With a 24% market share, Amena is Spain’s third-largest mobile network, behind Telefonica Moviles SA and Vodafone Group Plc. It is owned by Spain’s second largest telecoms group Auna Telecomunicaciones SA, which is itself in the process of being auctioned off by Merrill Lynch.

Auna shareholders are currently evaluating a number of bids around the 13bn euro ($14.33bn) mark for the entire group. Auna’s leading shareholders include the Spanish power groups Endesa SA and Union Fenosa SA, as well as bank Banco Santander Central Hispano SA. It is thought the sale has been triggered by the desire of Endesa and Union Fenosa to raise cash to cut debt, and in the case of Endesa, to distribute a bonus dividend.

Bids for the entire group have reportedly already been submitted by a number of private equity companies. According to recent press reports, BC Partners has teamed up with US risk capital group Kohlberg Kravis Roberts Co and Goldman Sachs Capital Partners to bid up to 12.5bn euros ($14.92bn) for Auna. There is also thought to be a rival bid from a consortium of Carlyle Group LP, Providence Equity Partners, Permira, and Blackstone Group.

A month ago France Telecom indicated its interest in Amena but then ruled itself out of the bidding for the parent company Auna Group, which includes a cable and fixed-line division. France Telecom said it began to consider a separate acquisition for Amena after it became clear that Auna shareholders were open to such a bid.

According to reports, France Telecom has sent a due-diligence team to Spain as part of preparations for a possible bid. Acquiring Amena would enable France Telecom to realize its strategy of bundling mobile, fixed-line, and internet services in Spain.

Last month, chief executive Didier Lombard pledged to continue the carrier’s policy of debt-reduction, but said he would look at a selective acquisition strategy. This commitment to seek further acquisitions is surprising in the light of the carrier’s enormous debt. Debt levels at France Telecom recently rose alarmingly after the carrier adopted International Financial Reporting Standards instead of French GAAP. Debt has risen by 6bn euros ($7.7bn) to a staggering 49.9bn euros ($64.48bn) as the company conforms to the new accounting rules.

It built up the debts as a result of a reckless expansion strategy in the late 1990s, and debt peaked at 68bn euros ($87.87bn) in 2002. This led to questions over the carrier’s viability, and it took a state aid package from the French government, plus a change of management and massive job cuts to get the carrier back on its feet.

In early June, the French government reduced its holding in the carrier, but demand was so weak for the shares that the banks underwriting the offer have reportedly been left holding an unspecified number of shares that will have to be sold at a later date.

The market took a dim view of the reports that France Telecom was considering spending again, and its American Depositary Shares fell 0.54% to $29.34 on the New York Stock Exchange as of 4.50pm BST on Tuesday. American Depositary Shares essentially allow foreign-based companies to issue shares in the US in order to gain access to the US-based investment markets.