BT in talks to sell Cegetel stake

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

LONDON, England -- BT Group, Britain's dominant phone company, is in talks with Vodafone and Vivendi Universal to sell its 26 percent stake in French phone operator Cegetel.

"Of course we are discussing with Vodafone, we are discussing with Vivendi,'' Pierre Danon, Chief Executive of BT's retail arm, told Reuters. "Both of them are now showing some interest for our share.''

Vodafone (VOD), Europe's biggest mobile phone company, and debt-laden media giant Vivendi Universal (VEX) are both trying to gain control of the France's second-largest telecoms group. Vodafone wants to consolidate its European coverage, while Vivendi would like to use the cash-generating mobile phone company to help pay of debts.

Although a bidding war is unlikely to ensue, Vodafone's finances are in a better position and it has deeper pockets than Vivendi, which is struggling with debts of about $20 billion. Vivendi secured a 3 billion euro loan from its bankers to see it through the next 6 months as it redraws its strategic plan.

When asked if BT (BT) expected to get a good price for the asset, Danon replied: "It looks better now we have two companies that have declared interest ... We don't want to disclose our expectations ... but certainly it is trending in a positive direction.''

In June, Danon had said the stake was worth about 5 billion euros but many analysts have valued the holding at nearer 3.7 billion euros.

Industry sources familiar with negotiations told Reuters that if any offer met expectations, BT might reach a preliminary deal to sell its stake before Vivendi's key board meeting on September 25. The media giant, which owns 44 percent of Cegetel, is expected to outline its new strategy.

"Clearly they have the board meeting on the 25th and by then, they (Vivendi) will try to clarify their position with regard to Cegetel,'' the source told Reuters.

Vivendi Chief Executive Jean-Rene Fourtou is under pressure to sell assets to raise cash but he is expected to outline plans to hold on to the media giant's communications and U.S. businesses, said Reuters.

Vodafone is keen to increase its 15 percent stake in Cegetel, which controls 80 percent of French mobile phone operator SFR. The French business remains the last asset in a major European market, which Vodafone does not control and it has repeatedly said it would like to take control of SFR.

SBC Communications of the U.S. also holds an economic interest of 15 percent in Cegetel.