France Telecom

Type:	Public Limited
Industry:	Telecommunications
Founded:	1988
Headquarters:	15th arrondissement, Paris
Country:	France
Employees:	161,390
Revenue:	€45.50 billion AS OF 2010
Website:	www.francetelecom.com
Facebook:	Orange
Twitter:	@orange
Key People
Stéphane Richard, Chairman & CEO

France Telecomis the primary telecommunications operator in France with 221 million customers as of 2011. Orange, the company's corporate brand is Orange, the main mobile communications and internet provider in Europe. France Telecom trades in Paris and New York Stock Exchange under the ticker symbol FTE. The company serves more than 193 million consumers. It operates in Asia Pacific, Europe, France, Latin America, Middle East & Africa, North America, Russia, Spain, Switzerland and United Kingdom. Its' headquarters is located in Paris, France. Stéphane Richard is the current Chairman & CEO of the company.

Background

France Telecom was established as Direction Générale des Télécommunications from 1889 until 1988 as part of the French Ministry of Posts and Telecommunications. Since the invention of telegraphy and telephony, the French government monopolized the telecommunications services in the country. In 1987, The European Commission initiated the liberalization of the telecommunications market in European countries and published the “Green Paper on the Development of the Common Market for Telecommunications Services and Equipment.” On July 2, 1990, the French law no. 90-568 was enacted to form France Telecom as “société anonyme” (French Corporation), a public service provider governed by corporate law in accordance with the French Postal and Telecommunication Code. In 1991, French Telecom became an independent operator under public law, which means it is still controlled by the government. In 1995, the Direction Général des Postes et Télécommunications (DGPT) issued public consultation document to open competition in the telecommunications industry. In 1996, the French Parliament enacted the Experimental Licensing Bill and eventually on December 31, 1996, French Telecom was incorporated and became privatized in 1997. The following year, the telecommunications industry in France became open to competition.

Business Portfolio

France Telecom's business is focused on the following sector:

• Local and international telephony
• Wireless
• Internet
• Multimedia
• Data
• Broadcast and cable TV service

The Orange Brand

In 2000, France Telecom purchased Orange, a mobile phone operator based in United Kingdom owned by Vodafone AirTouch for 40.3 billion dollars. The transaction allowed the company to combine its cellular business with Orange to create the second largest mobile phone company in Europe. A major move for France Telecom to position the company as the European leader and global player in the telecommunications industry. In 2001, France Telecom formed the Orange Telecom Plc. and sold 15% of its shares during the Initial Public Public Offering. In 2003, the company bought back the 13 percent minority shares it does not own worth $ 7.8 billion dollars. This decision was prompted by a bill passed by the French government granting France Telecom the option to buy out the minority shareholders of Orange and Wanadoo, the company's internet business division. At present, Orange has more than 144 million customers. In 2007, Milward Brown Optimor ranked the company as one of the world's most powerful brands.

Wanadoo

In 1996, France Telecom entered the internet business by launching Wanadoo, a wholly-owned subsidiary to serve as internet service provider (ISP). The company managed the PagesJaunes, an online yellow pages. In 1997, the company partnered with Microsoft's MSN to compete with AOL in France. When MSN decided to exit the French market in 1998, Wanadoo absorbed its subscribers. This made the company the leading internet service provider in France. The following year, the company purchased Alapage.com, an online retail store selling books, videos and music. The company expanded in Spain, Netherlands and Belgium. In 2000, the company was listed on the Euronext Paris Stock Exchange. During the same year, the company also acquired Marcopoly, a home appliance and electronics company. The following year, the company acquired Freeserve, an ISP based in United Kingdom. Freeserve was re-launched as Wanadoo, UK. This was succeeded by its acquisition of EresMas, an ISP and portal in Spain. In 2003, the company sold its Belgian ISP subsidiary to Tiscali, Pan-European ISP for 6.5 million euros. In 2004, France Telecom decided to buy out the minority shares of Wanadoo's investors to gain full control of the company. The French Stock Exchange approved France Telecom's plan. The company's regained full control of its ISP subsidiary. In 2006, France Telecom re-branded Wanadoo as Orange Broadband.

French Government Ends Majority Control Over France Telecom

In 2004, the French government decided to end its majority control over France Telecom and sold as much as 299 million shares reducing its stakes to the company to less than 50 percent. The sale was initiated by then Finance Minister Nicolas Sarkozy to cut the public debt of France and bring it within the standard limitation (60% of gross domestic product) set by the European Union. Sarcozy's hope in reducing the government's holdings in the company will ""increased room to maneuver in order to adapt to future developments in the telecommunications market." The French government sold 10.85 percent reducing its' company holdings to 42.25 percent. In 2005, the French government again offered $5.5 billion worth of its shares in the company to reduce its holding to less than 33 percent. The sale was initiated by then Prime Minister Dominique de Villepin. In 2007, when Nicolas Sarkozy became Prime Minister of France, the French government once again sold at least 5 percent of its holdings to the company to reduce the country's debt. At present, French government owns 27 percent stakes in the company.