Orange raises pounds 1.75bn for foreign spending spree

Orange, the newest of the UK's four mobile phone networks, has raised pounds 1.75bn from its bankers to fund a foreign spending spree. Chris Godsmark, Business Correspondent, outlines the company's expansion plans.

The new borrowing facility, revealed yesterday, is thought to be the largest debt financing deal ever secured by a European mobile phone network.

The pounds 1.75bn of loans raised for Orange will replace the company's existing pounds 1.2bn facility, arranged two years ago in advance of the group's flotation. It means the company will be able to draw on pounds 550m of extra resources.

Graham Howe, Orange's finance director, said the company would keep the additional spending power in reserve to pursue acquisitions abroad.

Orange has already said it intends to bid for mobile licences in the Netherlands and Belgium, while earlier this the group sealed a pounds 45m deal in Austria, to take a 17.45 per cent stake in a consortium awarded the country's third digital mobile licence.

"This gives us the opportunity of participating in a number of overseas ventures. But we've got no clear-cut idea of how that money will be spent," admitted Mr Howe.

Analysts were surprised yesterday that Orange said it would not need to draw on the extra cash to pay for its pounds 800m investment programme in its core UK network. In August the company announced an ambitious expansion strategy to double its number of signal base stations from 3,000 to 6,000 by the end of next year.

The new borrowing facility was put together by two US banks, Chase Manhattan and JP Morgan.

Mr Howe said all of the 25 further lenders invited into the deal had taken up the offer, and the loan facility was 70 per cent oversubscribed. It will cut the interest rate on the loans from 1.5 percentage points above short-term money market rates, to 1 per cent.

Orange shares, which had been depressed for much of this year, rose to a record high yesterday on evidence of a continuing boost to consumer demand. They ended 3p higher, at 254.5p, compared with last year's 205p flotation price.