Mobile network equipment suppliers are likely to be the main victims when Thierry Breton, the new chairman of France Telecom SA, announces the group’s survival strategy this week.
With a promise of immediate government assistance of 9bn euros ($8.9bn), Breton is expected to come up with matching savings. Applying the brake on 3G spending by its Orange mobile operation would provide much of the savings.
Even companies without France Telecom’s debt burden have been delaying their 3G roll-out plans, a decision made considerably easier by the technical problems that network suppliers face to make it work. The industry as a whole has been lobbying the European Union to get it to apply pressure on industry regulators to relax conditions in those countries where the technology has to be deployed by a particular date.
Breton, who has established a reputation as a turnaround expert, has been making a two-month study of France Telecom’s operations and will present the results to the board this week. For a company with a massive debt burden and an inflated payroll, the decision to delay 3G roll-outs will be one of the easier choices it has to make.