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Bouygues pullout may give Telecom Italia French foothold

Confused construction outfit to concentrate on cellular

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Telecom Italia looks set to inherit an embryonic French fixed line telecommunications operation, following the decision of partner to Bouygues to pull out. Bouygues is basically a construction company, but has piled into telecoms because of European deregulation. It owns Bouygues Telecom, the GSM 1800 system that started up in France last year, and currently has 51 per cent of 9 Telecom SA, with Telecom Italia holding the balance. The plan now seems to be to get out of fixed telephony, where the company would have faced substantial up-front costs, and stiff competition from France Telecom, Cegetel and more cable companies than you can shake a stick at. Bouygues wants Telecom Italia to buy its stake in 9 Telecom, leaving it free to concentrate on development of Bouygues Telecom. Here too it will face substantial costs, as it is the number three entrant in a market dominated by France Telecom and Cegetel. Whether or not Telecom Italia will jump at the chance to kick off its own operations in France is unclear. The company is just about the last major European telco without an international alliance, but its own strategy remains fuzzy, and if it starts trying to set up international operations on its own it will probably fall flat on its face. ®

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