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Tuesday, October 12, 1999 Published at 13:36 GMT 14:36 UK

Business: The Economy

French giant targets alliance

Je ne regrette rien: Michel Bon of France Telecom

France Telecom is aiming to take over the crumbling European-US telecoms alliance, Global One.

The telecoms revolution
Some reports have also suggested that Deutsche Telekom is interested in buying out the other partners' stakes. France Telecom, like Deutsche Telekom, controls some 25% of Global One. Sprint controls some 50% of Global One.

Both Deutsche Telekom and France Telecom are scrambling to rebuild their international strategies, as their Global One alliance falls apart.

MCI Worldcom's takeover of Sprint has effectively destroyed the world alliance of the three carriers.

As yet, it is unclear how much the alliance would be priced at.

Patrick Bartlett reports on the future of global telecoms alliances
The two European giants had hoped that the alliance would give them a step into the US market, as well as protect them from each other in their home markets.

The troubled alliance had already been hit by Deutsche Telekom's bid to merge with Telecom Italia, who sought a white knight to fend off the hostile takeover bid from Olivetti.

[ image: France Telecom says the
France Telecom says the "page has turned"
This move was seen by France Telecom as a breach of the Global One alliance and prompted them to move into Deutsche Telekom's home market.

Last week France Telecom retaliated by taking a 17% stake in E-Plus, Germany's third largest mobile phone operator.

Speaking to BBC News, Michel Bon, chief executive at France Telecom said: " A lot has changed, 1995 was an era of grand alliances...we just signed with Sprint and Deutsche Telekom. We did great things together. But that page has turned. We don't think we have wasted our time over the past four years."

Michel Bon: "We have no regrets"
Mr Bon confirmed that France Telecom would like to take over the other shares of Global One and own the telecoms provider itself.

He said that the company would be interested if the price was right. He also expected a resolution of the stalemate within "the next two months".

He expected one of the three partners to take over the company - and the others to rebuild.

Meanwhile France Telecom will continue to seek a US partner to replace Sprint, which is now in the Worldcom camp.

Mr Bon said: "We are looking for an alternative in the United States.... that could be a partnership, an acquisition...the creation of a subsidiary...or it could be a commercial relationship."

He said he was not annoyed at the decision by Sprint to merge with MCI Worldcom rather than stay with Global One.

What's next for Deutsche Telekom?

Since the European telecoms markets opened to competition in 1998, Deutsche Telekom's domestic market share has dropped, accentuating the importance of a strong international strategy. Deutsche Telekom chief executive Ron Sommer is expected to explain his strategy at the Telecoms 1999 conference on Monday.

Its purchase of UK mobile operator One-2-One failed to win over investors, who thought the price tag of 10bn was too high.

Some say the German company still hopes for a link up with Telecom Italia.

Deutsche Telekom could also be pressured by news that engineering group Mannesmann is set to spin off its mobile phone arm into a separate company. Some speculate that this is prompted by a desire for closer links with Vodafone Airtouch, its US partner.

Competition in telecoms has since spread to the Internet, as Deutsche Telekom's online rival AOL last week unveiled an aggressive advertising campaign starring the tennis champion Boris Becker.

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