France Telecom moves on Orange

France Telecom is emerging as the likely winner in the hotly contested race to buy mobile operator Orange.

According to reports in the Financial Times this morning, France Telecom is in exclusive talks to buy Orange from Vodafone Airtouch for around £30bn. The French telco wants to extend itself beyond its domestic market and Orange's third generation UK licence, obtained in last month's auction, is an attractive selling point.

KPN of the Netherlands has expressed an interest in Orange and is seen as France Telecom's main rival in the bidding.

Vodafone Airtouch is required to demerge or sell Orange because it has agreed to purchase German operator Mannesmann, which recently acquired Orange.

Both Vodafone and France Telecom have declined to comment on the reports.

Henry Harrison, senior consultant at Schema, said that any deal could impact France Telecom's relationship with NTL, which also wants to offer 3G mobile services.

"If the France Telecom deal goes through, it may impact NTL's plans to become a mobile virtual operator," said Harrison. The France Telecom/Orange deal would be unlikely to have a short term impact on users, he added.