Report: France Télécom in talks to buy Orange

France Télécom SA and Vodafone AirTouch PLC are in talks over a deal that would see the French telecommunications company purchase UK-based mobile operator Orange PLC for about 30 billion pounds ($US44 billion), according to various media reports published on Friday.

Provided that France Télécom and Vodafone can reach a final agreement, the sale of Orange could be announced as early as this 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 pound loan it secured this week, the FT report said.

Officials at both Vodafone and France Télécom declined to comment.

Vodafone has to divest itself of Orange to meet the requirements set by the European Commission for approval of its pending merger with Germany's Mannesmann AG. The 180 billion euro ($US164 billion) 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 license, for which it owes the U.K. government 5.96 billion pounds.

Orange also bought a 3G license for 4.1 billion pounds. NTL Mobile Ltd., 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 US-based WorldCom are reportedly interested in acquiring a U.K. 3G mobile spectrum license 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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