FT posts $12B loss; French government steps in

One day after CEO Michel Bon resigned, France Telecom reported an $11.9 billion loss for the first half of 2002, causing the French government to pledge its financial support for the collapsing carrier.

The loss includes a $7.1 billion write off for the assets of Mobilcom, a German wireless carrier that FT owns a 28.5% stake in. FT announced today announced it would stop its financial investment in the carrier, a move that is likely to drive Mobilcom to bankruptcy. The French government then issued a release saying FT--a former state monopoly the government still owns a majority stake in--was a national asset that the government would not let fail. Though the government gave no specific figures, it promised to contribute a “very substantial reinforcement” to keep the carrier afloat.

Bon meanwhile joined a joined a growing list of CEOs ousted from their country’s national carriers. Ron Sommer resigned under pressure from Deutsche Telekom in July, and at the beginning of the year, Sir Peter Bonfield left British Telecom. The French government said it would name Bon’s successor in a month, but Bon would remain as chairman of the company until then.

The $12 billion loss strongly contrasts with the $1.9 billion in positive earnings reported for the same period last year. In addition, FT increased its debt to $68.3 billion, making it one of the most indebted companies in the world.

--Kevin Fitchard, Staff Writer