France Telecom has said that it will be withdrawing from some underperforming European markets as it warned that European and US debt issues were causing problems with economic growth.

The operator said that it plans to sell its Swiss, Portuguese and Austrian assets as it looks to move away from markets where it is not already one of the top two operators. It instead plans to focus on consolidating its position in stronger performing territories.

The Swiss sale is seen as a response to local competition authorities last year blocking its plan to merge with number two Swiss operator Sunrise.

According to analysts, the sales of the three European operations will generate some €2bn ($2.9bn), which the operator said it would plough into modernising its networks and also to returning money to shareholders.

“No talks have yet begun on Switzerland; the process is starting today,” said France Telecom’s chief financial officer Gervais Pellissier. “We are working with the other shareholders in Austria and Portugal to find ways to alter our stakes there.”

The announcement follows similar moves from rival Vodafone, which has sold minority shares in China, Poland and in French operator SFR, which it sold to Vivendi for €7.95bn. Deutsche Telekom meanwhile has attracted much opposition in the US for its plans to sells off its US arm T-Mobile to AT&T.

Last week Vodafone announced that it would be delivering dividend payments to its shareholders after receiving a £2.7bn payout from its 45 per cent stake in US operator Verizon Wireless.