The ratings on France Telecom (FT)--the dominant telecommunications services supplier in France and one of the largest telecoms group worldwide--reflect the group's highly leveraged financial profile, weak free cash flow generation over the past few years, and currently tight liquidity. These key credit weaknesses are offset primarily by the liquidity and equity support of FT's majority shareholder, the French state (with 56% of the capital), as well as by the new management team's massive plan to boost free cash flow generation. FT's credit quality also continues to benefit from an above-average business profile. Since July 2002, support from the French state has been a key rating factor, underpinning the group's investment-grade status. The state's December 2002 announcement that it will
