This excerpt taken from the FTE 6-K filed Sep 9, 2005.



  1. Acquisitions


  1.1 Acquisition of Amena in Spain


On July 27, 2005, France Telecom announced that its subsidiary Orange S.A. had entered into an agreement to acquire 80% of the shares of Auna (“Auna”), the owner of 97.9% of Retevision Movil S.A., a mobile operator under the trade name “Amena”, for 6.5 billion. This transaction will reach final completion once the cable activities of Auna (Auna Tlc) are separated and upon the fulfillment of certain other conditions, including in particular, approval by competition authorities.


France Telecom will then proceed to merge Auna, Retevision Movil S.A. and France Telecom España (which holds the fixed and internet businesses of the group in Spain under the Wanadoo brand). Following completion of the merger, France Telecom will retain approximately 75%-80% of the newly merged entity. The balance (between 20%-25%) of the shares will be held by Santander, Union Fenosa and Endesa, as well as by the minority shareholders wishing to retain their stake, including certain Spanish savings banks. The transaction has been approved by the boards of directors of Orange S.A. and Union Fenosa.


On a comparable basis, at the end of 2005, the France Telecom group will have more than 11.8 million customers in Spain with sales of 4.1 billion and a gross operating margin of around 1.2 billion for CAPEX of roughly 750 million.


The annual growth objectives of the France Telecom group in Spain for 2006-2008 are 7% to 8% for revenues and 11% to 15% for gross operating margin with reduced CAPEX. By 2008, France Telecom España aims to have more than 14 million customers.


This transaction puts France Telecom in a position to offer convergent broadband and mobile services in a key European market with close to 10 million additional customers.



Table of Contents

This transaction also allows France Telecom to reinforce its strategy as an integrated operator in Europe. France Telecom will now be in a position to launch convergent offers in broadband and mobile in a key European market.


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