(Adds shares, background, potential bidders)
By Leila Abboud and Gwénaëlle Barzic
PARIS, May 5 (Reuters) - Orange has begun talkswith several potential buyers for parts of Jazztel's fibre network, which it has agreed to sell to get regulatoryapproval for the takeover of the Spanish broadband company.
Nicolas Laederich, an executive who handles regulatoryaffairs and competition issues for the French telecoms group,said the divestment would be paired with a promise to rent outcapacity on the company's fixed network to whoever buys thefibre assets.
European regulators have asked Orange to make theseconcessions as a condition of approving the 3.4 billion euro ($3.80 billion) deal to acquire Spanish broadband companyJazztel.
The arrangement would bring back a fourth nationalcompetitor to Spain's broadband market.
Sources told Reuters last Thursday that European regulatorswould approve Orange's takeover of Jazztel. The deadline for adecision is June 1.
Orange clinched the Jazztel deal in September to keep upwith Spain's leader Telefonica and Vodafone,which were both already present in mobile and fixed services.Vodafone bought national cable operator Ono several monthsbefore Orange moved for Jazztel.
Spanish customers are flocking to buy discounted bundles offixed and mobile services, and Spain is now Orange's second mostimportant market in terms of revenue and sales, after its homecountry of France.
Laederich said Orange would sell about 720,000 fibreconnections that Jazztel had installed in five cities includingMadrid, Barcelona and Valencia. The company that buys the fibreassets will also have the right to piggyback on Orange-Jazztel'sfixed network via a wholesale agreement so as to be able offerbroadband nationally.
"We have already had contacts with several interestedparties," the executive said by telephone, declining to givespecifics.
"These remedies in no way undermine the attractiveness ofthe Jazztel acquisition for Orange."
About 60 percent of the fibre connections overlap withOrange's own network, he explained, and the goal of generating1.3 billion euros in cost savings from the Jazztel deal remains.
Potential buyers for the fibre assets could include budgetmobile carrier Yoigo, which is owned by Sweden's Teliasonera, or regional cable companies such as Euskaltel and R,which are both owned by private equity funds. Small mobilecompany Masmovil, which already rents capacity onOrange's network, could also be a good fit.
Shares of Orange closed 4.7 percent lower at 14.21 euros onTuesday, compared with a 2.1 percent drop in France's blue-chipindex.
$1 = 0.8941 euros) (Additional reporting by Andres Gonzalez Estebaran in Madrid;Editing by Andrew Callus and Susan Thomas)
Vodafone (VOD)
