France yesterday launched the privatization of telecommunications operator France Telecom, with Economy and Finance Minister Nicolas Sarkozy announcing the sale of 9.6 percent of its shares.
The state is to retain 41.0 to 43.5 percent of the capital and plans to remain a major shareholder in the medium term, a finance ministry statement said.
France Telecom is a flagship industrial name in France and anything affecting its corporate status or the employment prospects of staff has provoked opposition from trade unions in the past.
The decision means that France Telecom will gain a more flexible capital structure and a larger investment base and that the government will earn funds needed to reduce its public debt.
Issued shortly before the company's board was to meet the statement said: "The state has today started the sale of 9.6 percent of the capital of France Telecom. When this sale is completed, depending on the number of shares that have been bought, the state will hold directly or indirectly between 41.0 and 43.5 percent of France Telecom's capital."
It added: "The state is determined to remain a major shareholder of France Telecom in the medium term."
The money raised will help France trim its public debt, which has repeatedly breached EU limits.
The government's stake sale is worth 4.6 billion to 5.8 billion euros (US$5.6 billion to US$7 billion) based on Tuesday's closing price, depending on the exact number of shares sold.
France Telecom, meanwhile, "needs to increase its room for manoeuvre in order to adapt to future developments in the telecommunications market," the ministry said.
By effectively privatizing the telecoms operator, the state plans to provide France Telecom with a more flexible capital structure and a larger investor base.
The government said France Telecom's stable financial situation and recent buyout of Orange and Wanadoo, its mobile and Internet access units, means the operator can now take full advantage of developments in the telecoms market.
Shares will subsequently be offered to existing and former France Telecom employees.
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