French Government to Sell up to 7% of France Telecom

Press Release - June 25, 2007

The government of France has announced plans to sell as much as 7 percent of France Telecom SA, the country’s incumbent telephone provider, at an estimated price of €3.8 billion (US$5.1 billion).

Proceeds from the sale of 130-million to 180-million France Telecom shares will be used to help pay down national debt, before the implementation of tax cuts promised by newly elected President, Nicolas Sarkozy in his recent election campaign.

“The proceeds of the sale will be fully used for state debt reduction,” explained Sarkozy’s Finance Minister, Christine Lagarde, in a weekend statement.

This will reduce the French government’s share in Europe’s #3 telecom provider to as little as 25.5%, in a move that is seen as positive by many market analysts.

“France Telecom can free themselves of the leash of the government,” commented Emmanuel Soupre, a fund manager at Paris-based Neuflize Gestion. “It’s a positive sign for France Telecom. Conditions are good, the markets are favorable.”