Vodafone clears way for Arcor float

CELLPHONE group Vodafone has paved the way for the flotation of its fixed-line German operator Arcor, unloading the unit's railway signals business for e1.15bn (£670m).

State-owned railway operator Deutsche Bahn will pay cash for the business. It will retain its 18.2% stake in Arcor but will lose its veto rights on key decisions. The rail operator had previously opposed Arcor's flotation.

Vodafone, which owns 74% of Arcor, acquired the business during its e180bn takeover of Mannesmann in 2000. It had intended to float the unit a year ago in order to focus on its German mobile operations. But Deutsche Bahn blocked the plan, fearing it could lose control of its own communications infrastructure.

Vodafone is expected to use proceeds from the sale to pay off some of its £17bn of debt. A fall in the value of Arcor was the main factor behind Vodafone's £4.5bn asset write-down in November.