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Last Updated: Wednesday, 1 September, 2004, 07:16 GMT 08:16 UK
Paris to sell telecom group stake
France Telecom
The French Government is to sell part of its stake in France Telecom to help reduce national debt, the finance ministry has said.

The government said it was selling a 9.6% in the group, but may raise the amount to 12.1% depending on demand.

The sale will raise at least 4.58bn euros ($5.5bn; 3.1bn) based on the firm's closing price on Tuesday.

The news came as France Telecom unveiled plans to raise up to 1.15bn euros with a convertible bond issue.

France Telecom said the bond issue would help to shore up the company's finances.

Future development

The stake sale is part of wider efforts by the French Government to sell off state assets to lower the budget deficit.

The French finance ministry added that it planned to remain a major shareholder in the group in the medium term, retaining a 41-43.5% stake.

It said the sale would allow France Telecom to increase margins "to adapt to the future development of the telecommunications markets" and will ensure it has a "more flexible capital and an enlarged investor base".

The telecommunications group has faced a tough time financially in recent years - with the government bailing it out with 9bn euros in state credit during a financial crisis in 2003.

The firm is facing a 1.1bn euro bill for state aid it received by not having to pay some tax bills between 1994 and 2002.

In July, following a year-long investigation, the European Commission ruled the firm should repay the cash as the aid was incompatible with competition rules.

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