France Gives Details Of Telecom Sale

He also said wanted to see a third competitor in the French telecomunications sector, alongside France Telecom and the recently formed Cegetel, a grouping of Generale des Eaux, British Telecom, SBC Communications Inc and Mannesmann AG.

Analysts estimate the sale would raise between FFr20 billion and FFr40 billion ($7.76 billion), with the money likely to be used to fund capital injections to other state-owned companies.

Under the Maastricht treaty on monetary union, privatisation revenues cannot be used to reduce budget deficits, although France will use a special transfer from France Telecom to cover future pension liabilities to cut its deficit next year. Among various companies requiring capital injections is state-owned bank Credit Lyonnais, whose chairman last week suggested it would need some FFr8 to 9 billion in recapitalisation if it were to be privatised quickly. This would be on top of several billion francs expected to be required to fund a new rescue plan for the bank.

 

Fillons comments on the partial sale of France Telecom confirm suggestions by chairman Michel Bon who has said he expected a first share sale in April.

A spokeswoman at Fillons ministry was unavailable for comment on the timing of the sale of a second tranche, which analysts have said is unlikely before liberalisation of the European telecommunications sector in 1998.