SBC Buys Stake in French Cellular Firm
Jerri Stroud Of the Post-Dispatch, St Louis Post-Dispatch (MO)
SBC Communications Inc. is putting a $626 million bet on the future of mobile telephones in France, despite poor sales in the past.
In a deal announced Tuesday, SBC Communications Inc. and Vodafone, a British cellular concern, each will buy a 10 percent stake in a French cellular telephone company. SBC also will sell a stake in its Washington-Baltimore cellular system to its new French partner.
"We believe France offers outstanding potential for growth, especially in wireless communications," said Edward E. Whitacre Jr., chairman and chief executive of SBC, formerly Southwestern Bell Corp.
"This alliance targets an opportunity with excellent long-term growth potential," said Don Kiernan, Southwestern Bell's chief financial officer.
About 1.3 percent of the French use cellular phones now, a much lower percentage than in other European countries and the United States. SBC's own penetration rate is 6.5 percent, about twice the U.S. industry average.
Under Tuesday's agreement, SBC and Vodafone each will buy a 10 percent stake in Societe Francaise du Radiotelephone (SFR), the cellular subsidiary of Compagnie Generale des Eaux (CGE). SBC's investment in SFR will be $626 million.
SBC also will sell a 10 percent interest in its Washington-Baltimore cellular system to CGE for $247 million. Another SBC subsidiary will buy a 10 percent stake in certain cable properties owned by another subsidiary of CGE.
SBC and CGE will have a controlling interest in COFIRA, a holding company that owns 90 percent of SFR, the cellular company. …