France Telecom will regain the ability to use its shares to pay for acquisitions after the French government yesterday announced plans to cut its stake in the former telecoms monopoly to less than 50 per cent for the first time.
The move frees the group from a strategic straitjacket that forced it to pay cash for the lion's share of its acquisitions, including mobile phone group Orange, to avoid diluting the state's holding below the politically sensitive 50 per cent threshold.
This led to towering debts - at one stage €70 billion - pushing it near collapse two years ago.
Bankers said the sale was "the latest step on the company's track back to normalisation".
However, analysts have played down any immediate acquisition spree. "I don't see them looking for any external growth opportunities in the short or medium term as their €47 billion of debts are still too high," said Mr Manuel Lachaux, analyst at Paris brokerage ETC.
The government said it would sell up to 12.13 per cent of France Telecom, cutting its stake to between 43.5 and 41 per cent.
The sale - the first time the government has sold off more than 50 per cent of a public monopoly - is expected to raise up to €5.75 billion, with the shares priced €18.95-€19.25. France Telecom shares fell 1.8 per cent to €19.08.
Trade unions last night called for France Telecom staff to go on a 24-hour strike on Tuesday in protest at the privatisation.
