New boss for France Telecom

Thierry Breton is to stand down as chairman of Thomson Multimedia to take over the top job at France's biggest phone company from Michel Bon, the long-serving chief executive who stepped down in September.

France Telecom - still 55% owned by the French government - is in debt to the tune of 70bn euros (£43.9bn; $68.7bn), and its latest half-year loss was more than 12bn euros.

Mr Breton, a specialist in turning around troubled companies, was widely tipped as the favourite to take over the top job, and his appointment will be confirmed by a French Cabinet meeting later on Wednesday.

News of Mr Breton's appointment cheered investors, with France Telecom soaring 10% to 8.43 euros on Wednesday.

"We have the right man in the right place," said fund manager Jacques-Antoine Bretteil at International Capital Gestion in Paris.

"He's the best chairman they could have."

The boom years

Mr Bon had been the architect of France Telecom's acquisition-fuelled strategy throughout the telecoms boom years of the 1990s.

Now, with overcapacity rife in the industry, investment being scaled back and the value of the companies he so dearly bought slumping, radical change is required.

Mr Bon's resignation had been seen as a vital prerequisite for refinancing France Telecom's debts.

The heavy debt load has contributed to the collapse of France Telecom shares over the past two years.

The firm's stock market value is about 10bn euros - little more than a seventh of its total liabilities.

Tough task

But the question remains of how to tackle the company's problems.

"France Telecom cannot be turned around in a day," Mr Bretteil added.

The government has hinted that a new financial strategy will emerge within a month.

But board members leaving a meeting on Wednesday morning played down expectations, saying that Mr Breton would run an internal audit first before releasing a strategy by the end of the year.

He will have to juggle the needs of shareholders, bondholders and the government, which is reportedly backing away from earlier offers of state-backed loans.

'Pillars of recovery'

Mr Breton will also remain on the board at Thomson, which he joined in 1997, and which under his leadership has become a firm boasting sales of 10bn euros last year.

He will be succeeded as chief executive by Charles Dehelly, currently chief operating officer, and who was "with Mr Breton, one of the pillars of the group's recovery and transformation", Thomson said.

Frank Dangeard, currently vice-chairman, will succeed Mr Breton as chairman.