The jockeying for Orange, the number-three mobile phone operator headed by Hans Snook, intensified yesterday when Telefonica began seeking debt funding. The Spanish telecoms firm joins a queue of potential bidders for the company, which is due to be spun off from Vodafone AirTouch later this year.
According to banking sources, Telefonica has begun sending out feelers to a number of investment banks to secure loans amounting to about £30bn in order to prepare for an eventual move on Orange. "We've been approached for indicative bids on a big loan [for Telefonica]," a banking source said.
The size of the credit facility required to purchase Orange is likely to see Telefonica and other mooted bidders, including France Telecom and KPN of the Netherlands, seek financing from syndicates comprised of several banks and other financial institutions. Other possible buyers are thought to include NTT DoCoMo of Japan, MCI WorldCom of the US and Finland's Sonera.
Interest in Orange among the world's top telecoms carriers has risen to intense levels since February, when Vodafone won its record £100bn takeover of Mannesman, which had bought Orange in November.
Telefonica's ability to raise the funds, likely to be denominated in euros, is little doubted by senior bankers.
The Spanish telecoms carrier, and its listed internet and directory arms which it controls, are worth about 105bn euros (£62bn).
Meanwhile, France Telecom yesterday underlined its determination to continue expanding in Britain. The company, which is the biggest shareholder in NTL with a 30 per cent interest, said it would bid for Orange even if the UK cable company's bid for a third-generation mobile phone licence is successful. Michel Bon, chairman of France Telecom, said his company could sell one licence should it eventually end up with two.
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