PARIS - France Telecom SA has agreed to sell its Orange Switzerland mobile-phone unit to the buyout firm Apax Partners LLP for 1.6 billion euros ($2.1 billion), the first big step in Chief Executive Officer Stephane Richard's plan to unload slow-growing European operations.

The deal, which is subject to approval by Swiss authorities, will be submitted to France Telecom's board in the week starting on Jan 9, the company said in a statement on Saturday. In trying to buy the mobile-phone unit, London-based Apax beat out its rivals, including EQT Partners AB, Providence Equity Partners Inc and the French telecommunications billionaire Xavier Niel, people with knowledge of the transaction said on Friday.

France Telecom is shedding its assets in Europe, where phone companies are vying for a shrinking pool of new customers amid a tightening of regulations, and looking to faster-growing markets in Africa and the Middle East. France's largest mobile operator is also in talks to sell its Orange Austria unit to the Hong Kong-based Hutchison Whampoa Ltd, people familiar with the situation said in October, and is planning to exit Portugal.

"It makes sense to exit the difficult Swiss market and it may give them more flexibility on the cash-flow side," said Giovanni Montalti, a London-based analyst at Credit Agricole Cheuvreux. The deal will leave France Telecom with European operations in countries including Spain, Poland, and the United Kingdom, along with its home market, while it has a presence in Kenya, Cameroon, Tunisia and other emerging markets.

Perella Weinberg Partners LP and Lazard Ltd advised France Telecom on the Swiss sale. EQT and Providence could not immediately be reached for comment.

Apax has participated in more than 20 deals this year, including the $6.5 billion buyout this past month of the US wound-treatment company Kinetic Concepts Inc, its largest in 2011, according to Bloomberg data. The firm has amassed about half the 9 billion euros it is seeking for its latest fund, three people with knowledge of the plans said this month.

France Telecom's decision to exit Switzerland follows an attempt to merge its operations there with its rival Sunrise. That attempt was rejected by competition regulators this past year.

The owner of Sunrise, the London-based CVC Capital Partners, was excluded from the process used to sell Orange Switzerland, although the firm discussed helping Providence with arranging financing in the hope of attempting another merger, people with knowledge of the talks have said.

Combining Orange Switzerland with Sunrise would leave the country of about 8 million residents with just two mobile operators: the merged entity and Swisscom AG, the former Swiss phone monopoly. By comparison, the UK, Germany and Italy all have four full-service mobile-network providers.

The deal valued Orange Switzerland, which had 1.3 billion Swiss francs ($1.39 billion) in revenue this past year, at 6.5 times its estimated 2011 earnings before interest, taxes, depreciation and amortization, according to France Telecom.

The median multiple of earnings before interest, taxes, depreciation and amortization paid for Western European telecommunications assets in the past three years has been 5.6, according to Bloomberg data.

Bloomberg News