France Telecom pursues IP dominance with Equant merger

Under the terms of the deal, France Telecom will sell Global One to Equant for $300m in cash, and in return, will receive 80.6m new Equant shares.

As a result, the French telco will end up with a 54.3 per cent stake in Equant. It has also pledged to invest $1bn in developing the company's business strategy.

The deal creates one of the largest IP data service companies in the world with 3,700 large business customers generating annual revenues estimated at between $2.5bn and £3bn.

It also creates an extensive product portfolio as the companies unite data services such as frame relay, ATM, voice and data over IP, and hosting.

Michel Bon, president of France Telecom said: "The combined business will have the geographic presence, financial strength, management resources and technical capabilities to guarantee long term success in the rapidly growing IP market."

Didier Delephine, CEO of Equant/Global One, claimed the deal will give Equant the additional network control and financial resources it needs to expand its current business.

However, the deal also provides extensive cost savings as the two companies streamline internal processes in a restructuring set to cost $400m.

Equant estimates it can save $300m a year by the third year of business as a result. The restructuring is likely to include integrating back and front office systems such as administration, billing systems, corporate management and marketing.