All Eyes on France

The outlook for 2003 could be decided for France's top two operators this week, as their parent companies make decisive strategy decisions. For Orange SA (London/Paris: OGE) a board meeting on Wednesday of its owner France Telecom SA (NYSE: FTE) will determine its 3G plans for the near future. Analysts and industry watchers believe the mobile group's capital expenditure will be squeezed by as much as €2 billion during the coming two years, and its Swedish operation could be closed to save money. Orange has denied it will abandon Sweden. It did, however, suffer a setback recently when the Swedish regulator rejected Orange's request for an alteration to its 3G license conditions, sparking talk that the operator might quit rather than attempt to meet regulatory deadlines (see No 3G Extension for Orange). Also in France, it seems Vivendi Universal has done everything in its power to sell as many parts of its business as possible in order to raise money and backing for its bid to take total control of Groupe Cegetel, which majority-owns mobile operator SFR. Vivendi already owns a 44 precent stake in Cegetel. Vodafone Group plc (NYSE: VOD) had been hoping to take advantage of Vivendi's financial woes and buy its way into a majority ownership position (see Vivendi Says 'Non' to Vodafone). But against the odds, Vivendi has positioned itself to match Vodafone's €4 billion bid for British Telecommunications plc (BT)'s (NYSE: BTY; London: BTA) 26 percent stake in Cegetel. A decision as to whether it believes it has the financial legs to run with that strategy is expected any time this week. A successful move by Vivendi would, for the time being, scupper Vodafone's bid to control a mobile operator in each of the major European markets. It already has majority-owned wireless carriers in Germany, Italy, Spain, and the U.K. — Ray Le Maistre, European Editor, Unstrung
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