PARIS, Oct 31 (Reuters) - French telecoms group Orange

said on Friday it had reached a non-binding agreement

to buy the 50% stake it does not already own in its Spanish unit

MasOrange for 4.25 billion euros ($4.96 billion) in cash.

With the acquisition of the stake currently jointly held by

U.S. private equity funds KKR, Cinven and Providence,

Orange will strengthen its position in an economy that has

consistently outpaced others in the euro zone, boosted by a

booming tourism sector, a strong labour market, European Union

funding and cheaper energy.

Orange intends to sign a binding agreement by the end of the

year and complete the transaction in the first half of 2026,

subject to regulatory approvals and agreement on final terms.

MasOrange was created last year from a merger between

Orange's then Spanish unit and smaller rival MasMovil, which was

controlled by the three funds. MasOrange surpassed Telefonica

as the country's largest telecom operator in terms of

number of clients.

Orange has enough liquidity, including the 4.4 billion euros

in cash it received as part of the merger, to acquire the

remaining 50% of MasOrange, a spokesperson said on Friday,

adding that Orange would maintain its dividend policy.

On October 14, Orange teamed up with rivals Bouygues Telecom

and Iliad's Free to submit a 17 billion euro

non-binding offer to buy most of Altice France's assets, valuing

the company at 21 billion euros. The next day, Altice France

said it had rejected the bid.

($1 = 0.8575 euros)