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France Telecom to Buy Up Rest of Equant

Posted on: Monday, 24 January 2005, 09:00 CST

PARIS - France Telecom said Monday it will buy out minority shareholders from Equant NV to facilitate a drastic restructuring of the corporate networking subsidiary.

The offer, in which Europe's second-largest telecommunications company is set to pay 564 million euros ($731 million) for the 45.8 percent of Equant it does not own, comes just one month after its Amsterdam-based unit named its third chief executive in 18 months to spur a turnaround.

France Telecom also agreed to provide a 250 million euro ($324 million) loan to Equant so it can meet its 2006 debt requirements. Equant said it expects "a very difficult year" in 2005 and would have to take a substantial writedown of assets.

Equant has lost money since 2000, when France Telecom acquired its majority stake for 3.5 billion euros.

France Telecom has been fully acquiring its subsidiaries in an effort to integrate its fixed-line telephone, Internet and mobile operations.

The offer for Equant follows its 2003 acquisition of mobile unit Orange and the 2004 buyout of Internet service provider Wanadoo. Other European operators, including Telecom Italia SpA, have also been fully acquiring subsidiaries as part of a broader consolidation of the industry.

France Telecom shares fell 1.3 percent to 23.10 euros ($30.14).

Source: Associated Press/AP Online

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