France Telecom’s debt grade was cut after it raised substantially less than expected from the placement of Orange shares. France Telecom had penciled in E14 billion ($12.7 billion) from the sale for debt reduction purposes. It raised just over E7 billion, plus around E3 billion via a convertible bond.
France Telecom’s debt burden has increased substantially to about E60 billion, the main contributor to this is the purchase of third-generation mobile phone licenses last year. Moody’s and Standard & Poor’s, the main rating agencies, have both reduced their credit ratings to A3 and A minus respectively in recognition of falling values.
Is this proves to be successful it may open the way for other companies trying to gain revenue via the same route.
