Mannesmann Defence Document Posted

Vodafone AirTouch PLC
14 January 2000


MANNESMANN POSTS DEFENCE DOCUMENT REJECTING VODAFONE'S OFFER

Mannesmann offers more value today,
more value tomorrow and less risk


-     Mannesmann has today posted its defence document rejecting
  Vodafone's offer.
-      Vodafone's   offer  is  wholly  inadequate  and   carries
  significant  risk. The offer fails to take proper  account  of
  Mannesmann's  unique strategic position and the benefits  that
  this will bring. Therefore, the Executive Board of Mannesmann,
  with  the  full support of the Supervisory Board,  unanimously
  recommends shareholders to reject Vodafone's offer.

VALUE

-     The  Executive Board believes that Mannesmann's base value
  is  at least euros 250 per share. This is supported by trading
  valuations  of  comparable companies and the increase  in  the
  sector since the announcement of the Orange acquisition.
-     This  base  value excludes all of the anticipated  synergy
  benefits  with Orange and the significant upside potential  of
  data, internet and tele-commerce. The Executive Board believes
  that  the potential value of Mannesmann including these is  at
  least  euros 350 per share. This value belongs to Mannesmann's
  shareholders. Vodafone's offer does not recognise this upside,
  nor does it include any premium for control.
-     Consistent with its focus on shareholder value, Mannesmann
  is  exploring an IPO of its internet businesses  in  order  to
  crystallise their substantial value.

GROWTH

-     The  Board believes that a focused European strategy based
  on  an  integrated approach, control and innovative leadership
  will  achieve  superior  growth  and  returns  for  Mannesmann
  shareholders  than  Vodafone's proposal.  A  combination  with
  Vodafone   would  significantly  dilute  Mannesmann's   growth
  prospects:  Mannesmann  telecoms is forecast  to  deliver  39%
  compound  earnings growth for 2000-3 compared  to  24%  for  a
  Vodafone/Mannesmann combination.

EUROPEAN PLATFORM

-     The  European  telecoms market represents  a  huge  growth
  opportunity.  Mannesmann already has controlling interests  in
  leading  mobile  operators in three of Europe's  four  largest
  markets and is well placed to be the European partner of choice.
-     The  controlled  operations Vodafone adds  are  relatively
  small. The biggest are Sweden and The Netherlands. Furthermore,
  Vodafone's offer would involve replacing Orange with Vodafone's
  UK  business,  despite the fact that Orange  is  substantially
  outperforming Vodafone in the UK by winning 30% more customers
  than Vodafone in the 4th quarter of 1999.

INTEGRATION

-     Integrated products significantly increase ARPU and reduce
  churn and are recognised as having huge growth potential. Scale
  in  both fixed and mobile is critical to the ability to  offer
  these integrated products, to access best content and to launch
  new  tele-commerce  applications.  Vodafone's  clear  lack  of
  understanding and experience in this area will destroy value for
  Mannesmann shareholders.

CONTROL

-    The benefits of control are undeniable and are reflected in
  the  trend towards consolidation of minority operations in the
  sector.   Mannesmann  controls  over  95  per  cent   of   its
  proportionate  EBITDA.  Vodafone  would  substantially  dilute
  Mannesmann's control position and expose it to the problems that
  Vodafone  faces  in trying to convince competitors  to  accept
  Vodafone's supposedly global products.

INNOVATION

-     Mannesmann has a clear track record of innovation  in  all
  its  core markets. It recognised the potential impact  of  the
  internet  early  on  and moved swiftly to position  itself  to
  benefit. Vodafone, by contrast, has only just woken up to  the
  internet's significance and this week's announcements served to
  highlight just how far behind it is.

RISK

-    Vodafone's offer carries a number of substantial risks that
  Mannesmann  shareholders are being asked to bear  without  any
  corresponding  withdrawal rights. These are  real  risks  with
  significant implications for the value of the Vodafone  shares
  being  offered.  Vodafone  continues  to  provide  only  vague
  assurances, not solutions, to these important issues.

Dr. Klaus Esser, Mannesmann's CEO, today said:

'The  choice for our shareholders is about strategy, growth  and
real    value.    Mannesmann's   integrated   strategy    offers
significantly  better growth prospects than a  combined  entity.
Integration  is  key  for  the  growth  in  data  and  internet.
Vodafone's  offer completely fails to recognise this  value  and
entails unacceptable risks for Mannesmann shareholders.'

Copies  of  the defence document have been posted to  Mannesmann
shareholders   today.   Additional  copies   can   be   obtained
http://www.future.mannesmann.com.


LETTER FROM KLAUS ESSER, MANNESMANN CEO

Dear Shareholder,

You should by now have received a document from Vodafone setting
out  the terms and conditions of its final* all-share offer  for
Mannesmann.

Vodafone's  final*  offer  is  wholly  inadequate  and   carries
significant  risks. Your Board therefore has  no  hesitation  in
continuing to urge you to reject it.

FOCUSED STRATEGY

Mannesmann has consistently pursued a clear strategy focused  on
Europe,  an  integrated approach, control of its operations  and
innovative leadership. The success of this strategy to  date  is
clear: over the past five years, the Mannesmann share price  has
increased by over 1,000 per cent.

Looking to the future, the European telecoms market represents a
huge  growth  opportunity.  The data/internet  market  alone  is
expected  to grow significantly over the next five years,  while
the opportunities for new entrants continue to expand rapidly as
liberalisation  of  fixed services is fully  implemented  across
Europe.  We  are convinced that our focused European  integrated
strategy  is  better suited to exploit these  opportunities  and
will  achieve superior returns for our shareholders compared  to
Vodafone's proposal.

1999 - ANOTHER OUTSTANDING YEAR

As a result of the substantial acquisitions that we successfully
undertook in 1999, Mannesmann today is, fundamentally, even more
attractive and has outstanding growth prospects:

-     in  April, we acquired the o.tel.o fixed-line business and
  germany.net in Germany;
-     in  May,  we  acquired  control of  Arcor,  cementing  our
  position as the leading alternative wireline carrier in Germany;
-    in June, we acquired control of Infostrada and Omnitel, the
  leading alternative wireline and wireless carriers in Italy;
-     in  September,  we  announced  that  the  Engineering  and
  Automotive business would be floated off as a separate company
  (scheduled for this year); and
-    in November, we acquired Orange, the leading wireless brand
  in the UK with the best network quality and the highest customer
  satisfaction.

Your  Group  now  has controlling interests  in  leading  mobile
telecommunications operators in three of Europe's  four  largest
telecoms  markets  (Germany, Italy and the UK)  and  a  minority
interest in a highly successful operator in the fourth (France).
Your  Group  also  has  controlling  interests  in  the  largest
alternative  fixed line carriers in both Germany and  Italy  and
has operations in Austria, Switzerland and Belgium. In total, we
now  serve  36  million controlled subscribers. By any  measure,
Mannesmann's  acquisitions have created enormous value  for  our
shareholders and we intend to continue this success.

Mannesmann   also   delivered  exceptional  results   in   1999.
Proportionate telecoms EBITDA of 12.2 billion was  70  per  cent
higher  than in 1998. Controlled wireless subscribers  increased
by  70  per  cent. Orange, in particular, more than doubled  its
customer  base and had a 43 per cent share of contract additions
in the UK, 40 per cent more than its nearest competitor.

Your  Group  is  now poised to reap the full benefits  of  these
developments as it continues to integrate its businesses and  is
well  placed  to be the partner of choice for operators  outside
Europe,  particularly those in the US and Asia, seeking European
connectivity.

BENEFITS OF INTEGRATION

Integrated  products  enable  Mannesmann  to  respond  best   to
customers'  demands for bundled services and a single  supplier.
This  builds customer loyalty, significantly increases ARPU  and
reduces churn. Mannesmann believes that scale in both fixed  and
mobile  services  is  critical to the  ability  to  offer  these
products  and  to access best content, launch new  tele-commerce
applications  and  develop ever more software intensive  support
and delivery systems.

Mannesmann rejects Vodafone's claims that returns are  lower  in
fixed  services.  Vodafone  fails to  appreciate  not  only  the
benefits  of the positive impact of higher ARPU and lower  churn
but  also  those  arising  from the liberalisation  of  European
telecoms,  particularly in the local loop, and  from  the  rapid
technological advances in the use of copper lines for multimedia
applications  and in fixed-wireless access. It is also  critical
to appreciate that mobile is only one means of data transmission
and  access  to the internet. Fixed data/internet  services  are
forecast  still  to account for the majority of the  total  data
market   in  2005.  Vodafone's  claims  highlight  a   lack   of
understanding  and  experience  that  would  destroy  value  for
Mannesmann shareholders.

VALUE OF CONTROL

Mannesmann believes that the benefits of control are undeniable,
hence  the trend towards consolidation of minority shareholdings
in  the sector. Mannesmann believes that control is an essential
element  for  the  successful development of  the  key  telecoms
products  of the future (data services and integrated  wireline,
wireless  and  internet services and access) in  areas  such  as
speed  to market, roll-out and branding. Control is also  a  key
factor in enabling management to maximise the value inherent  in
a  customer  base  by  being the partner of choice  for  content
providers  and  equipment  manufacturers.  Control  also   helps
facilitate  network  connectivity and systems  compatibility  in
areas such as customer care, billing and data centres. The  same
benefits cannot be expected with only a minority interest.

Mannesmann believes that achieving continuously superior  EBITDA
growth rates in the future will therefore be even more dependent
on  controlling  operations and their EBITDA  growth  potential.
Over  95  per  cent  of  Mannesmann's  proportionate  EBITDA  is
generated  by operations it controls, compared to less  than  40
per   cent  for  Vodafone.  It  is  a  particular  concern  that
Vodafone's joint venture partners in the US (Bell Atlantic)  and
Japan  (BT  and  AT&T),  the two largest  data  markets  outside
Europe,  are substantial operators with global ambitions.  These
operators already promote fixed-mobile services under their  own
competing brands.

Control  over  most of our operations is also a  key  factor  in
enabling us to achieve the significant synergies that we  expect
to  derive  from the recent acquisition of Orange. We  have  now
completed  our review, jointly with Orange, of synergies,  which
we  estimate will amount to over 11.2 billion per annum in  pre-
tax cash flow by 2003.

LEADERSHIP IN MOBILE DATA AND INTERNET

Mannesmann has an outstanding track record of innovation in  all
its  core  markets. Mannesmann has consistently  been  first  to
market with key products:

-     each  of  D2,  OPI  and Orange UK have  introduced  mobile
  internet services ahead of Vodafone UK;
-     their  customers send significantly more SMS messages  per
  customer than Vodafone UK;
-     Orange will be launching mobile video conferencing in  the
  UK this year;
-     D2 will be launching its mobile online banking services in
  Germany in the second quarter of this year; and
-     Orange  is the only operator in the UK to have  a  network
  capable of offering high speed circuit switched data services.

It  is not surprising, therefore, that all three of Mannesmann's
core European wireless operations are well ahead of Vodafone  UK
in terms of higher customer satisfaction and substantially lower
churn.

Mannesmann  recognised the potential impact of the internet  and
mobile  data  early  on.  We launched our  fixed  line  internet
operations  in  1998  and had complete mobile  internet  product
offerings in all our core markets in 1999. Mannesmann is already
the  third  largest ISP in Europe and a leading internet  portal
operator with over 155 million page views per month.

In  a  business where speed to market is key, this week's  first
presentation of Vodafone's proposed internet platform underlines
just  how  far  behind  it  is in understanding  the  internet's
significance and how to benefit from it:

-     Vodafone's proposition is built only on what Vodafone  can
  offer - a mobile package - rather than what the customer wants -
  seamless, personalised communications solutions;
-     Vodafone  admits that it still has no brand  on  which  to
  build its internet business, including the 'Vodafone' name, and
  it will be July this year before a brand is even unveiled; and
-     Vodafone  proclaims its proposed platform to be  'global',
  yet  it  admits  that today this can only  be  rolled  out  to
  Vodafone's  controlled operations. Even in the United  States,
  Bell  Atlantic, Vodafone's controlling partner, will  continue
  with its own separate internet strategy.

Furthermore, Vodafone's proposed platform is principally founded
on  a  few  non-exclusive  technology  and  content  agreements.
Mannesmann  has had a much wider range of partnerships  such  as
these in place for some time now:

-     Orange.net is based on the Sun-Netscape Alliance, which is
  an indisputable leader in the ISP market, powering 80 per cent
  of  the  world's  major ISPs. Content providers  include  ITN,
  Flextech and Thomson Directories;
-     D2-WAP  service offerings are made available by technology
  provided by Sun, 3 com, Siemens, phone.com and Nokia.  Content
  providers include Yahoo!, Handelsblatt, n-tv, Spiegel Online and
  e-bay; and
-     for  Omnitel 2000's innovative voice access it has  chosen
  Philips  as technology partner. Other partners include Oracle,
  Compaq  and phone.com. Omnitel 2000 provides over 150 services
  through content partners such as De Agostini and Unicredito.

SUPERIOR GROWTH PROSPECTS

We estimate that the proportionate EBITDA of Mannesmann Telecoms
will increase by over 60 per cent in 2000 and, subsequently,  by
39  per cent compound per annum between 2000 and 2003, including
the  synergy benefits arising from Orange. The upside  potential
of  data, internet and tele-commerce opportunities will  enhance
this growth still further.

This  growth  is  significantly higher  than  Vodafone's,  whose
proportionate  EBITDA is expected to grow by only  20  per  cent
compound  per annum between 2000 and 2003, according  to  recent
brokers' reports.

On  this  basis, a combination with Vodafone, given the enforced
disposal of Orange, would result in compound growth of  only  24
per  cent  per  annum  between  2000  and  2003  (including  the
synergies  Vodafone claims) and would, therefore,  significantly
dilute the growth prospects that we believe you will enjoy as  a
Mannesmann shareholder.

MORE VALUE

We  believe that Mannesmann today has a base value of  at  least
1250  per  share. This valuation is substantiated  both  by  the
valuations  of comparable companies and by the increase  in  the
telecoms  sector  since we announced our interest  in  acquiring
Orange.

Taking  into  account the benefits of data, internet  and  tele-
commerce  opportunities  and the synergies  that  we  expect  to
derive  from  the  integration of Orange, we believe  that  this
value is, potentially, at least 1350 per share.

SIGNIFICANT RISKS OF THE VODAFONE OFFER

In  addition to being wholly inadequate, Vodafone's  offer  also
carries a number of substantial risks.

The  European  Commission will require Vodafone  to  dispose  of
Orange if it acquires Mannesmann. In order to do so, German  law
requires  Vodafone  to establish a domination agreement  between
Vodafone and Mannesmann. This, in turn, will require Vodafone to
offer  all  outstanding Mannesmann shareholders a  cash  payment
which  could, on the basis of Mannesmann's current market value,
be  potentially up to 160 billion - significantly impacting  the
financial standing of the enlarged Vodafone group. As  a  result
of  German law and despite Vodafone's claims, a lawful de-merger
of  Orange  without a domination agreement is unrealistic  given
the  unquantifiable consequences of a de-merger  for  Mannesmann
and its minority shareholders.

In  addition, the de-merger of Orange may take over  a  year  to
implement.  Given the rapid development of the telecoms  sector,
this  delay  may severely curtail the development of Orange  and
hence its value by the time of the de-merger.

Despite   the  significant  issues  relating  to  the   European
Commission's  review of the transaction, Vodafone has  not  made
its  offer  conditional upon EC clearance. We have been  advised
that  there  is  a significant risk of a four month  'Phase  II'
investigation by the EC. If you accept the Vodafone offer before
the EC makes its decision, you will be fully exposed to the risk
that  any  EC  approval  is made subject to  materially  adverse
conditions or that the combination is ultimately blocked.

Furthermore, because it has reserved the right to waive  its  50
per  cent  acceptance  condition,  Vodafone  may  actually  only
acquire  a minority interest in Mannesmann and may therefore  be
unable to realise the benefits that it claims to be offering nor
implement the de-merger of Orange.

It  is  also  unclear what effect a combination of Vodafone  and
Mannesmann would have on the ability of Vodafone and  Orange  to
obtain  UMTS licences in the UK. Although Vodafone has made  its
offer subject to a condition in this regard, that condition  may
be waived in its sole discretion.

Any  of  these issues could significantly diminish the value  of
the  Vodafone  shares  being offered to  you  and  yet  Vodafone
expects  you  to accept its offer without having  the  slightest
idea  of their outcome. If you accept Vodafone's offer, you have
no withdrawal rights in respect of these risks.

In addition, Vodafone's offer will result in a tax liability for
our  German  corporate shareholders, certain  German  individual
shareholders   and,   most  likely,  US  shareholders,   further
diminishing the claimed value of Vodafone's offer.

Mannesmann  has  been,  and remains,  open  to  a  constructive,
value-focused dialogue Vodafone's attempts to portray itself  as
the  bride  left  at  the  altar  are  a  naive  and  misleading
interpretation of selected events. Mannesmann's widely  reported
interest in the UK market left no doubt about our intentions  in
that regard.

We  have repeatedly stated that our objective has been simply to
protect  and maximise shareholder value and not to preserve  our
independence at all costs. However, this does not mean  that  we
should enter into discussions with a competitor on the basis  of
a  derisory offer that is an attempt to repair some of  its  own
strategic shortcomings at the expense of our shareholders.  This
will  remain  our  view  until such time  as  Vodafone  makes  a
proposal that recognises the true value of Mannesmann.

We  remain committed to reviewing all alternatives in  order  to
achieve  our  objective.  To  this end,  we  are  exploring  the
potential  for  an IPO of our internet businesses  in  order  to
crystalise their value.

RECOMMENDATION

Vodafone's  offer  is wholly inadequate and carries  significant
risks.  The  offer fails to take proper account of your  Group's
unique strategic position and the benefits that this will  bring
to  you. Therefore, the Executive Board of Mannesmann, with  the
full  support  of the Supervisory Board, unanimously  recommends
shareholders  to reject Vodafone's offer and not to  return  any
form of acceptance that Vodafone has sent to you.

Mannesmann's largest shareholder, Hutchison Whampoa, which  owns
approximately  10  per cent of Mannesmann, has  stated  publicly
that it supports Mannesmann's rejection of Vodafone's offer.

Yours sincerely,

Klaus Esser
 

DISCLAIMER ON FINANCIAL PROJECTIONS
 
BY  THEIR  NATURE;  THE FINANCIAL POJECTIONS CONTAINED  IN  THIS
PRESS  RELEASE INVOLVE RISK AND UNCERTAINTY BECAUSE THEY  RELATE
TO  EVENTS  AND DEPEND ON CIRCUMSTANCES THAT WILL OCCUR  IN  THE
FUTURE;  MANY  OF  WHICH  ARE NOT WITHIN  MANNESMANN'S  CONTROL:
ACCORDINGLY  THERE  CAN BE NO ASSURANCE THAT ACTUAL  EVENTS  AND
RESULTS  WILL  NOT  DIFFER MATERIALLY FROM  THOSE  EXPRESSED  OR
IMPLIED BY THESE PROJECTIONS.