French government to lower Télécom stake

1 Sep 2004

The French government has announced that it plans to sell part of its majority stake in the country’s incumbent operator France Télécom (FT) to help reduce national debt. The finance ministry said that it will sell at least 9.6% of the group, though this could rise to as much as 12.1% depending on demand. The sale is expected to raise at least EUR4.58 billion, based on closing prices yesterday, and is part of the country’s wide-ranging efforts to sell off assets to lower its budget deficit. The ministry added that it will remain the majority shareholder in FT for the medium term, at least; the state currently owns 53.1% of FT, with 44.5% of the company owned by individual investors and a further 2.4% by its employees.

In the halcyon days of the telecoms boom FT was seen as one of Europe’s most aggressive international operators. In 2000 alone it bought out its Global One partners (January), acquired UK mobile operator Orange (May) and purchased 73.7% of UK ISP Freeserve (December). Such an acquisitive strategy came at a cost, however, and following the crash in stocks in 2001-02 FT has come under increasing pressure to put a check on its borrowings and lower its own debt. It has since sold-off a number of non-core assets and received EUR9 billion in contentious state aid. This week it announced plans to raise a further EUR1.15 billion via a convertible bond issue.

FT’s core activity remains the provision of fixed line voice telephony to its domestic market, though revenues from this segment have been steadily declining for a number of years since the arrival of competition. Its internet activities both at home and overseas are coordinated by its Wanadoo subsidiary, whilst mobile operations are grouped together under the Orange banner. Orange is one of Europe’s largest mobile companies, with interests in 21 countries. Aside from its French and UK operations, its most important assets include DutchTone (Netherlands), Orange Romania, Mobistar (Belgium), Orange Denmark, Wind (Italy), MobiNil (Egypt) and MobilCom (Germany).

France, Orange Group
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