France Telecom and Vodafone Airtouch are expected to announce tomorrow that they have reached agreement on the sale of Orange to the French group in a deal that would create Europe's second largest mobile phone company.
France Telecom intends to pay about $46 billion (€50 billion) for the UK's third largest mobile operator. The sale of Orange will allow Vodafone to close its purchase of Germany's Mannesmann.
The French group, whose Itineris operation in France has 10 million subscribers, last year bought 15 per cent of NTL, the UK cable company.
The group would combine Orange, which also has stakes in Belgian, Swiss and Austrian operators, with its mobile interests in France, Denmark, the Netherlands and several other European countries. If the weekend's negotiations are finalised, Mr Hans Snook, chief executive of Orange, will run the combined business. France Telecom plans to spin off between 15 per cent and 20 per cent of the mobile unit at the beginning of next year, assuming market conditions are favourable.
The purchase price includes £25 billion sterling (€40 billion) of equity, for which France Telecom could pay slightly more cash than shares. France Telecom will assume about £2 billion of Orange's debt, plus an additional £4.1 billion of debt Orange has raised to pay for a third-generation mobile licence in the UK.
This licence is one reason France Telecom is attracted to Orange. The French company is also eager to expand outside France, after it failed to buy Germany's E-plus.
A close examination of Orange's business and finances by France Telecom and its advisers began late last week.
:quality(70)/cloudfront-eu-central-1.images.arcpublishing.com/irishtimes/VR3765MFOBH2NMV2QNICYDF67M.png)