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By Tony Hallett, 9 November 1999 00:25

NEWS Vodafone AirTouch is on the verge of making a hostile takeover bid for Mannesmann, the German engineering group turned predatory telecoms player, according to UK press reports over the weekend. However, Newbury-based Vodafone is rumoured to have an unlikely partner in France Telecom, which would buy Orange should a deal be completed. Mannesmann beat several rivals to win Orange last month, but if Vodafone buys Mannesmann it will have to give up its UK rival on antitrust grounds. Alan Pyne, a director at telecoms consultancy, Schema, said: "This makes some sense. Vodafone would be forced to sell Orange, and the most likely bidder would appear to be someone like France Telecom because of their intentions to bid for a UMTS licence." France Telecom is now the main backer of UK cable and telephony provider NTL. However, its chances of operating a successful third-generation UMTS (Universal Mobile Telecommunications Service) network in the UK would be improved if it can migrate a second-generation, GSM customer base, rather than start from scratch. Nicky Scott, senior consultant at Ovum, said: "This scenario is not so far fetched. The spinning of Mannesmann's telecoms business makes any takeover easier, and Vodafone certainly wants a large part of the pan-European market." However, both Schema's Pyne and Ovum's Scott agreed price is an issue. Mannesmann's offer for Orange values each customer highly, but even if Vodafone pays highly for Mannesmann, France Telecom is likely to be reluctant to over-pay. Vodafone declined to comment on the speculation. France Telecom and Mannesmann were unavailable.