If share prices and debts provided an accurate reflection of a company's health, France Telecom and its chief executive Michel Bon would be regarded as very sickly patients indeed.

In the past year, the company's share price has fallen about 70% while debts have ballooned to an enormous 60bn euros ($54bn; �37bn).

A spending spree that has included mobile phone operator Orange, data carrier Equant and internet service provider (ISP) Freeserve as well as several new, third-generation mobile phone licences has left France Telecom vieing for the dubious honour of being the world's most indebted listed company.

France Telecom

Fixed-line operations in 28 countries Wireless operator Orange ISPs Wanadoo and Freeserve Data carrier Equant

The share price slump is, to some extent, because of investor concern about the size of the debts and what can be done to reduce them.

But, like other European telecoms firms, France Telecom was also caught up in the wider tech stock boom of 1999 and 2000 and the subsequent bust.

Preceding the past year's falls, France Telecom shares had climbed 200% in less than six months.

Click here to see a graph of France Telecom's share price.

This year, Mr Bon has said investors dumping the stock are over-reacting and not looking closely enough at France Telecom's prospects.

Better regarded

The rationale behind the acquisitions is to build France Telecom into a genuinely global telecoms company able to compete with its biggest competitors in both fixed line, wireless, data and internet services.

The debt pile is the price the company has had to pay to try to achieve this.

Despite high debts, a slumped share price and fact it is still majority-owned by the French government, the company is better regarded by many analysts than competitors such as British Telecom (BT).

France Telecom's acquisitions give it more exciting growth prospects than its UK rival and show a more convincing transformation from stodgy fixed-line monopoly to international mobile and internet giant.

While France Telecom undoubtedly faces a challenge reducing debt - and any sustained fresh deterioration in market conditions would be a severe blow - analysts believe it has a more coherent and promising international strategy than BT.

As of the end of last year, France Telecom had operations across 75 countries, with 39 million fixed-line customers, 33 million mobile customers, 3.5 million active subscribers to its internet service providers and 2.1 million subscribers to its cable television services.

Deeply troubled

This position shows a remarkable turnaround from five years ago.

BT's unhappy shareholders might not remember it, but there was a time not long ago when it was the UK company that was viewed as the nimble international player while France Telecom was a lumbering domestic monopoly mired in a deeply troubled privatisation process.

Mr Bon's predecessor as chief executive lasted just five days in the job in 1995 while the privatisation process was several times brought to a halt by huge union opposition.

That France's largest privatisation was eventually pushed through in 1997 and France Telecom's corporate culture quickly adapted is much to the credit of Mr Bon, a former banker and chief executive of retailer Carrefour.

Now it is BT whose international presence looks shaky by comparison.

Setbacks along the way

For France Telecom, there have been a few setbacks along the way. Among them was the acrimonious break-up of a strategic alliance with Deutsche Telekom when the German firm switched its attention to a tie-up - ultimately unsuccessful - with Telecom Italia.

International strategy was also knocked when US operator Sprint withdrew from Global One - a venture also including Deutsche Telekom - after being taken over by MCIWorldCom.

But there have been some notable successes in the expansion strategy such as the acquisitions of the fast-growing Orange, Equant and Freeserve.

Wanadoo, the company's ISP arm, in March said it would achieve its profitability targets sooner than previously expected and add almost eight million more subscribers by 2003.

Today, France Telecom's French fixed-line business provides about one third of total revenues compared with three quarters in 1995.

And, by 2003, more than half the group's revenue will come from outside France, compared with 2% in 1995.

Little option

Looking ahead, France Telecom's biggest short-term challenge remains its stated aim of reducing debt by 20bn-30bn euros by 2003.

With more favourable market conditions, the preferred route to lower debt might have been the sale of shares in mobile phone units - viewed by many as the most prized assets.

But, as Mr Bon said in a recent newspaper interview: "When the road is icy, you leave the Rolls in the garage."

The scale of the debt challenge is illustrated by the fact that France Telecom went ahead with the flotation of Orange anyway, although the unit's valuation had collapsed in a matter of months from as much as 150bn euros to 50bn euros.

In reality, it had little option. Under the terms of the Orange purchase, France Telecom had to buy back 7bn euros worth of its own shares from Vodafone - the vendor of Orange - by March this year.

Other elements of France Telecom's debt reduction strategy include a $16.4bn bond issue launched earlier this year, the sale of a 10% stake in Sprint and rationalisation of the company's property portfolio.

Other non-essential assets could also be candidates for disposal, despite substantial falls in their value from last year. These include stakes in STMicroelectronics (11%), Sema (17%), Bull (17%) and NTL (25%).

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