France Telecom begs for tax-payer bail-out
Will it pass muster with the EU?
France Telecom SA managed 10% revenue growth in the first half and is on course to sustain the expansion rate for the full year. But weighed down with $56bn in debt, the company has confirmed that it is in talks with its largest shareholder, the French government, and the French taxpayer is likely to be forced to bail the company out.
Reports from Paris suggest that the treasury is mulling alternatives that include backing a new bond issue, subscribing to a new issue of preference shares or giving the company a loan. Any deal would have to be approved by the European Union, which is expected to take a skeptical approach, as the French government is underwriting an expansion policy that no commercial company could afford.
France Telecom was able to boost first-half revenue by 10% to 22.5bn euros ($22.5bn) as a 5.8% decline in its fixed-line voice and data services was offset by growth on its Orange mobile operation, Wanadoo ISP and portal business, and international voice and data services.
With its debt expected to rise to $70bn by the end of the year, the company has agreed to sell its broadcast unit TDF for $1.6bn and its Dutch cable operator Casema. Satellite operators Eutelsat and Stellat have also been earmarked for disposal.