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Bon resigns, MobilCom collapses
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Bon decides to step down from debt-laden company plunging Germany's MobilCom into crisis
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PARIS, France (CNN) -- Michel Bon, the chief executive of France Telecom, has quit after dumping German mobile company MobilCom and posting a record loss of 12.2 billion euros.
France Telecom's stock, which has fallen more than 80 percent this year, declined by about 7 percent to 9.85 euros in early Paris trading on Friday after the company failed to come up with a plan to reduce debt at its board meeting on Thursday.
Bon's resignation late on Thursday opens the way for Europe's second largest phone company to raise much needed cash to cut its debt mountain. (Profile)
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EXTRA INFORMATION
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France Telecom (PFTE), under the stewardship of Bon, spent billions on expanding during the telecom boom of the late 1990s -- a process that has left the company with debts of 69.7 billion euros. (Full story)
In his last act as chief executive, Bon ditched cash-hungry German partner MobilCom, threatening 5,000 jobs. MobilCom, in which France Telecom has a 28.5 percent stake, said it would file for insolvency later on Friday. Its former Chief Executive Gerhard Schmid slammed France Telecom's decision. (Full story)
German Chancellor Gerhard Schroeder, facing an election in just over a week, pledged to save the company. (Full story)
The French government, which owns 55.5 percent of France Telecom, said it would appoint a new boss by early next month to oversee a radical restructuring of the company's finances. The leading candidate to take on the post is Thierry Breton, head of French consumer electronics group Thomson Multimedia. (Full story)
France Telecom's decision to dump MobilCom, Germany's fifth largest mobile phone company, has already led to Nokia, the world's biggest mobile phone maker, to write off millions of euros it lent to MobilCom to buy its equipment. Ericsson, the world's biggest wireless telecom equipment maker, said it would issue a statement later on Friday about its exposure to the loss-making German company. (Full story)
While France Telecom posted a 12.2 billion euro loss -- associated with writing off its investment in MobilCom -- its mobile phone business Orange soundly beat expectations, boosting first-half profits by 41 percent. (Full story)
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