France Tel to sell broadcast unit

PARIS, France -- France Telecom on Thursday posted a 10-percent rise in first-half revenue, boosted by strong sales at its mobile unit Orange, and said it was selling its broadcast business to help pay down debt.

The company said revenues totalled 22.472 billion euros ($22.31 billion) for the first six months of the year, which was in line with analysts' forecasts. France Telecom said It expected proforma core earnings (before interest, tax, depreciation and amortisation) to rise more than 10 percent for all of 2002.

Revenue from fixed-line, voice and data services fell 5.8 percent to 9.4 billion euros in the first half, due to increased competition.

Orange, Europe's fourth biggest mobile phone operator in terms of market value, contributed 7.83 billion euros to the group's revenues. Half-year sales rose 13.8 percent to 8.1 billion euros, which was at the top end of forecasts.

The unit's customer base rose 2.1 million to 41.4 million in the six-month period. Of the total, 415,000 new customers were added in the UK, lifting its subscriber base to 12.8 million. In France, it gained 802,000 new customers for an overall base of 18.2 million.

The group also said it would sell Telediffusion de France (TDF) to a consortium, which includes Charterhouse and state bank CDC, for about 1.6 billion euros. France Telecom will maintain a 36-percent capital stake in the unit.

France Telecom (PFTE) shares, which have plunged more than 90 percent in the past two years after going on costly acquisition spree, were up 8.5 percent to 14.10 euros in early Paris trading in Thursday. Orange (PORA) gained 7.10 percent to 56.13 euros.

The group has built up a debt of 60 billion euros and is running the risk of having its credit rating reduced to "junk" status.

Chief Financial Officer Jean-Louis Vinciguerra said on Thursday the group is addressing its debt problem, and the sale of TDF was part of its plan to sell off assets. The group is also facing a possible cash crunch and is looking for ways to secure new financing.

The French government, which owns 55.5 percent of the group, has been urging a quick solution to the group's financial problems.

Finance Minister Francis Mer has been quoted as saying the government would take "appropriate measures'' if the group faced a cash crunch. Analysts believe this is an indication the government act as a lender of last resort, if necessary.