France Telecom Cutting 3G Spend

2nd December 2002 by Reuters.com

France Telecom plans to slow its investment in third-generation wireless networks as part of efforts to cut costs and mend the phone giant's battered balance sheet, the Wall Street Journal Europe said on Friday.

Citing sources familiar with the matter, the newspaper said the debt-choked firm was aiming for cost-savings to match the roughly nine-billion-euro ($8.96 billion) rescue loan which the French state is reported to be planning.

But the report, which echoed similar articles in the French press that France Telecom would chop capital expenditure to pare down its debts, did little to spur the stock, hit by profit taking after a two-day 27-percent gain.

No one at the firm was immediately available to comment.

The WSJE said savings from reductions in spending on both operations and infrastructure would come over two or three years and help free up cash to cut France Telecom's 70 billion euro debt.

The firm's cellphone networks unit Orange could contribute some two billion euros over two years to the total figure by slowing down its rollout of third-generation mobile services in Europe, the paper said.

France Telecom, whose new chief executive Thierry Breton is due to present a restructuring plan on December 5, could easily save cash by only a slight slowdown in rollout, the paper added, noting that the move would come amid softer European demand for such services.

SPENDING CUTS VIABLE?

French daily Les Echos said France Telecom -- whose debt is bigger than Russia's -- might try to curb spending to sort out its finances, but cited no sources.

Les Echos said France Telecom could slash annual capital expenditure to five billion euros within the next few years, compared with around eight billion this year.

Aurel Leven analysts judged the reports viable.

"The potential for France Telecom to reduce investment and spending is real," analyst Antoine Joly said in a research note, adding that the firm had recently finished its investment cycle for fixed-line networks in France.

The news sent shares in telecoms equipment supplier Alcatel four percent lower as investors fretted that the troubled firm could suffer if France Telecom -- one of its clients -- crimped third-generation investment.

Aurel Leven's Joly said industry bellwethers Ericsson and Nokia could also suffer.

France Telecom shares fell 5.4 percent to 17.76 euros by 1145 GMT, underperforming the European DJ Stoxx Telecoms index as investors nabbed profits after a recent rally.

"We believe France Telecom shares look fully valued ahead of management's December 4 review," said Morgan Stanley analyst Paul Marsch, who downgraded the stock to "underweight" from "equalweight".

France Telecom's shares, massacred this summer as investors panicked over its huge debts, gained sharply in recent sessions as expectations mounted a rescue plan for the firm was imminent.

Le Figaro newspaper said earlier this week the government, which owns 55.5 percent of the company, would throw the firm a nine-billion-euro lifeline.

The paper also said massive job cuts were in the pipeline, although France Telecom denied the report, confirming only that 20,000 jobs would go over the next three years due to early or natural retirement.

TODAY'S PRESS RELEASES

WCDMA technology proves to be the first wideband 3G technology ready to be launched commercially on IMT-2000 frequencies and the only 3G technology interworking with 2G world

he first person-to-person video call via 3 handsets over the UMTS commercial network of 3 was conducted successfully between Rome and Milan, as well as Rome and London

Hutchison CAT Wireless MultiMedia Ltd., a joint venture between The Communications Authority of Thailand and Hutchison Wireless Multimedia Holding Ltd., is launching "Hutch" as a marketing service brand for its CDMA 1X technology mobile phone service.

France Telecom plans to slow its investment in third-generation wireless networks as part of efforts to cut costs and mend the phone giant's battered balance sheet, the Wall Street Journal Europe

picoChip Designs Ltd, a leader in innovative flexible wireless solutions, today announced the details of its technology. The company has developed a complete baseband platform for 3G infrastructure that solves three critical problems confronting manufacturers

IN-FUSIO today announced that Orange SA has signed an agreement in which its mobile games service will be offered to all of its 21 subsidiaries across the globe.

The convergence of digital cameras and 3G cell phones inspired the company to create a product and service that combines the bests of digital and instant photography.

-PHONE announced today that it will enhance its @Sha-mail service on December 2, 2002 to enable Movie Sha-mail users to send video clip files of up to five seconds to non-Movie Sha-mail J-PHONE handsets and users of other Japanese mobile carriers.

Express yourself in words and pictures with the M320, a great-looking phone with a must-have big colour screen.

An "eyesore" telecommunications mast which was compared to Blackpool Tower will stay at its present size after councillors threw out plans to make it bigger.

Thai Mobile, which is scheduled to launch its mobile-phone service commercially today, says it is aiming to sign up 100,000 subscribers by the end of next month.

Nokia began deliveries of the CDMA2000 1X Nokia 3585 phone to wireless carrier MetroPCS Inc. The Nokia 3585 phone will be offered in each of MetroPCS' markets, including Atlanta, Miami, Sacramento and San Francisco

Interest in public wireless local-area networking (PWLAN) is gathering steam in the mobile computing and networking arenas. For wireless carriers, the emergence of PWLAN solutions based on Wi-Fi technology represents both opportunity and threat.

More than one-half million Korean mobile phone subscribers signed up in the first month for a new service that lets them choose what people will hear when they call their phone.

04.com has announced that activities outside Japan have been enhanced through being selected as a supplier of a mobile applications platform to Orange group companies

Oplayo, the company that brought the world's first video streaming to existing GPRS networks, today signed its first mobile phone operator deal with Eurotel Praha.

NTT DoCoMo, Inc. announced today that sales of i-shot™ handsets have topped the 3 million mark, less than six months

Hutchison Whampoa's growing debt and the cash flow drag from its third-generation mobile telecom business (3G) put it in danger of a ratings downgrade next year, UBS Warburg has warned.

Juniper Research interviewed over 40 industry leaders and concluded that MMS has the potential to generate revenues in excess of $8.3bn by 2004

lcatel announced it has signed a frame agreement and three supply contracts with Mobile Telesystems, a leading mobile operator of Eastern Europe.

Alcatel officially inaugurated its 3G Reality Centre in Stuttgart, Germany today. This facility, which has been operational since June of this year, is the first end-to-end, fully open 3G/UMTS mobile facility in Germany

Lucent Technologies today introduced a third-generation (3G) CDMA2000 base station that, because of its compact design and distributed architecture, offers the flexibility needed to meet a variety of deployment needs and coverage challenges for mobile operators

Alcatel announced that leading French mobile operator Cegetel/SFR Group has signed a multi-million Euro contract for Alcatel's flagship multiprotocol, platform family, network management and services.

igital Bridges announced it has launched its first i-mode title - Star Trek® First Duty - with German mobile operator E-Plus.

UTStarcom announced the signing of a strategic partnership with Datang Mobile ("Datang"), marking their joint effort to develop and promote the TD-SCDMA 3G standard.

Until recently, Li Ka-shing's business judgment seemed above reproach, thanks to his decades of virtually flawless maneuverings in everything from container ports to hotel management.

Implementation of third- generation (3G) communication systems, especially in Europe and Asia, and new automobile electrical accessory designs are powering the growth of the world lead acid batteries market.

The CDMA Development Group announced that already eight TDMA operators in Asia and the Americas have migrated to or are deploying CDMA2000 for 3G.

There are rumors in academic circles and in the media that 3G will lead to a dramatic increase in power consumption. This is not true.

Japan was first to launch a 3G network for mobile services. But South Korea has been by far the best in turning this network technology into a commercial success.