Bouygues mulls withdrawal from French 3G bid

NEWS According to a source familiar with the company's finances, the mobile operator is on the horns of a dilemma as a withdrawal would damage the company's goodwill while continuing would "have a negative impact on accounts." The French telco has been selling off assets and issuing shares in a bid to raise capital. Last year it carried out a new issue of capital of E2.29bn (£1.45bn) and has collected E1.07bn (£670m) as well as securing a loan of E6bn (£3.8bn). The company needs FFr32,5bn (£3.13bn) to enter the UMTS beauty contest. Speculation is also rife that Bouygues Group is in discussions with Deutsche Telekom for a percentage of the parent company's share in Bouygues Telecom. Nigel Deighton, analyst at Gartner Group, noted that the decision presented a milestone for the company. He said: "It is will be no a surprise at all if Bouygues decides to pull out. Bouygues is the weakest candidate financially speaking. Bouygues Group has already backed out of the fixed line business by selling it to Telecom Italia and now the company has an important choice to make as to whether its future lies in telecoms or elsewhere." Deighton suggested Bouygues should join forces with either Deutsche Telekom or Telecom Italia to continue its bid. "UMTS costs a lot of money, not just for the licence but also to get it up and running. It would not surprise me to see the French telco sell a stake to either of those companies - if you've got a partner with deeper pockets than you it's bound to help." However, sources quoted on Reuters claim the company is in line for E5bn (£3.16bn) funding from various French investment banks. A cash injection would relieve the pressure for the telco to take on a new partner ahead of the beauty contest on 31 January. Bouygues claimed the financing of the UMTS bid was 'completely assured' but refused to comment further.