France Telecom to be renationalised?

There's talk...

The French government is seriously considering taking its debt-laden national carrier, France Telecom, back into state control, according to sources quoted this morning. The move is being considered as market sentiment for telecoms stock continues to be weak and talk of a rights issue to clear France Telecom's debt-mountain is dismissed. Last week credit ratings agency Moody's cut France Telecom's status from Baa1 to Baa3, a notch above junk status. The source, quoted in the Financial Times, describes the possible move as "defensible". However, with 1.5 million private investors owning a stake in the telco, the issue may prove too politically sensitive for prime minister Jean-Pierre Raffarin.