Investigating magistrate Jean-Michel Gentil’s decision about Sarkozy last Thursday raised hackles on the political right.

Many conservatives question the impartiality of judges given wide powers to conduct secret proceedings to investigate important criminal cases.

Sarkozy has rejected as unfounded the basis of the probe – that he exploited the mental frailty of France’s richest woman to raise election funds.

His former speechwriter Henri Guaino has said Gentil has “dishonored the justice system” and “besmirched France”.

A letter addressed to Gentil containing a large-caliber blank cartridge and a threat to “get you personally” arrived at the prosecutor’s office in Bordeaux, where he is based, on Wednesday.

On Thursday, that office said it had opened a probe into the unknown group that signed the letter, the “Interaction of the Forces of Order”.

The Paris prosecutor’s office then ordered judicial police who focus on anti-terrorism cases to investigate, prosecutors told Reuters.

Without naming Sarkozy nor the funding scandal, the letter said Gentil was driven by ideology that had caused “irreparable harm”.

The author said the group would “get you personally or, failing that, a member of your entourage”.

“The bullets are blanks, until we take our action up a notch.”

Two political journalists and the president of France’s broadcasting regulator (CSA) also received threatening letters which will be part of the anti-terrorism investigation.

The letters sent to private radio Europe 1′s Jean-Pierre Elkabbach, Michael Darmon of private television station iTele and the CSA’s Olivier Schrameck also contained empty cartridges or blanks, a legal source said.

Although Schrameck was cabinet secretary to former Socialist Prime Minister Lionel Jospin, the choice of the two other journalists appeared to muddy suspicion that the group behind the letters was targeting leftist sympathizers.

The scandal for which Sarkozy is being investigated revolves around alleged payments made to his 2007 election fund.

Sarkozy has denied taking campaign funds from Liliane Bettencourt, France’s richest woman who was declared to have dementia in 2006, but members of her staff questioned by Gentil and other magistrates have offered contradictory testimony.

(Additional reporting by Chine Labbe; Writing by Alexandria Sage, edited by Richard Meares)

The arrests came as France’s intervention in Mali to rid its former colony of Islamist fighters has prompted the authorities to increase security measures against possible reprisal attacks on its interests in mainland France and abroad.

Anti-terrorism judge Marc Trevidic, who is in charge of the operation, told Reuters last month that France needed more robust local policing, better intelligence sharing and the ability to infiltrate small radical Islamist groups if it hopes to fight new security threats on its soil.

He has said the insurgency that seized the north of Mali was paving the way for attacks on France as more French Muslims of African origin were finding a cause in the conflict.

Three of the four men arrested were Franco-Congolese and one was Malian, a police source said.

“There is an operation ongoing in the Paris region, conducted by the DCRI (domestic security service), which comes after the arrest of an individual a few months ago on the border between Mali and Niger,” Valls told BFM TV.

That man was a Franco-Congolese social worker named Cedric Lobo, 27, who was arrested in Niamey, the capital of Niger, while attempting to purchase a four-wheel drive vehicle with a false driver’s license, the police source said.

Lobo was attempting to reach the historic Malian city of Timbuktu to join al Qaeda in the Islamic Maghreb (AQIM) when he was detained by Niger police, the source said.

He was subsequently extradited to France, where he was charged with planning attacks and remanded in custody.

ISLAMIST NETWORKS

Valls said the arrests had come after a long investigation into al Qaeda recruitment rings led by Trevidic.

French anti-terrorism judges have opened several preliminary investigations in the past year involving individuals suspected of links to Malian “terrorist” cells.

“We have to continue dismantling these networks that want to either commit attacks on our soil or take individuals overseas to carry out jihad,” Valls said.

He added that police had stopped several individuals trying to travel from France to the Sahel – a vast swathe of semi-arid territory stretching from Senegal in the west to Eritrea in the east – known as a base for traffickers and Islamist militants.

Valls said a “handful” of French nationals had already joined al Qaeda-linked groups.

“There is no direct threat, but there are threats on the Internet, on social networks, calling on people to wage war, to attack French interests,” Valls said.

France has tightened security in public buildings and on public transport, although it has kept its security alert level at red, signifying “probable threats”, one down from the scarlet level which means “definite threats”.

Highlighting the threat overseas, Paris has raised its travel warning for its citizens across the Muslim world.

The embassy in Tunis on Monday confirmed that a French school in the Tunisian capital had been sprayed with graffiti warning of reprisals after France’s intervention in Mali.

(Additional reporting By Nicolas Bertin and John Irish; Writing by Nicholas Vinocur; Editing by Jon Boyle)

In an interview with Reuters, Chief Executive Ben Verwaayen said the loan from Credit Suisse and Goldman Sachs, under which the group’s 29,000 patents and U.S. business will be put up as collateral, would give him more time to deliver a promised turnaround.

“The balance sheet had started to be a concern, and a certain perception of fragility took hold,” he acknowledged.

“Once that becomes part of the conversation, you have to take action immediately and create certainty. We needed something practical, implementable, and fast, and that’s what we’ve done.”

Verwaayen dismissed concerns raised by the French finance ministry on Monday and Alcatel unions on Tuesday that the financing deal amounted to mortgaging the group’s future by saying that it would retain full ownership of its assets, including the patents.

“We would first have to go into default before anything happens and we have no plans to go into default,” he said, adding that he was open to government proposals if it had a better solution to suggest.

TOUGH COMPETITION

The financing deal is the latest move by the Dutch executive as he seeks to prove Alcatel-Lucent can prosper amid tough competition from low-cost Chinese rivals like Huawei 002502.SZ and a constant squeeze from cash-strapped telecom operators seeking to reduce expenses.

The group also plans to cut 1.25 billion euros in costs by the end of 2013 via 5,500 layoffs and exiting unprofitable countries and contracts to staunch an average annual cash burn of 700 million euros in the past five years.

Verwaayen did not rule out further cost cuts, and dismissed the charge that Alcatel-Lucent’s move to trim 7 percent of 76,000 staff fell short of rival Nokia-Seimens Networks (NOK1V.HE: Quote, Profile, Research, Stock Buzz) cutting nearly a quarter of staff.

“We could be even more aggressive on cost cuts, but you cannot break the company,” he said, adding that the program would reduce fixed costs by 20 percent.

With financing and cost cuts underway, Verwaayen still faces big challenges to deliver on a promise made upon his arrival in September 2008 to make Alcatel-Lucent a “normal company” with regular profit and healthy cash flows.

“I wouldn’t be here if I didn’t think we could get there,” said Verwaayen.

Much will depend on whether the telecom gear market recovers from a tough 2012 in which it contracted because Chinese operators – hit by a mobile technology switch – spent less and the recession affected European carriers.

Market research firm Gartner estimates that sales of telecom network equipment will contract 4.9 percent to $79.3 billion this year, and rise 2.4 percent to $81.2 billion next year.

For next year, Verwaayan said he did not expect a marked improvement in global operators’ appetite for communications gear. The U.S. will remain strong, fuelled by spending on superfast fourth-generation mobile networks, Verwaayen said, while European operators will stay cautious despite 4G build-outs starting in France, Britain, Germany and the Netherlands.

“It’s highly unlikely that there will be a significant change in 2013 market trends from 2012,” said Verwaayen.

“The only place where I can see a shift is China, if they get their regulations and necessary mobile licenses agreed on.”

Since hitting an all-time low of 71 euro cents in mid-October, Alcatel shares have surged 40 percent, helped by the financing deal and despite being kicked out of France’s blue-chip index CAC 40 .FCHI this month.

The shares were up 7.1 percent to 1.04 euros at 9:42 a.m. ET.

After aggressively short-selling the stock in the past few months, hedge funds started to reduce their negative bets on Alcatel in mid-November.

According to Markit, which provides securities lending data, Alcatel had a record 17 percent of its shares out on loan in mid-November, a figure that had dropped to 11 percent this week.

Short sellers profit from falling stock prices by borrowing shares, selling them, then buying them back more cheaply. The strategy, popular among hedge funds, is risky as it can backfire if the stock starts to rally.

Asked about the share price and hedge funds betting against the company, Verwaayen responded: “Of course it is a concern. But I think that everyone who is shorting us should think again with this loan in place.”

(Reporting by Leila Abboud and Gwenaelle Barzic; Editing by Helen Massy-Beresford)

As the UMP split into rival political blocs during televised parliamentary questions for the first time, National Front leader Marine Le Pen was in a nearby room promoting a coalition she hopes will boost support for her party.

“This is a rally for action, not a think tank. This is about driving the machine to access power,” Le Pen said.

The National Front won a parliamentary seat in June for the first time since the mid-1980s, and since the UMP descended into internal wrangling on November 18 Le Pen has boasted of receiving several hundred applications a day to join her party.

Membership cards for a political coalition she launched earlier this year to allow right-wingers of all stripes to rally to her cause without having to join her anti-immigrant party would be rolled out in January, she said.

Voter anger over what has become a farcical feud between moderate Francois Fillon and hardliner Jean-Francois Cope to lead the UMP may be reflected in upcoming parliamentary by-elections and in local elections in early 2014.

Just down the corridor from Le Pen’s meeting, the UMP appeared at parliamentary question time with 72 breakaway lawmakers loyal to Fillon sitting in a cluster next to the 122 other UMP deputies, in defiance of Cope’s naming as party leader.

Prime Minister Jean-Marc Ayrault poked fun at the fractured party by starting his response to a question from the UMP’s National Assembly leader Christian Jacob with: “Sir, president for the UMP – that is correct isn’t it, or am I mistaken?”

For Wednesday’s session, Fillon’s group, whose initials are RUMP, is down to ask two questions and the UMP four.

“We cannot go on like this, it’s not tenable politically,” grumbled Henri Guaino, an ex-aide to former president Nicolas Sarkozy.

“We cannot have a leader who is contested by half of the party. And … a party with two parliamentary groups. It’s the ultimate in absurdity.”

BICKERING

Le Pen told Radio Classique that voters were bound to punish the UMP: “Some will abstain and many will vote for National Front candidates because we seem today to be the only ones who can defend them and put up opposition to the government.”

The National Front scored a surprise 18 percent in the first round of the presidential election in April and there are three by-elections for parliamentary seats coming up before year-end; the National Front may score well but not enough to win a seat.

Cope, a disciple of Sarkozy and his hard line on immigration, and Fillon, Sarkozy’s more moderate former prime minister, met under a shroud of secrecy for a second day to try and resolve a two-week standoff.

The row has clouded the UMP’s future and made a laughing stock of a party which held power for a decade until Socialist President Francois Hollande’s victory in May.

Cope has twice been announced the official winner of a November 18 leadership contest, but both candidates have claimed victory and accused the other camp of vote-rigging.

Cope has offered to hold a new contest after local elections in 2014, but Fillon wants a fresh vote held within three months.

Aides could shed little light on progress in talks which party officials see running on for several days.

“They are not even speaking to their teams,” a Cope aide told Reuters.

The pair briefly agreed last week to call a party referendum on whether to hold a new leadership vote, before bickering again over Fillon’s formation of a breakaway group in parliament.

Sarkozy got his fingers burnt when he attempted to mediate last week, brokering a truce that lasted just a matter of hours.

The rift in the UMP, founded by Jacques Chirac in 2002 to glue together different right-wing groups, has worsened in recent days with a new faction of “non-aligned” conservatives joining forces and refusing to back either Cope or Fillon.

Bruno Le Maire, a former farm minister in the “non-aligned” faction, said party members needed a say in resolving the row.

“We need to make sure this crisis does not get decided by a little arrangement between friends,” he told France Info radio.

(Writing by Catherine Bremer; Editing by Andrew Osborn)

SFR launched the service in the southern French city of Lyon
and will add Montpellier in mid-December.

Lille, Marseille, Strasbourg, and Toulouse will be added in
the first half of 2013, while SFR does not expect to offer the
service in Paris until next autumn because of difficulties
installing mobile antennas in the capital.

Like other French operators, SFR is counting on the launch
of faster 4G technology to lure back customers to higher-cost
mobile plans and counter the price war underway since Iliad’s
Free Mobile service launched in January.

France Telecom and Bouygues Telecom are
also building out their 4G networks and commercial launches are
planned for early 2013. France Telecom has begun selling limited
4G services to business customers in a few cities.

“There is an advantage to being first to launch 4G to the
broad public to show that this new, better technology is not
reserved for the happy few,” SFR head Stephane Roussel said.

Mobile phones capable of running on 4G frequencies in Europe
are only trickling to the market, and the lack of them has held
back the development of the service.

With plans starting at 49.99 euros ($64.53) a month for 2
gigaoctets of mobile data, SFR will offer 4G phones including
the Samsung Galaxy III, HTC One, and the
Motorola Razr. Nokia’s Lumia 920 will soon
also be added to the line-up.

The suppliers for 4G network gear are Nokia Siemens Networks
and Huawei.

French consumers are getting access to 4G services slowly
over the coming year as operators build networks. In the UK, EE
recently launched a 4G service but other carriers must wait
until licences are auctioned next year.

In Germany, Vodafone and Deutsche Telekom
have started offering 4G already.

Unions swiftly condemned the move as unacceptable given the more than 3 billion euros ($3.88 billion) in profit that SFR should generate this year, and voiced fears that the cuts were a step towards a sale of France’s second-biggest mobile operator.

Vivendi is seeking buyers for its telecoms operations in Morocco and Brazil as part of a strategic overhaul the media-to-telecoms conglomerate hopes will cut debt and revive its flagging share price.

Led by longtime Chairman Jean-Rene Fourtou, Vivendi has since the summer been exploring ways to reduce its exposure to investment-heavy telecoms and focus more on its music and pay-TV businesses.

SFR, long Vivendi’s cash cow, has been hit by the arrival of a new low-cost mobile player Iliad, triggering a price war in France. Speculation has swirled around Vivendi’s plans for SFR, with French media reports suggesting talks were underway on a tie-up with local cable operator Numericable or a sale to Iliad.

TOUGHER MARKET

Stephane Roussel, SFR’s chief executive, acknowledged in an interview that interested parties had approached Vivendi about SFR, but said the group was not out searching for a buyer.

“Although there is a broader reflection on telecoms going on in Vivendi, there is no active initiative on Vivendi’s part consisting of going to market to find a buyer for SFR,” he said.

“SFR is not for sale. That said, it doesn’t mean that nothing will happen. There are potential buyers who are coming to test the waters.”

In the meantime, SFR is revamping its fixed and mobile offers and streamlining its organization in an effort to adjust to the tougher market in France.

SFR will cut 1,123 jobs and create another 267 such as on-line sales staff and web community managers.

The newcomer Free Mobile had taken 6.4 percent of the mobile market by the end of the third quarter.

Bouygues Telecom also plans to cut 556 jobs to cope with the fallout from Free Mobile, while market leader France Telecom is counting on retirements to slowly pare the size of its workforce in the coming years.

Shares in Vivendi were 0.5 percent higher at 16.40 euros by 11:29 a.m. EDT, in line with France’s blue-chip CAC 40 index. The stock is little changed since the start of the year.

Vivendi’s chief financial officer recently promised action on the strategic review in the “coming quarters”.

SFR unions said workers were being made the victims of the executives’ plans.

“Vivendi has already announced to its worker representatives that its telecom units were no longer seen as a growth engine and that the group was looking for buyers,” five unions wrote in a joint statement on Wednesday.

“Vivendi is sacrificing its workers on the altar of profits to make SFR more attractive and sell it for a higher price.”

(Editing by James Regan and Helen Massy-Beresford)

Demonstrators, holding banners with slogans such as “don’t touch civil marriage”, “all born from the union of a man and a woman” and “one father + one mother for all children”, took to the streets in Paris, Lyon, Marseille and other major towns.

The organization behind the protests, called “Demos for All” in imitation of the “marriage for all” call of gay-marriage campaigners, claims the Socialist government’s reforms, which polls indicate have popular support, would threaten “major and dangerous upheaval”.

The organizers said 200,000 people demonstrated in the French capital, compared with a police estimate of 70,000.

France’s National Assembly is due to start examining the proposed law allowing same-sex marriage in January, with a vote expected in mid-2013. It would grant gay couples the right to adopt children but not to use assisted procreation methods.

Recent polls show the majority of French people support gay marriage, though not the right for homosexual couples to adopt.

France’s top Catholic prelate, Paris Cardinal Andre Vingt-Trois, earlier this month criticised the government for forging ahead with the plans at a time when the country faced urgent economic concerns.

Pope Benedict told French bishops visiting the Vatican on Saturday not to be “afraid” of spreading Christian teachings.

“In the important debates about society, the voice of the church must make itself heard relentlessly and with determination,” he said.

The Vatican pledged this month never to stop fighting attempts to “erase” the privileged role of heterosexual marriage, which it called “an achievement of civilization”.

Jean-Francois Cope, who is hoping to become leader of the opposition centre-right UMP party in an internal contest with ex-Prime Minister Francois Fillon on Sunday, sent a letter of support to the protesters.

While he said he would not join them, other elected UMP representatives and mayors were among demonstrators in Paris.

Lyon Cardinal Philippe Barbarin, who has said marriage was defined at the very start of the Bible as created by God to join man and woman, was one of around 10,000 protesters in that city, according to figures from the organizers.

“I’m here like everyone else, like the Protestants, the Catholics, the Muslims, the philosophers, it’s a message to politicians so that a debate is organized on such a fundamental issue,” he said, adding that he had come as a “simple citizen”.

The archbishop of Toulouse, Robert Le Gall, joined 10,000 there, according to organizers. Police said there were 5,000.

(Reporting by Thierry Chiarello, Lucien Libert, Gerard Bon and Tom Heneghan in Paris, Catherine Lagrange in Lyon; Writing by James Regan; editing by Jason Webb)

Third-quarter group revenue was in-line with expectations, down 3.4 percent to 6.67 billion euros. Earnings before interest, tax and amortization (EBITA) fell 8 percent to 1.39 billion euros, beating the average of analysts’ estimates.

Adjusted net income stood at 665 million euros ($845 million), Vivendi said in a statement on Tuesday.

Analysts had on average expected EBITA of 1.27 billion euros and adjusted net income of 602 million, according to a Reuters poll based on eight estimates.

Telecom unit SFR, which brought in nearly 40 percent of Vivendi’s operating profit last year, has been hit by a price war after Iliad’s (ILD.PA: Quote, Profile, Research, Stock Buzz) low-cost Free Mobile service launched in January.

To cope, SFR has revamped its mobile offers and will trim annual operating costs by 500 million euros by end of 2014.

The moves appear to be having some effect. In the third quarter, SFR signed up 40,000 additional customers on long-term contracts and now has 20.87 million customers, up from 20.79 million in the second quarter.

Vivendi said it now expects SFR to post a decrease in full-year earnings before interest, tax, depreciation and amortization (EBITDA) of close to 12 percent, against 12-15 percent predicted previously.

“Commercial results at SFR are back in line in fixed and mobile and cost reductions are underway and starting to yield results,” said Philippe Capron, Vivendi chief financial officer.

“SFR is successfully adapting its model to the new market conditions in France.”

Vivendi did not provide any fresh details about its ongoing strategy review in which it is considering selling assets to reduce debt and reverse a slump in its shares.

Sale processes for GVT and Vivendi’s Moroccan telecom businesses are now underway, sources have told Reuters.

Capron declined to comment on specific asset sales.

“The strategic review is going ahead at full speed, although we have not fixed a specific calendar for decisions,” he said on a conference call.

“But rest assured, we are committed to delivering value to shareholders while keeping our current credit rating.”

($1 = 0.7867 euros)

(Editing by James Regan)

Chief executive Arnaud Lagardere, also chairman of Airbus parent EADS, also said on Tuesday he would use the proceeds to reward shareholders, cut debt and make minor acquisitions.

“It is clear now with the French government and everybody inside EADS that we will leave probably, more than probably next year,” he told a conference call.

Finance head Dominique D’Hinnin said a stock market listing of Lagardere’s stake in Canal+, 80 percent-owned by French group Vivendi (VIV.PA: Quote, Profile, Research, Stock Buzz), would depend on market conditions.

Lagardere wanted to list the stake last year but abandoned the operation just as marketing was set to begin because of market volatility following the Fukushima nuclear disaster in Japan.

Lagardere has said for several years it wanted to sell non-media assets, including the Canal+ and EADS stakes, divestments seen as key to the investment case for a company whose market value has plunged 60 percent in the past five years.

In August, D’Hinnin said the Canal+ listing was the group’s top priority. Lagardere values its stake at 1.2 billion euros ($1.5 billion).

The company’s comment on EADS was the latest uncertainty around a Franco-German sovereign shareholder pact underpinning the group.

German carmaker Daimler (DAIGn.DE: Quote, Profile, Research, Stock Buzz) has said it wants to exit EADS and has agreed to sell half its 15 percent direct stake this year to German state-owned development bank KfW KFW.UL.

Daimler holds voting rights of 22.5 percent in EADS, while Lagardere’s holding is complemented by a 15 percent stake held by the French state.

EADS last month called off talks with British rival BAE Systems (BAES.L: Quote, Profile, Research, Stock Buzz) about a merger worth $45 billion. Lagardere had expressed doubts about the terms of the planned deal.

The merger hinged on France and Germany accepting a more limited role in the combined group than they wielded at EADS.[ID:nL6E8L9QLV]

“The beauty of the negotiation with BAE is that everything was on the table – Daimler selling to the German government or not,” Arnaud Lagardere said.

Key programmes at EADS – including the A350 widebody jetliner that will compete with Boeing’s (BA.N: Quote, Profile, Research, Stock Buzz) 787 Dreamliner and the A400M military transporter – were going to plan, he said. “We have a window here where most of our projects – if not all of the projects – seem to be on track,” he said.

($1 = 0.7867 euro)

(Additional reporting by Dominique Vidalon; Editing by Dan Lalor and Christian Plumb)

The company has yet to hire banks to work on the deals, but a previously announced mid-September move to put the two businesses directly under Chief Financial Executive Paul Tufano is a sign they are candidates for sale, the people said.

Alcatel-Lucent said on Friday it was studying options, including asset sales and a restructuring of its debt, to strengthen its balance sheet after posting a third-quarter loss.

Goldman Sachs analysts estimated that sales of the submarine optic and the corporate telephony units could raise up to 400 million euros. One of the sources said the valuation would be “much higher” without giving details.

The company faces about 2.2 billion euros in debt repayments through end 2015, with a major deadline on January 1, 2015, according to analysts. It has 2.96 billion euros on its balance sheet as of September 30, and nearly 4.63 billion euros of debt outstanding.

In parallel to studying asset sales, the group continues to work on ways to improve its debt structure and monetize its portfolio of 29,000 patents to boost liquidity. It signed a licensing deal with RPX Corp. (RPXC.O: Quote, Profile, Research, Stock Buzz) in February on its patents.

One of the people familiar with the matter said Alcatel-Lucent is studying whether it could pledge some of its assets to raise debt.

“It would be like an asset-backed security,” the person said. “The asset sales altogether are too small to solve their financing issues, so they are looking at other ways to improve their credit profile.”

Alcatel-Lucent said in July that it was also in negotiations with its banks on renewing a revolving credit facility. In April, part of the company’s 1.4 billion euros five-year revolving bank credit facility expired leaving it with 837 million euros available that expires in April 2013.

Sources told Reuters in September that a number of banks have been reluctant to lend due to the uncertainty around the company.

Alcatel-Lucent declined to comment on Friday about the status of the talks on the revolving credit line.

A spokeswoman for the company also declined to comment on the specific asset sales or the options being considered for the debt. “As we said this morning at results, we are reviewing all our options and will communicate when appropriate,” she said.

She also said that the reorganization of Alcatel-Lucent’s structure announced in September gave CFO Tufano a more operational role. “The reorganization is aimed at giving more visibility on the profitability of each of the businesses,” the spokeswoman said.

(Reporting by Leila Abboud, Gwenaelle Barzic; Editing by Christian Plumb)