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French telcos soar on 3G deal
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October 17, 2001: 7:42 a.m. ET
France Tel. and Vivendi soar after French cut costs of high-speed wireless licences
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LONDON (CNN) - France Telecom and Vivendi Universal rose on Wednesday after the French government agreed to cut the cost of high-speed wireless licences.
Vivendi Universal, which owns France's second largest mobile phone company, SFR, refused to handover  619 million for one of two licences awarded by the French government, saying the price was too high.
French Finance Minister Laurent Fabius said late on Tuesday the companies could pay an eighth of the 4.95 billion fee in this year and further payments would be based on revenue from the services.
European telecom operators took on crippling debts as they splashed out more than $100 billion in government auction houses in a gamble to offer seamless e-mail, Internet and video services across the region.
That strategy fell apart as investors bulked at buying stocks in companies with huge debts and untried technology.
France Telecom stock, which soared 10 percent in late trade on Tuesday, rose 5.6 percent. Its Orange mobile phone unit climbed 4.8 percent to 9.09, while Vivendi climbed 5.2 percent to 56.60.
Bouygues Telecom, France's third-biggest mobile phone company, Spain's Telefonica and France Suez dropped out of the bidding for French licences and may now consider participating in acquiring the two other permits on offer.
Hope that other European governments may follow suit pushed up stocks in other operators. Vodafone Group (VOD), the world's biggest wireless operator, rose 4.7 percent to 167.5 pence in London, while British Telecom gained 6 percent to 345.5 pence.
BT and Deutsche Telekom shares powered ahead despite losing a battle with the British government over payments for third-generation mobile phone payments. The two companies had argued the government acted unfairly in giving rivals Vodafone and Orange extra time to come up with a combined £10 billion ($14.5 billion) to pay for their licences, bought in an auction last year.
At the time, Vodafone was in the process of selling Orange as part of its takeover of Germany's Mannesman. 
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