Ruff,
Is is a good news for QCOM?
Fri, 26 May 2000, 2:39am EDT
France Telecom in Exclusive Orange Talks, People Say (Update4)
By Robert B. Cox
London, May 26 (Bloomberg) -- France Telecom SA won the
exclusive right to negotiate with Vodafone AirTouch Plc to acquire Orange Plc for as much as $45 billion, people familiar with the French and British phone companies said.
The talks may lead to an agreement as soon as Tuesday, when
Vodafone reports earnings, they said. France Telecom may pay about two thirds in cash, assume about $9 billion of debt, and pay the rest in stock, the people said.
France Telecom wants to buy Orange, the U.K.'s third-largest
and fastest-growing cellular company, to expand abroad and take advantage of growing demand for mobile services. Orange would also give the Paris-based company a license to offer so-called next- generation mobile services in the U.K. after it bowed out of an auction for the permits last month when bidding went too high. ``Orange is perceived as the last opportunity to break into the U.K. mobile market,'' said Mark Cardwell, an analyst with Sanford C. Bernstein in New York, who rates France Telecom stock
``market perform.''
The French company, which earlier this week was arranging a
20 billion pound ($30 billion) loan to pay for Orange, was picked in part because it could pay more cash than the other bidders, Sonera Oyj, a Finnish telephone operator, and Netherlands-based Royal KPN NV's mobile unit, the people said.
It also plans to raise about $1.9 billion in June by selling
most of its stake in Mexican telephone company Telefonos de Mexico SA, and Telmex plans to buy the remaining stake for a $600 million, the companies said yesterday. France Telecom may also assume some 6 billion pounds of Orange's debt, the people said.
The purchase would pit the French company against British
Telecommunications Plc, Deutsche Telekom AG and Vodafone in the market for British wireless customers. Deutsche Telekom bought the One 2 One cellular telephone company a year ago.
Wireless Internet
All four companies are racing to build pan-European mobile
networks as they prepare to invest in the new mobile phone
networks, called UMTS, which will allow companies to sell
potentially lucrative Internet retailing services to hand-held devices such as mobile phones and palmtop computers.
A Vodafone spokesman declined to comment. France Telecom
officials could not be reached. Vodafone's bankers at Dresdner Kleinwort Benson, UBS Warburg, Goldman Sachs Group Inc. and Donaldson, Lufkin & Jenrette, Inc. declined to comment, as did France Telecom's bankers at NM Rothschild, Morgan Stanley Dean Witter & Co. and Credit Suisse First Boston.
Forced to Sell
Vodafone, the world's largest mobile phone company was forced to sell Orange to win regulatory clearance for its $166 billion acquisition of Mannesmann AG, Germany's biggest cellular operator.
By entering exclusive talks with France Telecom, Vodafone
ends months of speculation about whether it might instead spin off Orange to shareholders, allowing Chief Executive Hans Snook to negotiate with rivals. With shares of telecommunications companies sliding and Vodafone's need for cash increasing, a mostly cash sale to a rival may be more appealing.
The U.K.-based company needs funds to finance investments
that could reach as much as 50 billion euros ($45.5 billion) to build new mobile networks in Europe. Vodafone Pacific, the company's Australian unit, just scrapped a A$1.87 billion ($1.1 billion) initial share sale. ``Vodafone has got to reduce its debt by selling assets, so it can get on with its primary business of being a mobile phone operator,'' said Matthew Lewis, an analyst at Daiwa SBCM Europe.
A sale may also clear European Union Competition Commission
concerns about Vodafone's ownership of Orange. Selling Orange is a condition for approval of the Mannesmann transaction. ``What's important is that links between Vodafone and Orange are severed,'' said Amelia Torres, a spokeswoman for Competition Commissioner Mario Monti.
Raising Funds
Shares of France Telecom yesterday rose 5.5 euros, or 4.2
percent, to 135.90. Vodafone rose 8.8 percent to 287 pence.
France Telecom wants Orange, which counts 6 million customers in Europe's second-largest economy, to complement phone and high-speed Internet services it offers through NTL Inc., the U.K.'s biggest cable-television company, in which the Paris-based company
is a shareholder.
The Western European market for the higher-speed UMTS mobile
data services is set to soar, with 17 percent of the population,or 67 million people, getting data over mobile phones by 2004,compared with an estimated 3.4 percent of the population in 2000,according to IDC, a market research company. |
