Vodafone 'to make hostile bid'

SFR telecom engineer uses mobile phone while working on relay transmitter in Paris

LONDON, England -- Vodafone, Europe's biggest mobile phone company, is preparing to make an unsolicited cash offer for SFR, the French mobile phone company controlled by Vivendi Universal.

A formal offer could be made before the end of the month despite indications Vivendi Universal, the world's second-largest media group, wants to hang on to its stake, the Financial Times said on Monday.

Analysts have estimated that any offer could be in the region of £8 billion ($12.4 billion), the FT said, adding that Vodafone (VOD) had a $10.65 billion unused bank facility to help fund the purchase.

Vivendi's (PEX) stock, which has dived more than 80 percent this year amid concerns about its debt pile and strategy, rose 4.3 percent to 13.35 euros in early Paris trading on Monday.

Britain's Vodafone already owns 32 percent of SFR through a 20 percent direct stake and a 15 percent holding in Cegetel, the French telecoms business that in turn owns 80 percent of SFR. Vivendi has a 44 per cent stake in Cegetel.

MORE STORIES • Vodafone 'may pay $5b for Cegetal'  • Vivendi expects new funding soon  • Vodafone eyes Vivendi's SFR

With only three mobile phone operators battling for a share of consumers, France is an attractive market, analysts said. SFR has close to 35 percent of the French wireless market, serving 12.8 million clients.

Vivendi, which has debts of about 19 billion euros, may be reluctant to sell the business because it needs cash to pay off its debt. Cegetal is one of the most cash-generative assets in its portfolio, but it can not use the money Cegetal garners to repay debt because it owns less than 50 percent of the telecom group.

Cegetel's other shareholders -- BT Group and SBC Communications, which own 26 percent and 15 percent respectively -- are keen to sell their share of phone operator.

Vodafone is waiting for the expiry of "lock-up'' rights between Cegetel's shareholders. The rights, which prevent any sale of shares without the full agreement of all investors, expire on Sept. 23.

Vivendi, seeking to resolve a cash crisis under a new management team, plans to give an update on its strategy including disposal plans on September 25.