Enel, Europe's largest listed utility, said Infostrada would then be folded into its joint mobile telephone venture with France Telecom, Wind. France Telecom holds 43.5 per cent of Wind, Enel the rest.

"Enel and France Telecom have agreed a deal on the terms and conditions for Enel to buy Infostrada from Vodafone and then to merge Infostrada and Wind with a subsequent reorganisation of the share capital of the new company," Enel said in a statement.

The merged Wind/Infostrada is slated to be floated on the Italian stock market in the first half of 2001, Enel said, and capital raised via that listing will go towards paying for Infostrada.

Enel said it would pay Vodafone, which needs cash to pursue its trans-European mobile strategy, half the 11 billion euro price tag in cash and half in bonds.

Once Wind/Infostrada is merged, France Telecom's stake will be diluted to 26.6 percent, but the French giant will have the option to reacquire up to 32.5 percent of Wind/Infostrada over a 24-30 month period after Wind/Infostrada is listed.

If France Telecom takes the full option, Enel's stake in Wind/Infostrada would be 42.5 per cent, France Telecom's 32.5 per cent and 25 per cent would be with the market.

Enel said it expected the merged Wind/Infostrada to have revenues of around $2.25 billion in 2000.