Iliad founder to buy Orange Switzerland for $2.9 billion

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By Pamela Barbaglia and Sophie Sassard

LONDON, Dec 18 (Reuters) - Telecoms tycoon Xavier Niel's NJJ Capital (Other OTC: CGHC - news) has agreed to buy Swiss mobile operator Orange (Taiwan OTC: 4554.TWO - news) Switzerland from private equity group Apax Partners for 2.8 billion Swiss francs ($2.9 billion), Apax said in a statement.

The deal marks a new development for billionaire Niel who set up low-cost telecoms operator Iliad (Paris: FR0004035913 - news) in France and attempted to enter the U.S. market this year via a bid for T-Mobile but this was rejected.

Orange Switzerland ranks as the country's third and smallest operator with almost 2.2 million customers and revenues of 1.3 billion Swiss francs ($1.33 billion).

It has 20 percent of Switzerland's mobile market while rival telecom operators Swisscom (Other OTC: SCMWY - news) and Sunrise (Taiwan OTC: 2720.TWO - news) have 59 and 21 percent, respectively.

NJJ Capital, Niel's private investment fund, has circled Orange Switzerland since 2012 when the business was sold to Apax.

Apax, which is making a return of more than two times its initial investment, had looked into a plan to merge Orange Switzerland and its larger rival Sunrise earlier this year, two sources, who cannot be named because the matter is confidential, said.

The merger of Orange Switzerland and Sunrise was previously attempted in 2009 by their former owners, France Telecom and TDC . Neil could later resume the merger plan although he is aware of the difficulty to get such a deal done, one of the sources said.

NJJ Capital declined to comment.

Niel, who owns 55 percent of French telecoms group Iliad, triggered a telecoms price war in France through the launch of Free, a bundled telecoms and TV offering.

He tried to move into the United States with a surprise offer for T-Mobile US Inc which was already in talks with Sprint Corp, the U.S. mobile carrier now controlled by Japan's Softbank Corp (Xetra: 891624 - news) .

In April, he acquired 55 percent of Monaco Telecom, the main telecommunications provider in the principality of Monaco, for 322 million euros.

"Niel is now starting to have a decent TMT platform in Europe and he will continue to look at opportunities," a source familiar with the situation said.

NJJ Capital was advised by Lazard and BNP Paribas (Xetra: 887771 - news) while Apax worked with Credit Suisse (NYSE: CS - news) . ($1 = 0.9791 Swiss francs) (Additional reporting by Andrew Callus and Freya Berry. Editing by Jane Merriman)