France Telecom has reported a 10% rise in revenue for the first six months of this year, along with plans to pay back 1.6bn euros of debts.

The news sent shares in both the telecoms group and its mobile phone subsidiary Orange soaring, both of them adding about 7%.

Shares in Alcatel also rose strongly in morning trading after the equipment maker reported results, making it a good day for French telecoms investors.

But the market's reactions belied the industry's desperate difficulties.

Alcatel's debts

Rather than being a reflection of health, the rise in Alcatel shares came after investors chose not to focus on the company's 1.44bn losses for the April to June quarter, a third of which had arisen from a huge restructuring exercise.

"The really good news is on debt," said an analyst. "We were expecting 2bn euros and it stood at 1.3bn euros."

Shares in the company rose 5% initially even though chief executive Serge Tchuruk said Alcatel expected markets to stay depressed in the second half of 2002, "with no sign of recovery in view".

Orange pleases

France Telecom's investors were similarly interested in debt issues.

They were particularly pleased with the group's decision to raise 1.6bn for its creditors by selling broadcast unit Telediffusion de France.

But the success of the mobile phone firm Orange also lifted investors' sentiment as it proved its worth by bringing in more than two million new customers.

Orange sales rose 14% to more than 8bn euros during the first six months of the year, pushing its parent France Telecom's revenues 10% higher in the process to 22bn euros.

Weak core business

The cheer from investors marked a rare event for France Telecom which has seen its shares fall 94% since March 2000.

Serious doubts have been raised about France Telecom's ability to service its 60bn euros debts, and as a consequence its s

Analysts have expressed concern about the group's weak fixed line business in France and internationally, its internet unit Wanadoo, and an ongoing row over the future of its German mobile phone joint venture MobilCom.

Fixed line voice and data sales fell 5.8% during the first half of this year.