France Telecom SA is considering buying out the minority 18% owners of shares in its Orange SA mobile operation to give an immediate boost to its own finances and greater control of the operations of a unit that it fears has not taken sufficiently rigorous moves to cut costs.
Paradoxically, the news revealed by French business daily Les Echos that the company is mulling the move comes ahead of today’s board meeting when directors will consider radical moves to cut the company’s 70bn euro ($69.3bn) debt pile.
Even though buying out the Orange minority would cost about 4.7bn euros ($4.6bn), according to Les Echos, it would not deplete cash resources because it could be done with France Telecom shares. Access to Orange’s cash flow would give an immediate boost to France Telecom. It would also have a greater ability to temper Orange’s enthusiasm to invest in expensive new technology, and a delay in the 3G roll-out would considerably reduce outgoings.
Rumors also suggest that Orange chief executive, Francois Pontal, will be given an early present for a 60th birthday due next year with news that he can enjoy retirement from the company. CFO Jean-Louis Vinciguerra is also tipped for a change of career as new France Telecom chairman Thierry Breton stamps his authority on the company.