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French prepare further France Telecom sell-off

More cash for the deficit, and a few billion for FT too

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The French government is selling another 13 per cent of France Telecom, bringing its holding down to around 62 per cent. This assumes that the 2 per cent being bought by Deutsche Telekom for 8 billion francs will not be controlled in effect by France Telecom, because - surprise, surprise - FT is buying a share of DT for, you guessed it, 8 billion francs. The shares just offered were for 390 francs, and will yield some 36 billion francs, of which 23 billion will be retained by FT, and the rest go directly to the French government to help it with its deficit. The way in which the French government has bartered its ownership of France Telecom, or more particularly its pension fund, in order to meet the Maastricht criteria for monetary union has already gone down in history as one of the great conjuring tricks of all time, comparable only with Robert Maxwell's creativity in pension fund management. FT says it will be using the cash to fund its international expansion, with a seemingly absurd expectation of getting a third of its income abroad by 2006. Since only 2 per cent came from outside France in 1995, it has some way to go - but those fonctionnaires at FT should be giving some good parties with all that marketing money. Some of this cash may find its way moving towards some Internet-related activity, or even a face-lift for Minitel. It doesn't sound as though much will be done about speeding up data transmission. There is a distinct possibility that if FT cross-subsidises any services in competition with the private sector, it could find itself in Brussels answering some tough questions from DGIV, the European Commission's competition directorate, where the French have little influence at present.

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