France Telecom Buys Back Shares From Vodafone

London, ENGLAND — France Telecom announced Wednesday it
will pay US $10.7 billion for the 9.87 percent of its
equity currently held by Vodafone Group.

The re-purchase of shares forms part of the complex
transaction between France Telecom and Vodafone during
the French telco’s acquisition of Orange in May 2000.

For Vodafone, which has been on another spending spree
recently — increasing its stake in Japan Telecom to
25 percent — the funds will help to further reduce
its level of debt.

France Telecom had agreed last August to buy 58.2 million
of the shares at a price 50 percent higher than today’s
market price. Towards the end of March it will pay only
slightly less per share for the remaining equity. In
mid-March it will also pay back a US $2 billion loan to

The deal with France Telecom appears to be a very good
one for Vodafone, which in tough times is reaping the
benefits of remaining relatively buoyant in comparison
to other large operators.

According to the Financial Times, Vodafone Chief Executive
Chris Gent once insisted: “I am not a shark” — but his
deal-making capacity appears to prove otherwise.

By contrast, France Telecom Chief Executive Michel Bon has
endured a difficult few months, the failure of the Orange
flotation having repercussions throughout the company —
and throughout the European market for high tech stocks.

France Telecom, which owns 17 percent of French computer
group Bull, still hopes to halve its debt burden within
three years. It now stands at around US $55 billion.

To reduce debt, France Telecom is expected to embark
on an asset sale, perhaps beginning with its stakes in either
semiconductor maker STMicroelectronics or information
technology services company Sema.

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