatory requirements of the relevant jurisdiction, including the obtaining of any governmental or other consent which may be required or observing any other formalities needing to be observed in such jurisdiction. Receipt of this announcement will not constitute an offer in those jurisdictions in which it would be illegal to make such an offer and in such circumstances it will be deemed to have been sent for information purposes only. Statements in this press release relating to future status or circumstances, including statements regarding future performance, costs, revenues, cash flows, earnings, divestments, growth and other trend projections and the synergistic benefits of the merger are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as 'anticipates', 'should', 'expects', 'estimates', 'believes', or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward- looking statements due to many factors, many of which are outside Vodafone AirTouch's control, including steps that Mannesmann's management may take to frustrate Vodafone AirTouch's efforts to obtain managerial control of Mannesmann, increase the costs or reduce the benefits of the transaction, the triggering of change of control provisions in Mannesmann's licences or other agreements, the ability to obtain regulatory approvals without onerous conditions, the impact of labour disputes, the risk of negative impacts on Vodafone AirTouch's credit ratings, the potential costs, including tax costs, of divesting Orange and Mannesmann's industrial businesses, limitations on Vodafone AirTouch's ability to control Mannesmann due to voting restrictions and other provisions of Mannesmann's charter and German law, general economic conditions, competition, technical difficulties and the need for increased capital expenditure (such as that resulting from increased demand for usage, new business opportunities and deployment of new technologies) and the ability to realise benefits from entering into partnerships for developing data and internet services. Appendix I Sources and Bases of Information 1. Estimate of 350 million mobile internet customers in 2003 is sourced from Kurt Hellstrom, President of Ericsson. 2. The issuance of new equity for the acquisition of Orange is based on a Mannesmann closing price of EUR157.8 on the Xetra exchange on 20 October 1999, an exchange ratio of 0.0965 New Mannesmann Shares per Orange share and 1,212,738,350 fully diluted Orange shares outstanding. The cost of EUR12 billion in additional debt on Mannesmann's acquisition of Orange is based on the cash element of the offer of £6.40 per share, 1,212,738,350 fully diluted Orange shares outstanding and an exchange rate of EUR1.5612 to £1.00. 3. The proportions of the Combined Group owned by the shareholders of Mannesmann and Vodafone AirTouch respectively are calculated on the basis of Mannesmann Share Capital of 517.8 million and 31.1 billion Vodafone AirTouch Shares in issue at 18 November 1999. 4. Unless otherwise stated, all currency conversions between pounds sterling and euros have been made at a rate of EUR1.594 to £1.00, the rate used by Mannesmann in its defence document dated 14 January 2000. 5. Mannesmann's contribution of 36 per cent to the Combined Group's pre-bid market capitalisation is based on Mannesmann's Share Capital and Vodafone AirTouch Shares in issue as set out in 3. above and closing share prices and exchange rates on 21 October 1999 (the day following the announcement of Mannesmann's formal offer for Orange). 6. Mannesmann's contribution of 31 per cent to the Combined Group's proportionate telecoms EBITDA is calculated based on estimated year ended 31 December 1999 pro-forma EBITDA for Mannesmann (including Orange) calculated using a 50 per cent growth rate in 1999-2000 and a 2000 estimate for proportionate telecoms EBITDA of EUR3.8 billion and pro-forma proportionate EBITDA for Vodafone AirTouch for the twelve months ended 30 September 1999. 7. Customer numbers for Vodafone AirTouch and Orange are based on 35.5 million proportionate customers for Vodafone AirTouch and 4.9 million customers for Orange based on the respective companies' press announcements dated 5 January 2000. 8. To calculate EBITDA per customer for Vodafone UK and Orange, average subscriber numbers for the period (March to September 1999 for Vodafone UK, December 1998 to June 1999 for Orange) were used. These were extracted from the interim financial statements of Vodafone AirTouch and Orange. The EBITDA figures used come from the interim statement for Vodafone AirTouch for the six months ended 30 September 1999 and for Orange, from Mannesmann's presentation dated 29 November 1999, after taking into account subscriber acquisition costs. 9. ARPU figures are based on figures for the rolling twelve months ended 30 June 1999 for Orange and for the rolling twelve months ended 30 September 1999 for Vodafone AirTouch. Orange figures are from Mannesmann's presentation dated 29 November 1999 and for Vodafone AirTouch from its interim report for the six months ended 30 September 1999. Appendix II Definitions The following definitions apply throughout this announcement unless the context requires otherwise: 'ARPU' Average Revenue Per User 'Combined Group' Vodafone AirTouch as enlarged as a result of the merger with Mannesmann pursuant to the Offer 'D2' Mannesmann Mobilfunk GmbH 'EBITDA' Earnings before interest, taxation, depreciation and amortisation 'EU' European Union 'European Commission' The European Commission established by Article 4 of the Treaty of Rome 'German GAAP' Generally accepted accounting principles in the Federal Republic of Germany 'German Takeover Code' The German Takeover Code of the Exchange Expert Commission at the Federal Ministry of Finance 'London Stock Exchange' London Stock Exchange Limited 'Mannesmann' Mannesmann Aktiengesellschaft and its subsidiary and associated undertakings and, where the context permits, each of them 'Mannesmann Share Capital' Entire issued share capital of Mannesmann assuming full conversion of all outstanding convertible bonds and full acceptance of the Orange Offer 'Mannesmann Shareholders' Holders of Mannesmann Shares 'Mannesmann Shares' The existing ordinary shares of no par value of Mannesmann (in registered form) and any further such shares issued by the expiration of the Offer 'Offer' The offer by Vodafone AirTouch to acquire Mannesmann Shares not already owned by Vodafone AirTouch at the time the Offer is made on the terms and subject to the conditions set out in the Offer Document and, where the context permits, any subsequent revision, variation, reintroduction, extension or renewal thereof 'Offer Document' The document containing the Offer dated 23 December, 1999 'Omnitel' Omnitel Pronto Italia S.p.A. 'Orange' Orange plc and its subsidiary and associated undertakings and, where the context permits, each of them 'Orange Offer' The offer by Mannesmann for Orange as set out in an offer document dated 1 November 1999 'Proportionate Customers' The number of customers of an operator calculated by adding the number of dated customers of each of the ventures in which such operator has an interest, in each case multiplied by such operator's percentage ownership interest in the venture 'Proportionate EBITDA' Proportionate EBITDA is a pro-rata consolidation which reflects either Vodafone AirTouch's or Mannesmann's, as the case may be, share of EBITDA in both its consolidated and unconsolidated entities. Proportionate EBITDA is not a recognised presentation under either UK or German GAAP '3G (Third Generation)' Also UMTS (Universal Mobile Telephony System). Allows voice, video and multimedia to be transmitted at speeds of up to 2 megabits per second to mobile users. It is the planned standard for the world by 2002 'UK GAAP' Generally accepted accounting principles in the United Kingdom 'US Offer Document' The document declared effective by the US Securities and Exchange Commission addressed to Mannesmann Shareholders in the US and holders of Mannesmann American Depositary Shares 'Vodafone AirTouch' Vodafone AirTouch Plc and its subsidiary and associated undertakings and, where the context permits, each of them 'Vodafone Shareholders' AirTouch Holders of Vodafone AirTouch Shares 'Vodafone AirTouch Shares' Vodafone AirTouch ordinary shares of US$0.10 each 'Vodafone UK' Vodafone Limited 'Warburg Dillon Read' Warburg Dillon Read, the investment banking division of UBS AG For the purposes of the above definitions, 'subsidiary' and 'associated undertaking' have the meanings given by the United Kingdom Companies Act 1985 (but for these purposes ignoring paragraph 20(1)(b) of Schedule 4A to the Companies Act 1985) and given by Sections 15 et seq. German Stock Corporation Act, and 'substantial interest' means a direct or indirect interest in 20 per cent or more of the equity share capital of an undertaking.
UK 100