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Mon 12 Feb 2001 04:00 AM

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France Telecom says its debt won’t affect regional plans

France Telecom says its level of investment in the Middle East won’t be impacted by its own debts and a fall in the planned IPO price of Orange

France Telecom has rejected suggestions that its huge debt and its troubled IPO of UK mobile phone service Orange might affect its investments in Jordan.

France Telecom, which holds 40% of Jordan Telecom along with Arab Bank, is floating 15% of Orange in a bid to raise cash to help it pay down its 60 billion Euros of debt. Like many telecomms companies, France Telecom has spent heavily to expand operations and buy next generation mobile phone licenses.

France Telecom’s problem is that it has had to downgrade Orange’s IPO price to a level that values the company at $42 billion-$49 billion. France Telecom had originally valued Orange at roughly $81 billion.

If less money from the IPO means less money to pay off debt, does that mean less money to invest in a lower priority market like the Middle East? France Telecom CEO Michel Bon, who was in Jordan last week, dismissed such suggestions and said Orange’s low valuation is a temporary blip.

“Orange has little to do with this [Jordanian] development,” said Bon. “I’m confident the Orange share price will [return] to 70–80 billion Euros. What we’re looking at now is an IPO price dictated by the [current] market.”

Telecommunications stocks have tumbled heavily in the last six months. Consolidation and the need to pay European governments outrageous sums for ‘3G’ mobile phone licenses have driven up the debts of telecomms companies.

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