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Fr Tel invades rival's turf
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October 11, 1999: 4:14 a.m. ET
France Telecom seeks more German deals; may buy all of Global One
By Staff Writer Rod Cant
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GENEVA (CNNfn) - France Telecom boss Michel Bon has sounded a stark warning to rival Deutsche Telekom that the French group is planning more deals on its former partner's turf.
In an interview with CNNfn at Telecom 99, the global communications conference taking place in Geneva, Bon said that the recent $10.5 billion acquisition of Germany's third-ranked cellular player E- Plus is only the start of the company's ambitions in Germany.
Relations between the companies are at a low ebb after their partnership soured in April when Deutsche jilted its agreements with France Telecom and attempted an unsuccessful white-knight takeover of Telecom Italia.
"It's not a question of revenge," according to Bon, referring to the French company's first direct assault on Deutsche Telekom's home ground.
"We didn't need anything in Germany before (due to the partnership with Deutsche Telekom). Now we have to build something in Germany because it's Europe's largest market," he said.
We're getting a first piece (of the action) with E-Plus, and then we're going on to become a global player in Germany," said Bon, who has been president and director general of France Telecom for four years.
Bon virtually ruled out making a big move in the United States, pointing out that generating cost savings and revenue benefits is problematic in transatlantic deals, "and it's difficult to explain to shareholders how you are going to make money."
He gave a clue as to the next step in Germany: "In Europe, where we can, we start with mobile and immediately after, we develop fixed and Internet services."
The breakdown in the relationship between the flagship telecom companies of France and Germany, each the largest company on their domestic stock exchange, has led them to bid against each other for the spoils of their disintegrating partnership.
The $115 billion takeover of Sprint (FON) by MCI WorldCom (WCOM), will result in the sale of Sprint's 50 percent stake in Global One. Global One is a transatlantic venture between Sprint, Deutsche Telecom and France Telecom aimed at capturing corporate telecom accounts. The business has been beset by differences of opinion among the partners, and continues to lose money. Chief executive Gary Forsee quit in June after just 16 months in the job.
Sprint owns 50 percent of Global One, with Deutsche and France Telecom each owning 25 percent.
Deutsche Telekom has indicated that it would consider becoming sole owner of Global One, and France Telecom's Bon confirmed to CNN his willingness to pick up the pieces of Global One.
Both partners should have the cash to pay for the various stakes in Global One. Bon estimates his company's stake in Sprint, to be sold when the MCI WorldCom deal goes through, is worth some $9 billion. Deutsche has a similar holding.
Global One "is in a kind of bid process, and if the price is right we'll buy it."
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