France Telecom flotation could raise up to pounds 4.4bn

The flotation of part of France Telecom, the state-owned telephones giant, could raise Fr40bn (pounds 4.4bn) for the French government, the finance ministry revealed yesterday.

Around 21 per cent of France Telecom is to be offered for sale to the public, with a further 2 per cent of the company to be included in the flotation depending on demand.

The sale had been due to take place earlier this summer but was abandoned by the socialist coalition government of Lionel Jospin, prime minister, after its surprise election victory in May. The finance ministry said 7.5 per cent of the company would be offered to French private investors at a price likely to be between Fr170 and Fr190 a share.

A further 11.5 per cent would be placed with big institutions in France and overseas. Trading in the shares will start on 20 October.

In addition, 2.1 per cent of France Telecom's capital would be offered to the company's employees, a smaller figure than the 3 to 4 per cent previously indicated. The group said it expected half its 180,000 staff to apply for shares and brushed off opposition from trade unions, who have called a strike for 30 September.

Michel Bon, France Telecom chairman, said a share swap with Deutsche Telekom, the company's partner, could take place later next year. The government refused to be drawn yesterday on the size of the stake to be offered to Deutsche, though the ministry had previously suggested that a further 7.5 per cent of France Telecom's shares would be offered to the German operator.