France Telecom Reports Largest Loss in French History (Update7)
By Molly Schuetz
Paris, March 5 (Bloomberg) -- France Telecom SA, Europe's second-biggest phone company, reported the largest corporate loss in French history after writing down assets including German cellular company MobilCom AG.
The 2002 net loss ballooned to 20.7 billion euros ($23 billion) from 8.3 billion euros in 2001, Chief Financial Officer Michel Combes said at a press conference. The 2002 figure includes 18.3 billion euros of write-offs and provisions.
Chief Executive Officer Thierry Breton, who said the loss was ``dizzying,'' is preparing a 15 billion-euro share sale to lower debt. Since taking over in October, the 48-year-old has refinanced one-fifth of the 70 billion euros the company borrowed to acquire wireless permits in Europe.
``Breton has managed to regain the market's confidence but now he has to put his promises into action,'' said Laurent Vallee, who helps manage 600 million euros including France Telecom shares at Richelieu Finance in Paris.
France Telecom executives wouldn't comment on the timing of the share sale, saying only that they were collecting all the information necessary to proceed with it. Breton stuck to a goal of reducing borrowings to below 40 billion euros by the end of 2005 and reducing costs by 15 billion euros.
`With a Vengeance'
``We've shaken off the liquidity crisis and are giving ourselves the means to come back with a vengeance,'' Breton said at a press conference in Paris. ``We're all rolling up our sleeves to drive our growth.''
The loss topped the 13.6 billion-euro loss at Vivendi Universal SA in 2001, when the world's second-largest media company cut the value of purchases such as Seagram Co. and Canal Plus SA.
The loss per share swelled to 19.11 euros from a 2001 loss of 7.51 euros. Analysts had expected a loss of 18.3 billion euros, according to a survey by Bloomberg News.
France Telecom shares fell 21 cents, or 1.26 percent, to 18.76 euros as of 3:24 p.m. in Paris, valuing the company at 22.3 billion euros. Earlier, they fall as much as 3.5 percent.
The stock has more than doubled since Breton joined. Still, it's down from a March 2000 high of 219 euros. The French government, which owns 56 percent of France Telecom, first sold shares in the company in 1997 at 27.75 euros.
Breton
France Telecom racked up borrowings under former CEO Michel Bon, who Breton said spent about 100 billion euros buying assets. Bon was forced to pay mainly in cash instead of shares to keep France from losing control of the company. Bon quit in September after the company reported a record first-half loss, bringing losses accrued over a year to 22.4 billion euros. |
