The French Government proposes to pursue the privatisation of France Telecom this autumn, reducing its stake in the public operator from 75% to 62 or 63% through an increase in capital and the sale of shares held by the State. At current stock market prices (almost FF400), the Treasury could expect to earn about FF28 billion in two stages. The Government will first sell a 2% stake in France Telecom to the German operator Deutsche Telekom, and will subsequently release a further 5% or 6% of shares via the stock market this autumn. In accordance with French law, 10% of whatever shares are sold by the State must be offered to the workforce, whose stake in the company would thus increase from 2.5% to 3.5%. France Telecom will concurrently launch a 5% capital increase.

The partial privatisation of France Telecom in October 1997 earned the state coffers FF42 billion. Market analysts suggest the forthcoming double operation might be of comparable value: the stock market will be called upon to absorb about 100 million France Telecom shares through the 5% increase in capital and the sale of 5% of the Government's shares. France Telecom shares fell almost 8% on the announcement of the proposal on July 20. The increase in capital is expected to earn France Telecom about FF20 billion, providing the group with the wherewithal to pursue its...

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