The French government is to sell a 9.6 per cent stake in France Telecom to help cut public debt.
The sale will raise at least €4.58 billion for the government based on the company's closing share price yesterday.
The announcement came today as the ministry said France Telecom planned to raise up to €1.15 billion through the issue of a convertible bond to prop up the company's finances.
The French government, which backed the company's €15 billion rescue rights issue last year, will have its direct and indirect holding respectively reduced to 41 per cent and 43.5 per cent.
The Finance Ministry said the government planned to remain a major shareholder in the medium term.
"The state has decided to reduce the nation's debt by lowering its stake in France Telecom's capital," the Finance Ministry said in a statement, adding the company now needed more leeway to compete in the telecoms market.
The statement was made just hours before the company's shareholders meeting this afternoon.
The move is part of wider efforts by the French government to sell off state assets to help cut its public deficit.