Executives at France Telecom who continue to believe that the firm has acquired a certain autonomy from the state must have had a rude surprise on January 30. Virtually ignoring the telecommunications operator’s new (since January 1991) status as autonomous public operating company, the French government ordered France Telecom to invest approximately $179m in two state insurance companies, Union des Assurances de Paris and Assurances Generales de France. Granted, it’s not the government’s first request since the new status took effect: it persuaded France Telecom a few months ago that it needed to join the ranks of SGS-Thomson Microelectronics NV’s French shareholders. Nevertheless, that request was at least plausible, since SGS-Thomson’s business could at a pinch be said to be compatible with that of France Telecom. In fact, Dataquest ranks SGS-Thomson number one in the world as a supplier of dedicated integrated circuits to the merchant telecommunications market. Consequently, it could be reasoned that the state was acting in France Telecom’s best interests, ensuring that it would have privileged access to a technology crucial to its business. But it is preposterous to press a telecommunications operator to take participation in the capital of two insurance companies at a time when companies are striving to eliminate too much diversity from their activities – and a parliamentary commission, the High Commission of Post and Telecommunications Public Service, thinks so too. In a report last week, it said that the purchases could jeopardise the company’s pledge to cut its towering debt, and could weaken the enterprise, Reuter reports. Under its 1991-94 plan, France Telecom, which had $21,587m of net debt at the end of 1991, aims to cut net debt by about 1% a year, and the Commission says it is worried that France Telecom’s financial investments would distract it from its main activities, hurt workers’ morale and weaken the group. But apparently, the government simply cannot wean itself from the habit it has acquired over the years of using the phone company as a cash cow. High-definition television and space extravaganzas are among the projects the state has required the public telecommunications operator to finance during the last decade.
Social well-being
Evidence of this difficulty can be seen in a response from Emile Zuccarelli, the French minister of Post and Telecommunications, to a charge made by former PTT minister Gerard Longuet that forcing France Telecom to buy shares in the insurance companies represented a hijacking of its objectives that borders on abuse of the notion of ‘social well-being’. To which retorted Zuccarelli: My predecessor forgets that this represents only 2.5% of France Telecom’s total investments and involves quoted shares, which constitute a quality investment. It’s natural that France Telecom’s profits be used in the general interest and, as far as needed, reinvested into public enterprises. Voila, the crux of the issue. As a mere autonomous public operating company, France Telecom’s profits are not necessarily its own. Particularly not when the government has committed to realising $3,000m in 1993 from the sale of shares in public companies. Given the government’s need for France Telecom’s money, what are the chances that it will ever be privatised? Pretty good, particularly if the Socialists lose the upcoming elections, as everyone expects them to. Longuet, for instance, said, if he were to return to manage the PTT in a rightist government, he would favour a return to an enterprise logic. Such logic, said Longuet, who was responsible for the ultimately unpopular privatisation initiatives of Jacques Chirac’s government between 1986 and 1988, would prefer to see France Telecom use its profits to take participation in telecommunications service companies in Latin America, Southeast Asia or in Europe. Marsha Johnston
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