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. Last Updated: 07/27/2016

France Telecom Buys German Mobile Operator for $7.9Bln

FRANKFURT, Germany -- German utility groups Veba AG and RWE AG said Monday that they will sell their 60.25 percent stake in the E-Plus mobile telephone network to France Telecom SA for 7.4 billion euros ($7.9 billion).

The deal, however, depends not only on regulatory approval but also on agreement from U.S. operator BellSouth Corp. to waive its pre-emptive rights in E-Plus, France Telecom said in a separate statement. The company added that it hoped to reach a quick agreement with BellSouth.

BellSouth holds 22.5 percent of E-Plus. Britain's Vodafone Airtouch PLC holds the remainder and is seeking a buyer, E-Plus said.

With cross-border competition heating up in Europe's recently liberalized telecommunications market, France Telecom said it intends to use E-Plus to branch out into the German telephone and Internet market.

The former French telephone monopoly said it will finance its E-Plus purchases by selling its stake in U.S.-based Sprint Corp., worth around 8.7 billion euros, and its 2 percent stake in Deutsche Telekom, which is worth about 2.3 billion euros.

France Telecom's plan to form a partnership with Deutsche Telekom was dealt a severe blow after the German carrier pursued an ill-fated attempt to merge with Telecom Italia in May.

A breakup of the French company's Global One joint venture with Deutsche Telekom and Sprint Corp. also has been expected since MCI Worldcom's announcement earlier this month that it would acquire Sprint for $115 billion.

Deutsche Telekom also holds 10 percent of Sprint and is pondering what to do with its stake.

With 3.2 million customers, E-Plus is Germany's third-largest mobile telephone operator, with a market share of 16 percent. Sales in 1998 were 920 million euros ($984 million). The firm, with 3,100 employees, will remain based in D?sseldorf, the companies said.

Of the sale price, 3.8 billion euros will go to Veba and 3.6 billion euros to RWE, Veba said.