France Telecom experienced a period of profound transition between 2004 and the first half of 2005. The transition process was brought about via a change to the strategic plan with the success of Ambition FT 2005, marking the completion of the financial turnaround of the group and the presentation of new strategic directions for 2006-2008, as part of the next plan. Since the privatization of the company, since the divestiture of government securities and ERAP that occurred in September 2004, France Telecom is now a part of the private sector.
In the first part, we will focus on the incumbent's past to understand the implications of the changing telecom market on its status. Then we will study the various phases of company development. This will lead us to the privatization process and its consequences on the outcome of the organization.
In 1991, France Telecom was staggering under a debt which had reached immense proportions - 120.7 billion francs. This far exceeded its revenues by 103 billion francs. The weight of financial costs of 11 billion francs accounted for 11% of sales. This was due to very poor capacity, since 1982, to repay the State, a portion of the profits budgeted under the Schedule of Posts and Telegraphs. The collection, which peaked at 18.3 billion francs in 1986, had naturally led to use of substantial capital market for investment.
As part of commitments made in its contract plan 1991-1994, the operator has managed to reduce the huge debt of 95 billion francs in late 1994. The importance of its financial debt thus hinders appreciably the movements of the company.
In 1996, the company was transformed into a limited company, while remaining invested in its public service missions.
In the past fifteen years, in the context of financial globalization, development of free competition and developments in Community law, the assembly constituted by French companies under public control has been significantly redesigned.
By the end of 1986, there were around 3500 French firms. Fourteen years later, in late 2000 we recorded more than 1500 (Figure 1). SOEs accounted for 1.1 million employees in 2000 against 2.35 million in 1986.
In July 1996, a regulatory framework on telecommunications was set up. This regulation aims to create a harmonized and liberalized European market, which according to the commission can only improve the competitiveness of the European market for the benefit of users.
The Committee has set a regulatory framework to achieve these goals. This framework rests on three basic principles including:
Liberalization in monopoly sectors, starting with the liberalization of supply of equipment
Harmonization of the European market: The goal is to establish rules and standards regarding services and technology, and support the development of a common market.
The application of competition rules:Liberalization and harmonization are two aspects of the same process, but these guidelines are based on different legal bases. However, they must be applied simultaneously to succeed.
With the French market is also open to competition, privatization of France Telecom seemed inevitable.
[...] Base rates decreased and then went from 100 to n • Despite the significant decline in the base price of communications, the gap between the prices of France Telecom and the alternative operators was still high. ¬ Unbundling For price reasons, the number of unbundled lines continues to increase rapidly. Since 1998, when the opening of the fixed telephony market to competition took place, the end customer's market is highly developed. There is a growth of over 40% in seven years. More than additional lines have been unbundled in the first quarter of 2005, as well as in the previous quarter. [...]
[...] ¬ November 1998: second phase of opening of the capital market At the end of the second phase of the opening of the capital market, the state owned about 54% of the operator in accordance with the law which provides that the owner of the majority stake is the public operator. This involved a sale by the State of nearly 100 million shares, performed in several forms, and a capital increase of of France Telecom. The share price was set at € 60. This second sale transaction, previously registered as the largest market operation in Paris, removed a total of 59 billion francs and earned 35.7 billion francs for the state. [...]
[...] Conclusion As we have seen, the privatization of France Telecom has had serious consequences for everybody. Market deregulation and open competition have forced France Telecom to evolve and adapt, and eventually forced the state to change its status. France Telecom has experienced important changes in recent years in the context of globalization and increasingly strong pressure from the financial community, regulatory and civil society in general. For investor confidence in France Telecom there were not many solutions. Saving money, reducing staff, putting activities into subsidiaries, and reducing the share of wages in value added services are all steps that can increase the profitability of capital of the company. [...]
[...] Privatization ¬ September 2004 In September 2004, the government decided to sell part of the capital, at least making itself the minority stakeholder. France Telecom was now up to the private sector. Finally, given the demand of the state capital was sold ( 267,700,000 shares, representing € 5.1 billion increasing its share to : France Telecom was officially after 16 years of progressive reforms, but note that the Staff still had a civil servant status. The shares were placed with institutional investors with very low discount to market conditions. This exceptional operation at this magnitude was carried out in a single day. [...]
[...] These are all considered innovative services that will now be overseen by the Orange brand. The operational objectives of NExT for 2008 are as follows: • to of the total turnover of the Group from convergent offers • Availability of single portal to 100% in Europe • IP telephones 2 million and more than of mobile terminals signing • More than 12 million fixed broadband customers including more than 8 million customers to the Livebox million in France ) • More than one million customers who subscribe to MaLigne TV in France , and over million in sales from 400 content • More than 12 million customers mobile broadband with more than 6 million in France and over 5,000,000 in the United Kingdom • In the Enterprise market, more than one million customers Business Everywhere , and more than 2 billion Euros in revenue from services Information Technology and Communication (ICT). [...]
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