France Télécom ISP to Float Before Vacation

PARIS (06/21/2000) - France Télécom SA's Chairman and Chief Executive Officer Michel Bon wants to spin off part of the company's Internet service provider (ISP) subsidiary Wanadoo before the nation shuts down for its traditional long summer vacation in July and August.

A date for the spin-off has not been set, he said, although he hopes it will be "before the summer vacation," he told France Télécom shareholders attending the company's annual general meeting Wednesday.

The company will retain an 80 percent share in the Internet spin-off, he said, which will include the company's access provider business, Wanadoo; its portal site, Voila; and a number of other content businesses. The package will also include the company's yellow pages directory operations because of commercial synergies between Wanadoo's Internet portal and the directory division's advertising sales activities, he said.

The new business will be headed by Jean-François Pontal.

Bon also spoke of the company's plans for investment in third-generation (3G) mobile communications systems, defending the price agreed for U.K. mobile operator Orange PLC, which France Télécom is set to acquire from its most recent owner, rival U.K. operator Vodafone Airtouch PLC. [See "France Télécom, Orange Detail US$40B Merger," May 30.]In April, Orange had snatched one of five licences to operate 3G networks in the U.K. from under the nose of a consortium in which France Télécom was involved. Orange -- soon to be merged with France Télécom's mobile subsidiary Itinéris -- paid $6.4 billion for its license, significantly higher than the $4.8 billion France Télécom can expect to pay for a similar 3G licence in France later this year.

However, profitability from the two licences will likely be comparable, as the U.K. is more densely populated, making network construction cheaper than it will be in France, Bon told shareholders at the meeting.

One glitch struck the meeting, which was being broadcast live on the Internet for the first time.

When the time came for the assembled shareholders to vote on the meeting's resolutions, they were asked first to test the meeting's electronic vote registration system. But faced with their responses to the topical test question, "Should shareholders be able to vote over the Internet?", the system malfunctioned, and the vote had to be conducted again. Happily, it functioned correctly for the real business of the day.

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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