The European Commission served formal notice on French authorities to comply with a court order requiring remedial action in the system for financing universal service in telecommunications. A European Commission directive in 1996 established mechanisms for sharing the net cost of universal service when providing this service represents an unfair burden on the operator in question. Member States must comply with various provisions designed to ensure that the cost of universal service is assessed in a transparent, proportionate way. The EU said the purpose of these provisions is to guarantee that the financing mechanism does not result in excessive charges being made on the competitors of the service provider responsible for universal service to the latter’s benefit. The dispute with France involves accounting questions of the respective contributions by the different service providers to financing universal service from 1997 to 2001. The EC is also questioning arrangements for the settlement of overpayments by alternative service providers to France Telecom or to the universal service fund.http://europa.eu.int/
- On 03-January-2003, the European Commission launched a formal investigation of the EUR9 billion in financial aid presented to France Telecom by the government of France. The European Commission said it wonders whether the French authorities are providing France Telecom with funding that it could have obtained under normal market conditions. The formal investigation procedure will whether the State has acted like a private investor.
On 05-December-2002, France Telecom announced a financial restructuring that includes EUR 15 billion in new equity. The French government, which holds a 55% interest in the company, is providing EUR9 billion of this amount. Under the “15+15+15�? plan, France Telecom would also make operational improvements to increase free cash flow by EUR15 billion to reduce debt, and the company would reschedule EUR15 billion of debt.
