France Telecom today confirmed its intention to buy out minority shareholders in Orange. It is offering €7.1bn in new shares and treasury shares in France Telecom.

The telco notes that this represents a premium of 21 per cent on Orange's average price over the last three months - but swapping shares in a mobile network operator for a debt-laden fixed line operator - may seem less than attractive to many.

France Telecom is not in a position to offer much in the way of money, as it owes too much already. As of July 31, net debt stood at € 49.3bn, down €18bn on December 31, 2002.

By gaining full control of Orange, France Telecom also gains access to Orange's free cash flow and - soon-ish - net profitability. Orange will continue to run as a standalone business, according to reports.

France Telecom is itself back in the black. Today it revealed that net profit for the first half of 2003 was €2.5bn, against a loss of €12.2bn a year ago.

At some point, we infer, France Telecom will also seek to buy out minority shareholders in Wanadoo, its Internet unit. But the company told Reuters today that this is not currently on its agenda. ®