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Breton new CEO of France Telecom

Breton's first job could be to raise 15 billion euros to ease debt problems
Breton's first job could be to raise 15 billion euros to ease debt problems

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PARIS, France -- Corporate trouble-shooter Thierry Breton has been named as the new chairman and chief executive of struggling phone company France Telecom.

Breton, 47, had been the favourite to take over the posts after the resignation of former chairman and chief executive Michel Bon last month. The government, which owns 56.3 percent of France Telecom, is expected to rubber stamp the move at a cabinet meeting on Wednesday morning.

Breton was the executive chairman of electronic group Thomson Multimedia before his appointment to France Telecom.

He has been called on twice before by the government to save troubled state-owned companies and has taken Thomson from the brink to the biggest seller of TV sets in the U.S..

France Telecom (PFTE), under the stewardship of Bon, spent billions of euros on expanding during the telecom boom of the late 1990s -- a process that has left the company with debts of 69.7 billion euros. (Full story)

But analysts said they would reserve judgement of Breton until he outlines his strategy to tackle debt. Breton has told board members that it will take him two months to come up with a long-awaited refinancing package, Reuters reported.

Analysts expect Breton's first move could be to raise about 15 billion euros to cover looming payments on the paralysing debt. But a government-backed loan would give France Telecom crucial breathing space as the company's shares trade near historic lows.

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David Staples, managing director of debt rating agency Fitch, told CNN that Breton would need to restore confidence.

"He needs to decide on what to do with Orange (mobile unit), will they sell it? How can they reduce costs? Investors will want to know all the answers before they agree to give it more money. Investors need to know cash flow will grow and it is generating cash. There could be significant job losses but the government is concerned about jobs. The government has to stand behind the Breton."

But Industry Minister Nicole Fontaine told the weekly Le Journal du Dimanche that a government loan was unlikely to be enough to rescue the 55.5 percent state-owned telecoms group. Such a move could fall foul of European Union rules on state aid.

Her colleague at the Budget Ministry, Alain Lambert, told Europe 1 radio that the government wanted a refinancing plan that would not impact on budget finances.

Breton faces an uphill task in turning around Europe's second-largest phone company, which has seen its shares fall more than 95 percent since hitting a peak in March 2000 of 219 euros. The stock hit a low of 6.75 euros on September 24.

France Telecom's stock rose 8.9 percent to 8.33 euros in midday Paris trading on Wednesday.

Five years ago, Breton was picked to run Thomson, which at the time was suffering under a heavy debt load and was on the verge of collapse.

Now, after taking it public and establishing key partnerships -- among them, with technology giant Microsoft -- Breton has lifted Thomson to the No. 4 position among the world's consumer electronics companies.

In 1993, the government asked Breton to help turn around troubled French computer maker Bull. As second in command, he also managed to pull Bull from the edge of bankruptcy.

Breton began his own software company at the age of 24 and helped create an open-air theme park in France when he was 31. He has also taught mathematics at a French high school in New York and is the author of eight books.



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