The French government is reportedly trying to coordinate a deal that will see France Telecom acquire at least part of struggling equipment supplier Alcatel-Lucent’s submarine cable business in a deal worth up to €150m.
French newspaper Les Echoes…
The French government is reportedly trying to coordinate a deal that will see France Telecom acquire at least part of struggling equipment supplier Alcatel-Lucent’s submarine cable business in a deal worth up to €150m.
French newspaper Les Echoes reported that France Telecom, which already has a fleet of ships which lay submarine cable, would acquire more from Alcatel-Lucent. According to the report, which did not cite sources, the deal would raise €100-150m – not nearly enough to solve the financial problems of the equipment supplier, spending cash at a rate of about €700m per year. The parties are meeting today to discuss the situation, the report stated.
The government and sovereign wealth fund Fonds Strategique d’Investissement (FSI) together own about 26% of France Telecom.
The report added that the government is also looking into a deal that would see FSI acquire a stake in Alcatel-Lucent’s cable-making unit for an unidentified amount.
Last Friday (14 December), Alcatel-Lucent disclosed it has secured €1.615bn in financing underwritten by Credit Suisse and Goldman Sachs.
Commenting on the agreement, CEO Ben Verwaayen said proceeds will be used to extend the company’s maturity profile over the next few years and help it achieve performance programme priorities. He explained these include “the €1.25bn cost reduction target and the exiting or restructuring of unprofitable managed services contracts and geographic markets.”
Alcatel reported revenues of €3.56m for Q3, down 2.8% year-on-year. The company is currently executing a €1.25bn restructuring programme which it said had saved it €450m by the end of Q3.
Commenting on the Q3 results, Verwaayen said the company was aiming for a positive net cash situation at year-end.
“We are taking action to strengthen our balance sheet and we are reviewing a variety of options, which we will communicate when appropriate,” he said.
