French telecommunications operator France Telecom is to pass into private hands, with the state cutting its stake below 50% to cut the national debt two years after helping the group dig itself out of a corporate debt crisis.
France unveiled the privatisation today, with Finance Minister Nicolas Sarkozy announcing the sale of at least 9.6% of France Telecom's shares.
'The state will make a capital gain and will be able to repay debt, reduce its debt and give the company the freedom it needs,' he said.
In reducing the national debt, France also relieves the cost of debt servicing, a significant element of its public deficit which is in breach of euro zone rules.
The privatisation is worth up to €5.8 billion based on Tuesday's closing price, depending on the number of shares sold, and is a sequel to a €15 billion recapitalisation in March 2003 to which the state contributed €9 billion.
The price of shares in the company has rallied this year, while remaining far below previous high points, but analysts had said that it was unlikely to rise further until some of the overhang of shares the government was expected to sell had been absorbed by the market.
France Telecom nearly collapsed in 2002 with debt estimated at €75 billion and a record loss of €20.7 billion. The stock lost 96.8% of its value between March 2000 and late September 2002.
The state now plans to retain 41% to 43.5% of the capital and to remain a major shareholder in the medium term, a finance ministry statement said today.
