OPERATORS' CREDIT RATINGS LIKELY TO REMAIN UNDER PRESSURE.

Guy Deslondes indicated that he is expecting difficulties to peak towards the middle of the year for the most cash-starved alternative operators. The situation remains grave for leading traditional players, often because of excessive debt levels. "Despite the implementation of debt reduction programmes, described by management as aggressive, debt remains high at Deutsche Telekom and France Telecom and has not been reduced at all since 2000", according to Mr Deslondes. The SP analyst describes the programme launched by France Telecom to cut debt (Euro 64.9 billion at the middle of last year) to between Euro 37 and 47 billion by the end of 2003 as ambitious, and describes its application thus far as being in-line with expectations. On the positive side, he emphasises the cut in the cost of UMTS licences in France, the group's firm industrial position, and the sale of various assets, notably the group's stake in the semi-conductors manufacturer STMicroelectronics.Mr Deslondes looked to put some perspective on the risks presented by France Telecom's exposure to financial difficulties at the Anglo-American cable operator NTL (in which it holds an 18.3% stake), suggesting that the only real danger concerns the possible non-payment by NTL of the Euro 600 million due to France Telecom for its stake in Noos. By contrast, Mr Deslondes suggested that France Telecom is running significant risks in Germany in the context of the mobile telephony operator MobilCom, in which it holds a 28.5% stake, and which is...