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Bidders thirst for Orange
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April 20, 2000: 10:08 a.m. ET
France Telecom, Telefónica jockey for position to acquire U.K. cell firm
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LONDON (CNNfn) - U.K. cellular operator Orange remained flavor of the month Thursday as potential bidders for the company scrambled for position. France Telecom confirmed its intention to bid for Britain's third-most-popular mobile-phone network provider, while Spanish rival Telefónica was reported to be building up the financial firepower for an approach.
Orange is currently owned by Vodafone AirTouch (VOD), after the world's largest cellular company acquired Orange's parent in a $173 billion deal. A condition for European Union regulators allowing Vodafone's purchase of Mannesmann to go ahead was that it divest Orange, ensuring that Vodafone, already Britain's largest mobile-phone operator, didn't end up owning two U.K. cellphone networks.
The Newbury, England-based company has not made clear whether it intends to spin off Orange to unload it in a trade sale. 
Mannesmann paid about $32 billion for Orange last October. The U.K. unit's value is likely to have soared in the meantime, as the ability to offer Internet access via cellphones has enhanced the ratings of companies in the mobile communications arena.
Reuters cited bankers Thursday who said that Spain's dominant telecom operator Telefónica has lined up a huge loan to bankroll a bid for the British firm. Telefónica could not be reached for comment.
Heating up the battle, France Telecom on Thursday confirmed its willingness to bid for Orange, even if the British firm fails to win one of the next-generation cellular phone operating licenses that the British government is now auctioning. France Telecom is backing a bid for a new license by Nasdaq-listed cable firm NTL, in which the French firm has a 30 percent stake.
NTL and Orange are effectively competing against each other for one of the five licenses, which will allow mobile-phone companies to offer high-speed Internet access and video.
France Telecom chairman Michel Bon told a news conference Thursday that winning two Universal Mobile Telecommunications System (UMTS) licenses would not be a problem, because it would be easy to sell one of them. So far the auction has raised around £22 billion, almost five times the amount first anticipated.
Telefónica dropped out of the bidding last week, saying the prices being offered could not be justified. Buying Orange would guarantee it a place at the leading edge of cellular technology. If the bidding were to end now, both NTL and Orange would win a license. Six bidders remain of the 13 that started out. 
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