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France Telecom hits record, eyes Orange bid

PARIS: France Telecom shares hit a record high on Friday, boosted by news the firm would aggressively pursue a bid for British mobile operator Orange and continuing bullish sentiment related to Thursday's strong sales figures. At 1027 GMT France Telecom was up 2.4 percent at 171 euros, just off the record of 172.9 euros it hit earlier in the day, while the blue-chip CAC-40 index showed a gain of 1.49 percent.

France Telecom has the heaviest weighting on the French CAC index, around 15 percent, and the share's jump took its market capitalistion to just over 175 billion euros. France Telecom said on Thursday Orange's operations would complement its investment in British cable firm NTL , in which the French operator has a 25 percent stake in NTL. France Telecom's Chief Finance Officer Jean-Louis Vinciguerra also said the company was very aware of current high valuations in the mobile phone sector.

"The stock is rising on a combination of things - yesterday's sales figures showed strong Internet and mobile business and people are positive about the Orange news. They think France Telecom has the means to win it," said one trader.

Analysts were more sceptical France Telecom could win Orange, though they said France Telecom's aggressive stance was positive given its disappointing lack of acquisitions in key mobile markets.

"France Telecom has no choice - it has fallen behind its peers. It didn't win E-Plus in Germany. It has to bid for Orange," said one analyst.

"We know the group has got assets for sale, such as its stake in (U.S. operator) Sprint FON.N and Deutsche Telekom DTEGn.DE, but the problem is that is doesn't want to offer its own shares and paying in cash is not ideal when the latest wave of European M&A activity has been based on share-swaps," he said.-Reuters