Ladies and gentlemen, place your bets: Winner takes Orange.

Who will triumph in what one telecom banker said will be "a real slugfest" for the third-largest and fastest-growing mobile phone operator in the U.K? Orange, one of five winners in the U.K.'s recent auction for next-generation universal mobile telecommunications service (UMTS) licenses, could fetch between $45 to $50 billion. Why? "Because everyone wants to lock up the U.K. market," says a European-based telecom banker, adding that right now no one has a lock on Orange.

Orange has been the apple of many eyes in the past year. Hong Kong investment firm Hutchison Whampoa ( HUWHY), formerly the leading shareholder in Orange, sold the company to Germany's Mannesmann in October for $32.9 billion. That prompted U.K. competitor Vodafone Airtouch ( VOD) to pursue a hostile bid for, and eventually acquire, Mannesmann for $180 billion. But to obtain merger approval from European Union antitrust regulators for that deal, Orange must, in turn, be divested.

Vodafone AirTouch may decide to sell Orange outright or demerge it, allowing Orange CEO Hans Snook to maintain control of the company and bring in a minority partner. "Everyone would be less interested if that's the case," says a U.S.-based telecom banker. A Vodafone AirTouch spokesman says, "If no one satisfactory comes forward," the company will look to complete a demerger by early fall. The list of Orange suitors is something of a Who's Who in global telecommunications, with heavyweights coming from Paris, Rome, Helsinki, The Hague, Madrid and Clinton, Mississippi.

"I rather feel for Orange. Given the circumstances, the company has performed very well in the last six months," says SG Securities analyst Jim McCafferty, who adds that if Orange is demerged to existing shareholders, he believes the company might then be interested in talking to an acquirer on its own. This could be a more attractive proposition for Orange, because it would give the company more direct control over the process, he says. "The key to Orange is its management. The company brings strong management credibility and brand potential," McCafferty says. "As long as the bidder lets Orange management hold senior positions, it'll make them quite happy." SG Securities hasn't performed underwriting for Orange.

Vodafone Airtouch, BT Cellnet (owned by British Telecommunications ), One-2-One (owned by Deutsche Telekom ) and Canadian wireless operator Telesystems International Wireless ), in conjunction with Hutchison Whampoa, won the four other UMTS licenses. That leaves quite a crowd eyeing Orange and its UMTS license.

The Strategic

France Telecom ( FTE), with a market capitalization of $146 billion and no real debt to speak of, has both the financial resources and strategic positioning to woo Orange into its corner. France Telecom has made no secret of its interest in being a strong, long-term player in the U.K. market and, together, they would embody the buzzwords "pan-European footprint."

Last summer, France Telecom bought a 25% stake in U.K. cable company NTL , becoming its largest shareholder. NTL is a major owner of the country's communications towers, which are integral to building out mobile-phone networks. The two teamed up, unsuccessfully as it turned out, to bid for a UMTS license. Each UMTS license (also called a third generation or "3G" license) will enable its operator to rapidly transmit voice, text and video, and provide Internet access to mobile devices. France Telecom also bid last year for One2One, the U.K.'s smallest mobile phone carrier, but lost to Deutsche Telekom.

Reflecting how complex the Orange situation is, one European-based telecom banker said, "It's an obvious must" for France Telecom. While another said, "It's not an impossible situation if it loses." France Telecom has hired Morgan Stanley Dean Witter, Credit Suisse First Boston and Rothschild to advise the company on its bid for Orange.

The Connected

KPN of The Netherlands has been the telecom equivalent of a global socialite, rubbing shoulders and cutting deals with the industry's rich and powerful. Those associations took center stage recently when NTT DoCoMo ( NTT), the Japanese mobile-phone carrier and the world's largest telecommunications company in terms of market capitalization, took a 15% stake in KPN Mobile. The Dutch carrier has a relatively modest market capitalization of about $47 billion, but with backing from NTT, it will be able to make an aggressive bid for Orange.

Helping KPN's cause is the fact that KPN and Orange co-own a Belgium mobile-phone business called, what else, KPN Orange. The carrier, in partnership with Bell South , also owns Germany's third-largest mobile operator, E-Plus, not to mention its venture with Qwest Communications ( Q) -- called KPNQwest .

"The market doesn't like it when there are too many cooks in the kitchen," says one European banker. KPN's multiple partnerships and their potential effect on decision-making processes have been called "complicated," "cumbersome" and "fairly confused." NTT DoCoMo, however, is the furthest along technology-wise, having become the first mobile-phone carrier to roll out high-speed data service to customers. "Orange could benefit from the knowledge and experience that NTT brings to a KPN bid," says one European-based telecom banker. KPN has tapped J.P. Morgan and ABN-Amro to advise it on a possible deal with Orange.

The Outsider

When Sprint agreed to be acquired by MCI WorldCom last October for $129 billion, it was the largest acquisition to date. The deal marked an about-face for MCI WorldCom, which had previously stated it didn't need a mobile-phone network. It gained customers and an Internet backbone, but its primary interest was Sprint PCS, the company's wireless unit.

MCI WorldCom is now in a somewhat similar position in Europe, with strong fixed-line operations but no cellular presence. "There aren't as many synergies there," says a European telecom banker, adding that MCI WorldCom doesn't have the cash to pay for Orange and, therefore, could face a highly dilutive stock transaction.

But the company -- with a market capitalization of $118.5 billion and, including Sprint, operations in 65 countries -- is no underdog. MCI WorldCom has hired its traditional adviser, Salomon Smith Barney, to help assess a possible Orange deal. CEO Bernard Ebbers told analysts in late April that the company would also explore opportunities for a partnership with a U.K. UMTS license winner, helping offset bidding and build-out costs for the owner and giving MCI WorldCom a stake in the network. MCI WorldCom dropped out of the U.K. auction during the final round of bids, but plans to partake in the UMTS auction in Germany, which is scheduled to begin early this summer.

The Unlikelies

Finland's Sonera Spain's Telefonica ( TEF - Get Report) and Italy's Telecom Italia ( TI) are long-shots in a bid for Orange, but can't be discounted, global telecom bankers say. An unlikely aspirant could become a real contender given the right alliance. For now, though, Sonera is on the small side, Telecom Italia is burdened by a heavy debt load and Telefonica "has nothing specific to offer," says one European-based telecom banker. The company has a major presence in Latin America, but no real position in Europe outside of Spain.

As valuable cellular assets become increasingly rare and UMTS licenses become increasingly expensive (winning bids for the U.K.'s five UMTS licenses totaled $35.5 billion), bankers say mobile-phone carriers will find alternatives to owning their own continent-wide networks. "Not everyone will have a pan-European footprint. They'll piggyback on other networks," forecasts a European-based telecom banker, who explained that those with the networks and licenses will welcome the opportunity to lease access to competitors in an effort to help pay off their investments. "It's so expensive, network owners will need as much traffic as possible."

" But you're in a very different position in the marketplace. You're not in control of anything," counters a U.S.-based telecom banker, adding that a lesson has been learned in local and long-distance telecom services that is likely to pertain to mobile phone service. "The one place you never make sustained money is as a reseller," he says.

The options now for partaking in the U.K. market are "pretty limited," the banker says. "No one knows how Orange is going to unfold."