On 1^st February of this year - at 8 o’clock in the evening to be precise - Christian Pierret, France’s Secretary of State for Industry, picked up his telephone and tapped out the digits 74 72. A wrong number? Hardly. For at the other end of the line was Georges Charpak – the winner of the Nobel Prize for physics - who soon heard his political master duly gushing and enthusiastic about the technology before him. "Hello Professor", he said, "this is the Secretary of State for Industry speaking. I’m calling you thanks to Cegetel’s number 7. Isn’t that marvellous?" Marvellous – perhaps. Historic – most certainly. For it was this one small lifting of the receiver which has led to one giant change in France’s telecommunications industry. The call was made using the SNCF’s (French Railways) fibre optical network – rented out to Cegetel– and thus brought to and end over a century of uninterrupted public monopoly in the field of telecommunications. In England it was called privatisation – in France, needless to say, the talk is of revolution.

"The heart of my strategy is to transform this company to face competition", affirms Michel Bon, who was appointed Chairman and CEO of France Telecom in the autumn of 1995. "The main tool with which to do this, in my view, is growth. We are fortunate to be in a market that is growing rapidly. We are also the market leaders. Therefore the bigger the growth, the better things are going to be for us. In general terms, though, it has always been my view that competition is a good thing – and within the context of France Telecom it represents a lever with which to transform the company. Therefore I embrace competition, although for us this clearly means that we can no longer take our customers for granted. That in turn means a complete change of culture – not just here at headquarters but for every single one of our 165,000 employees. Many people predicted that the whole exercise would end in tears. But in fact the company is adjusting to change and moving forwards rather nicely."

With consolidated operating revenues of FF 76.8 billion for the first half of 1997, France Telecom is the world’s fourth-largest telecommunications carrier, boasting 33 million telephone lines in service and operations in more than 50 countries. And since some 20% of its capital went onto the Bourse back in the October of last year, the value of the company’s shares have risen by a massive 50%. An impressive figure which has helped to smooth the many-a-ruffled-feather on the part of the company’s employees, 70% of whom chose to invest in the company, despite their manifest uncertainty and reservations about the future.

Although Telecom remains by far and away the dominant player in France, that has not prevented some 46 newcomers – both foreign and French - from appearing on the scene. Foremost amongst them are Cegetel (a subsidiary of the Compagnie Generale des Eaux and British Telecom), Bouyges Telecom, Lyonnaise Cable and Siris – each enterprise anxious to stake its claim to what is rightly perceived to be a potentially highly lucrative field. But if the example of British Telecom is anything to go by – then Bon has little cause for concern. Privatised during the heyday of the Thatcher years, British Telecom has steadfastly retained over 80% of its market-share – a market that has itself doubled during the course of the last fifteen years. It is the same story of dominance when it comes to the boom sector of mobile phones – with over 3 million Frenchmen and women choosing to subscribe to the France Telecom’s provider Itineris.

Few doubted that Bon was the right man for the job. Part and parcel of the French elite – yet another graduate of the Ecole Nationale d’Administration hitting the big time – the tall and slim 53 year old father of four is anxious to highlight not his career in banking or as head of France’s National Employment Agency – but his 7 years with the retailing giant Carrefour as the best training for his current job. For during his term of office sales tripled, results quadrupled and the stock price of the retailing group – the second largest in Europe – jumped to six times its starting value. Hardly surprising, therefore, that Bon should have snapped up France’s coveted Manager of the Year award on two separate occasions.

"The world of retail is a wonderful school", Bon affirms. "The word for retail in French is détaillant – which means paying attention to detail. In other words you are in a very precise business in which you can only succeed if every detail is right. But at Carrefour things were organised very differently. Its difficult to believe when I compare it to my current position – but at Carrefour’s HQ there were just 23 of us – and that included my driver. In other words what you are talking about is a fully decentralised company. I didn’t even have an office to myself – and I was the boss. Here the philosophy is that problems work their way up progressively to the top. In fact there are 6,000 of us at these offices in Paris. That is not my approach. I began decentralising this company from the very first day I arrived – and this is something which you can expect to see continuing."

One example of an eye for detail has meant closely scrutinising the pricing of all those newcomers on the scene. Which has led to a sharp downturn in the cost of calls – national and international calls (surprise, surprise) tumbling by half since 1995, making France Telecom calls amongst the most reasonably priced in Europe – and with Bon not ruling out further price reductions in the future. Meanwhile, he is forging ahead with his informal alliance with Deutsche Telecom, both company’s purchasing 2% of each other’s shares during recent weeks. And its outside of France, Bon will have you believe, where the future is to be found. This is why it is France Telecom’s goal throughout Europe to become a pan-European telecommunications carrier – together with its partners – building a strong presence in local markets. And in emerging markets, often further afield, France Telecom (best not to refer to the company as F.T. – at least in front of Bon – for it is likely to lead to a terse and ironic ‘no comment’) continues to demonstrate and export its expertise in wireless services and network modernisation in developing countries, as well as engineering and consulting. In fact the company has leveraged its expertise through strategic partnerships in Argentina, the Ivory Coast, Indonesia, Mexico, Senegal and Vietnam – a trend which Bon is anxious to build upon further.

But in order to do this effectively is it not going to be necessary for France Telecom to pull up its collective socks in terms of adjusting to the concept of service, which perhaps does not come too easily or naturally to the average employee?

"That’s absolutely true", Bon replies somewhat disarmingly and in flawless English. "The concept of service does sit rather uneasily not just here at Telecom in particular but in France in general. Sociologists explain this by saying that the concept of equality is embedded deep in French culture. Traditionally the person who has provided a service has perceived himself, and been perceived, as inferior. And through the years this has permeated through to our business culture – that the concept of service means inequality. The Latin root of the word service is servility – that is to say enslavement. In France there has always been a tradition of a top-heavy public sector – the notion that the state – not the customer – is king. And a slow king at that – a mentality that is perhaps more pronounced in France than other, say, Anglo-Saxon cultures. None of this is of much use or interest to a customer who complains about his phone line, I might add. I merely point it out in order to demonstrate the sort of problems we face – and to let you know that this is something which is at the very top of my agenda."

In fact business is so lucrative and enjoying such a period of sustained growth that there are rumours that another French heavy weight – the EDF – (Electricité de France) might throw its hat into the telecommunications ring. As things stand this utility, which retains its monopoly position, has not yet received a governmental green light to diversify into this field. But the trend towards liberalisation, which began in Brussels, might well provide the pretext. And with 29 million customers and a network of 10,000 kilometres that could easily be used for fibre optics, the EDF could deliver Bon a blow from which he might well find it difficult to recover. But the Telecom boss did say that he was all in favour of competition, n’est ce pas?

"Yes I am. And it would of course make sense for an electricity company to become involved in telecommunications. I have no problem with the EDF coming in if we are playing on a level playing field. What I would have great difficulty in accepting, however, is that the EDF should use its monopoly position in electricity to elbow out competitors in telecommunications. Because to me that is not competition at all."

For Michel Bon, growth remains the watchword. And he will rattle off a series of statistics designed to impress upon you that time is not necessarily working against Telecom. "Let us assume that the market is growing at 7% a year. If your competitors are only taking 1% of that market, then time is not working against you – on the contrary - it is working for you."

A modest man, Bon says that he would like to be remembered as the person who helped to make a smooth and successful transition for France Telecom away from the era of monopoly and towards the era of competition.

"At the moment we are in change mode, so its hardly the most appropriate time for the drafting of epitaphs", he concludes. "What I can say is that the first 2 years have been promising. I would put it no higher than that. Because competition also creates uncertainty. On top of that we are in a field which is so fast moving that there is absolutely no guarantee whatsoever that the investment decisions which we are taking right now will turn out to have been the right ones five years down the line. I don’t like to use this phrase because I have heard it used at many gatherings of political leaders – but let’s just say that I am ‘quietly confident’ about the future." And upon which words Michel Bon moves off, quietly and confidently, to his next meeting.