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France Telecom in talks to buy Orange

French stick their oar in

France Télécom SA and Vodafone AirTouch are in talks over a deal that would see the French telecommunications company purchase U.K.-based mobile operator Orange for about £30 billion according to various media reports published today.

Provided that France Télécom and Vodafone can reach a final agreement, the sale of Orange could be announced as early as next week, according to a report in the Financial Times newspaper (FT).

France Télécom plans to pay for the mobile telecommunications company in a combined cash and stock deal with a £20 billion loan it secured this week.

Vodafone has to jettison Orange to meet the requirements set by the European Commission for approval of its pending merger with Germany's Mannesmann AG.

The acquisition is set to create the world's biggest mobile telecommunications company.

Furthermore, Vodafone could use the cash from the sale of Orange to pay for its third-generation (3G) mobile spectrum licence, for which it owes the U.K. government £5.96 billion.

Orange also bought a 3G license for £4.1 billion. NTL Mobile, a joint venture of France Télécom and cable company NTL Group, pulled out of the auction.

A number of companies, including France Télécom, Dutch telecommunications operator Koninklijke KPN NV and U.S.-based WorldCom. are reportedly interested in acquiring a U.K. 3G mobile spectrum licence through the purchase of Orange.

KPN is still exploring its position in terms of a purchase of Orange, but is not expected to be able to beat the cash portion of France Télécom's offer, according to the FT report.


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