Workers force delay in France Telecom sell off

The French government has delayed plans to partially privatise France Telecom, the state telecommunications utility, in the face of opposition from the company's workforce.

The decision may lead to the resignation of Marcel Roulet, France Telecom's president, who had led the battle to place his company on a commercial footing in advance of the full liberalisation of voice telephony in Europe by 1998.

A France Telecom spokesman said yesterday that "Mr Roulet has not resigned, and he will not resign today." But sources at the French ministry responsible for telecoms said his departure was imminent in light of fundamental differences of opinion between minister Francois Fillon and Mr Roulet over future strategy.

European officials expressed concern that the policy shift might jeopardise efforts to de-regulate the European telecoms market, and suggested France Telecom's proposed alliance with Deutsche Telekom could be derailed if the pace of deregulation in France flags.

The alliance, part of a global link that would include Sprint, the US long-distance carrier, is now under regulatory review in both the US and Europe. The US government has indicated it wanted further proof that Europe was opening its telecoms market before approving the transatlantic joint venture, dubbed Phoenix.

The German government announced plans to privatise Deutsche Telekom earlier this year, and stated it would meet the 1998 deadline for full liberalisation of the market for voice transmissions.

French PTT officials stressed that commitment to liberalisation remained strong, despite the delay on privatisation.

Mr Roulet embarked on a campaign to modernise and commercialise France Telecom in 1986, in a five-step process that was to culminate in partial privatisation by next year. The company has become one of Europe's most efficient telecoms providers.

Plans to privatise the company set off serious opposition, most recently in marches across the country 30 May. Mr Chirac, who was elected on a job creation platform, is believed to have been swayed by advisers to avoid further confrontation with unions, at least until after the 1996 budget, when deep cuts may have to be made in public spending.