New Orange squeezes the competition

It's been hard to predict winners in the prize fight for dominance in the international telecoms market. But after yesterday, we can start to place some hefty bets.

First, the winners. France Telecom is spending around E50bn (£30bn) on Orange. It will combine the company with its other, mostly European, GSM network providers, and brand the group New Orange.

The move looks sound. It stands in contrast to its failure to win E-Plus in Germany, losing out to Deutsche Telekom over One2One in the UK, seeing Global One implode, and losing out again in the UK with its bid to win a third-generation licence through its partner, NTL.

Orange gets the backing of one of Europe's true telecoms giants. Crucially, key management figures, including CEO Hans Snook, will stay. Perhaps that's why the new group will be called New Orange, and not MobilCo, as some reports had predicted.

Meanwhile, Vodafone AirTouch gets cash to bid for more third-generation licences, and the all clear for its merger with Mannesmann. The deal also values Orange at a 28 per cent premium to the price Mannesmann paid less than a year ago.

So France Telecom and Vodafone look strong - as do other European players, BT and Deutsche Telekom.

But there are losers.

KPN now looks distinctly second division. And Spain's Telefonica and Italy's Telecom Italia are bound to be feeling the pressure to do deals.

Japanese giant NTT DoCoMo, which has invested in KPN, is now struggling to find a mobile home in Europe. Ditto MCI WorldCom.

The fight will go on. But in a year of unprecedented jostling, a conclusion seems easier to predict.