France Telecom dives after chief quits

SHARES in France Telecom dropped 15% at the opening of the Paris Bourse after it failed to resolve its funding issue, revealed losses of e12.2bn (£7.7bn) for the first half of the year and chairman and chief executive Michel Bon resigned.

Bon remains until a successor is found. Today, he said the French government would boost France Telecom's equity 'when market conditions are favourable'.

France Telecom had been expected to launch a e15bn rights issue today in a bid to cut its e70bn of outstanding debt. But the fund-raising will be delayed at least until the appointment of a new boss.

Bon said: 'The clear commitment of the government, as I had hoped, is to choose the most favourable moment to undertake the boost to shareholders' equity that I was not able to oversee over the past two years given the state of the markets.' He also accepted responsibility for the decision to invest in MobilCom, the German mobile phones group, which is expected to go into liquidation.

Bon, 59, was the lowest paid of France's CAC 40 company chiefs, earning just e279,000 last year. This could add to the problems of finding a successor. Thomson Multimedia chief Thierry Breton, 47, is one of the favoured candidates, having already rescued two State-owned companies for France.

The French government owns 55.5% of France Telecom's shares and Finance Minister Francis Mer said its problems would not affect its plans to sell off further stakes in Air France and Electricité de France.

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