Vodafone goes shopping in France

SFR is France's second largest mobile phone company

Mobile phone giant Vodafone has returned to the takeover trail, negotiating deals which would give it control of France's second largest mobile firm.

Vodafone has, after talks into the early hours of Wednesday, agreed to pay 6.3bn euros (£3.98bn; $6.18bn) for stakes in Cegetel owned by BT and US-based SBC Communications.

The deals would give Vodafone a majority stake in Cegetel, and with it long-prized control of second-ranking mobile phone firm SFR.

"We believe that SFR's natural home is within the Vodafone Group, where it can fully benefit from being part of the leading global mobile operator," Vodafone chief executive Sir Christopher Gent said.

"It would give us control of all five of the biggest markets in Europe and is a very important strategic asset," Sir Christopher told BBC Radio's Today programme.

Threat to deal

However, Vodafone's plans could yet be scuppered by French media giant Vivendi, which has first right of refusal over sale of BT and SBC's stakes.

Cash-strapped Vivendi would have to match Vodafone's offer to BT, and give a 13% premium to SBC.

"The outcome is that we will have voting control [of Cegetel] if Vivendi does not pre-empt," a Vodafone spokeswoman said.

Vivendi last month said it was considering all options, in a restructuring aimed at regaining prosperity.

The refocusing could even seen Vivendi raise its stake in Cegetel, the firm said.

Sir Christopher added: "They [Vivendi] are thinking about their options but they haven't given us any indication."

Market reaction

BT boss Sir Christopher Bland welcomed as an "excellent transaction" the offer of 4.0bn euros for its 26% stake in Cegetel.

"The price represents a return of around two and a half times our total investment in Cegetel," the BT chairman said.

The firm was now close to achieving a goal of reducing debts by £10bn, "giving BT one of the strongest balance sheets in the sector".

In the City, Vodafone shares stood 2p lower at 99p in morning trade, with BT stock 1p lower at 179p.

In Paris, Vivendi shares soared 7.7% to 14.45 euros, as investors warmed to the implications of Vodafone's overtures.

"Either Vivendi keeps their [Cegetel] stake, and that's good, or else they sell it and raise cash, and that's also good," one trader said.

"They're unlikely to buy more, which means the cash crisis is behind them."