France Telecom, Lyonnaise ink deal

Agreement reached for cable infrastructures

PARIS — After almost 12 months of negotiations, France Telecom and water and services giant Suez Lyonnaise have reached an agreement under which Suez Lyonnaise will take control of cable infrastructures built by France Telecom but operated by Lyonnaise Cable.

The deal, signed on Thursday, marks the latest stage in France Telecom’s efforts to restructure its cable interests. The state-owned Telecom is estimated to be losing about $483 million a year via its cable business.

Under an ambitious cable plan in the early 1980s, France Telecom installed cable around France and then rented the infrastructure to other operators, including Lyonnaise Cable. France Telecom now stands as a cable operator and wants to sell off its rented cable sites, concentrating its efforts on areas where it owns and operates the infrastructure.

New partners

Suez Lyonnaise and France Telecom will now become partners in Lyonnaise Communications, with Suez Lyonnaise holding 50.1% of the shares. In the long term, France Telecom will withdraw from the joint venture, either by bringing new investors in or when Lyonnaise Communications is floated on the Paris Bourse.

Speculation is that two cable heavyweights with expansionist plans in France, NTL and UPC could be interested in taking part or all of France Telecom’s stake.