Newspaper article The Evening Standard (London, England)

Orange in the Black despite French Woes

Newspaper article The Evening Standard (London, England)

Orange in the Black despite French Woes

Article excerpt

Byline: NICK GOODWAY

MOBILE phones giant Orange tried to shrug off the woes of its parent France Telecom as it moved into net profit for the first time before a huge writedown on the value of its stake in Italian operator Wind.

It also raised its earnings forecast for the year and cut its likely peak funding needs for the rollout of third-generation services.

Last night France Telecom's chief executive Michel Bon was forced to resign in the face of mounting losses, a e70 billion ([pound]44 billion) debt mountain and an expected rights issue of up to e15 billion.

The board of FT also voted to stop funding MobilCom, the German operator in which Orange had a 28% stake which it had already written off earlier this year.

Orange chief executive Jean Francois Pontal said: "Even considered alongside prospects for market consolidation we see no business case for investingto be kept going, even if in the medium term the reactors could be switched off and we could buy more (nuclear generated) power from France - a solution probably too daft even for this Government.

That rules out immediate closure. Letting things drift should not really be an option because it would mean a succession of bailouts and a long-term drain on the taxpayer. Inevitably, a host of further claims from bondholders and anyone else who thinks they have a chance would also come to the surface.

So they - Government and industry - have two weeks to work out how to devise a rescue that makes economic sense and will stand the test of time.

Some elements are easy. The company can be exempted from the greenhouse gas levy; its business rates bill can be reduced, and its contract with the State-owned British Nuclear Fuels for the further in MobilCom."

Chief operating officer Graham Howe said: "It is sad that Michel Bon has departed. …

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