France to sell £4bn stake in telecom group

France is selling up to 12.1 per cent of France Telecom in Europe's largest share placement in four years, bringing as much as €5.75bn (£3.9bn) into state coffers as it strives to cut national debt.

France is selling up to 12.1 per cent of France Telecom in Europe's largest share placement in four years, bringing as much as €5.75bn (£3.9bn) into state coffers as it strives to cut national debt.

The government will see its grip on the former telecoms monopoly fall below the symbolic 50 per cent level to 41 per cent in the move announced yesterday. The decision to proceed with the sale as the country returns from summer holidays, sends a strong signal about the government's desire to push ahead with a privatisation programme that has faltered amid volatile stock markets and powerful union protests.

The France Telecom sale will allow the government to cut its trillion euro debt mountain, sending a positive message to markets and Brussels about its economic reform programme.

French Finance Minister Nicolas Sarkozy, who has set his sights on succeeding Jacques Chirac as president, said the government hoped to sell its shares "well above" the €14 per share it paid at the time of France Telecom's rights issue last year.

Sources familiar with the operation said the France Telecom stock would be sold at between €18.95 and €19.25.

"It shows the government is focused on getting out of public companies and paying down its debt," said David Naude, an economist at Deutsche Bank in Paris.

The deal, under which the government has pledged not to sell any more shares for nine months, barring a few exceptions, removes uncertainty about the timing of future stock sales. That uncertainty has curbed France Telecom's recent share price performance.