Following several days of intense rumour, France Télécom this morning (3 May) snapped up London-based mobile phone operator Orange from Vodafone for a cool £26.9 billion.

France Télécom said in a statement it will pay £25.1 billion in a mixture of cash and shares for the company and take on £1.8 billion in debt.

Orange, which recently successfully bid for one of Britain’s hotly contested third-generation (3G) mobile licences, was on the block as a result of owner Vodafone’s pending deal to acquire Germany's Mannesmann. Vodafone must sell Orange if it wants to gain regulatory approval from the European Commission for the acquisition.

Today's deal, which is also conditional on approval from the European Commission and confirmation that Orange will be granted the U.K 3G wireless licence, will create one of the largest mobile telephone carriers in Europe with operations in 16 countries across the continent and, according to France Télécom predictions, 30 million customers by the end of this year.

The new wireless operator created from the merger of Orange and France Télécom's existing wireless operations will be based in London.

France Télécom said the new company will retain the Orange name. It will be headed by Hans Snook, the current chief executive officer of Orange, and be listed in London, Paris and New York in late 2000 and early 2001.