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Vodafone sheds France stake
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February 28, 2001: 6:41 a.m. ET
Cellular operator sells 10 percent stake in France Telecom for $10.7 billion
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LONDON (CNN) - Britain's Vodafone Group agreed on Wednesday to sell back its stake in France Telecom for 11.6 billion euros ($10.7 billion).
France Telecom will use cash raised through the recent flotation of its cell subsidiary Orange to pay for the purchase, which had been expected. That flotation raised  9.2 billion for the former French telecom monopoly.
 Vodafone acquired the 9.9 percent stake in France Telecom last year when it sold UK mobile phone unit Orange to the French firm for $37 billion.
France Telecom then folded its domestic French service Itineris and other cellular assets into Orange ahead of the flotation.
Vodafone, the world's biggest mobile phone company, also said it would receive a further 2.2 billion from France Telecom by cashing in a loan note. In total, the British company will raise more than 13.8 billion.
The UK company, which sold Orange to satisfy regulatory concerns over its $173 billion acquisition of Mannesmann last February, said it would use the money raised to pay off debt.
The company expects to receive 8.9 billion from the sale by March 31.
Vodafone will receive payment in three tranches – starting with 6.1 billion on March 5, then 590 million on March 26, and the 5 billion balance due March 25, 2002.
France Telecom, which plans to slash in half its 60 billion debt mountain by the end of 2002, has said it would sell its holdings in U.S.-based Sprint (FON: Research, Estimates), worth some 2 billion, and Franco-Italian chipmaker STMicrolectronics (PSTM).
 Earlier this month, the French company agreed to sell its 17 percent stake in Anglo-French technology consultant Sema (SEM) to U.S.-based Schlumberger (SLB: Research, Estimates).
Paris-based France Telecom said it would hold the shares it buys back from Vodafone and sell them in a secondary offering over the next two years.
Shares in France Telecom (PFTE) fell 4.2 percent to 66.35 in Paris, while Vodafone (VOD) declined 2.2 percent to 188 pence in morning trade in London. 
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