France Télécom Buys Stake in Polish Carrier

PARIS (07/26/2000) - France Télécom SA is to acquire a 25 percent stake in Polish telecommunications operator Telekomunikacja Polska SA (TPSA) for some 3.2 billion euros (US$3 billion), the French company announced Tuesday.

It will exercise control of the stake through a consortium with Polish company Kulczyk Holding. In total, the consortium will own 35 percent of TPSA. Another 15 percent of TPSA will be held by public investors, 15 percent by TPSA employees, and the remaining 35 percent retained by the Polish state.

The consortium will have an option to increase its holding by 10 percent by July 31, 2001, France Télécom said in a statement. In addition, the Polish government intends to float at least 14 percent of the company on the stock market by September 30, 2001. Of this secondary offering, 6 percent would be reserved for the consortium, according to the statement, giving the consortium the possibility of extending its holding, in time, to 51 percent.

Under the terms of the agreement, the consortium will be allowed to appoint a new supervisory board to TPSA. It will also control five seats of the sixteen-seat board.

In 1999 TPSA generated net income of 248 million euros on revenue of 3.17 billion euros. The company has recently begun modernization of its network infrastructure, with plans to spend some 47.7 million euros on a new optical backbone to be supplied by Alcatel SA and Lucent Technologies Inc. [See "Poland Buys Optical Backbone Network," July 12.] It has a stranglehold on local access in the Polish market, with 10 million lines or 96 percent of the market and a substantial share of the mobile phone market too. Its mobile phone subsidiary PTK Centertel, in which France Télécom also has a 34 percent stake, has around 1 million subscribers.

TPSA, in Warsaw, can be reached at +48-22-661-76-89 or on the Web at http://www.tpsa.pl/. France Télécom, in Paris, can be reached at +33-1-44-44-22-22 or on the Web at http://www.francetelecom.com/.

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