French swoop for Orange slice

FRANCE Telecom today made a dramatic e6.6bn (£4.6bn) paper bid for shares in mobile phones network Orange that it does not already own.

The French State telecoms giant will offer 11 of its shares for every 25 Orange shares in an attempt to buy the 13% stake.

The bid, at e9.94 a share gives a 17.4% premium to Friday's close. In London Orange shares closed at 582 1/2p. The offer will run from 12 September to 7 October.

It comes as France Telecom continued its phoenix-like recovery from near-death by debt, unveiling a first-half net profit of e2.52bn, against losses of e12.2bn in the same months of last year.

With its balance sheet bolstered by the proceeds of a e15bn rights issue in April, the international phones operator owned almost 60% by the French government, achieved operating profits of e4.64bn, up 46%.

The group's internet subsidiary, Wanadoo, said UK arm Freeserve was abandoning its historic distribution contract with founder Dixons in favour of a link with the 1,300-outlets Lloyds Pharmacy.

Wanadoo said Dixons had demanded such tough terms for renewing the deal to distribute Freeserve internet connections that 'Freeserve would have put itself further from its priority objective: to become profitable in 2004'.

France Telecom's results included a continued improvement from Orange. On revenues up 9.4% like for like to e8.6bn, its operating profit was e2.08bn, up 67%.