France Télécom Sees Red

It is not easy to be closer to the Canal Saint-Martin.

Busy Midget Pickpockets

Paris:- Monday, 16. September 2002:- Once upon a time France Télécom, the French national telephone company, had a total monopoly for France's telephone service. As such it owned the network and all of the black plastic dial telephones and rented them to users.

Just after my arrival in France, France Télécom dreamed up the Minitel. Although it was an idea ahead of its time - a free Minitel post for every France Télécom subscriber - connectable to a galaxy of information servers, for a variety of tariffs.

The machine was dumb, clunky and slow, but the French took to it. You could order goods from mail-order catalogue houses, consult your horoscope, find out the train times and the weather forecasts, get the Loto results or play games - slowly - or tune into the text-only sexy 'Minitel Rosé.'

The beauty of it was France Télécom used its metres to figure out how long the user had been online, to which server and for how much, and simply tacked this extra charge of the regular user's telephone bill.

Then the telephone company would take its contractual cut, and the rest it would send to the 'Minitel Millionaires' who supplied the content and ran the servers.

It was like a very slow Internet that made a hellva lot of money year in and year out. Actually, 'slower' was better because everything was charged by the minute.

For France Télécom, at least, those were the good old days. Since then the state operator has sold 44.6 percent of itself to the public, gotten into the Internet business as a prime supplier of access, and jumped into the mobile phone business with three feet.

Along the way it seems to have managed to forget its entire Minitel success, as well blow all of its accumulated profits from it on the Internet and the mobile phones.

Because the French state still owns 55.4 percent of the stock, the company had to use cash to expand. By 'expansion' I do not mean some sort of repeat of the Minitel idea, but in what is now classic expansion in the terms of mobile phones - by buying other mobile phone operators who have paid ten times what subscribers are worth, to get subscribers.

Which is the exact opposite of giving subscribers free Minitel terminals, so they will freely run up lots of line charges.

France Télécom sold its 44.6 percent to the public with an initial offering at 31.46 in late 1997. It hit its peak of 219 per share on 2. March 2000. Last Friday it fell another 2.63 percent, to close at 10.36.

In May of 2000, France Télécom paid 50 gazillion euros for the British operator, Orange. This was slightly more that the French state collected in income taxes in a year, and slightly more than the public deficit.

But in March of 2000 France Télécom also bought 28.5 percent of the German operator, Mobilcom - for a measly 3.7 billion euros. The French company now desperately wants to unload the German company and its 5500 employees. In extremis, the German government has just found two banks to inject 400 million euros into it.

Meanwhile, the French government had started giving some attention to the property it is 'managing' on behalf of taxpayers, and is planning to throw 15 billion euros into it. But, ah, six billion of this is supposed to come from banks in return for more shares that France Télécom will issue - and I used to think there were some smart people at Bercy.

Small stockholders have watched the stock value tumble 76 percent since the beginning of the year. How, I wonder, can they be persuaded to buy more, now, at any price?

Anyway, the government has finally canned the government functionary who ran France Télécom, and is looking through its shortlist of other likely fall-guys - who have been running state companies like Air France or the RATP - anybody except Bernard Tapie.

You know - somebody who can figure out how to soak up 70 billion euros of debt - without using one cent of the Minitel zillions, which don't exist anymore anyway.

Meanwhile, on the mobile-phone front, the operators are preparing their next marketing offensive. Today's Le Parisien has an outline of their plans for charging for calls - by the second.

Even with the tables of examples in Le Parisien, you will need a clever accountant to figure out which is the best deal. But basically, if you have a black plastic phone with a dial on it and don't use it much, you'll stay out of the poorhouse.

And, until I can figure it out, don't expect me to call. I'm paying for it already without using the phone.

This is a broadcast warning heard incessantly for the past several years in métro stations, sometimes drowning out the sound of the music generated by the army of accordionists, both with and without amplifiers.

One reder has written to say that one should be wary in the Gare du Nord, if this is the place where you first arrive in Paris. Here, you may be confronted with automatic city transport ticket vending machines. These have been greatly improved over earlier models - but if it is your first time with one, they require some concentration.