French state cuts Orange stake, remains largest shareholder

July 31 (Reuters) - French state investment bank Bpifrance sold a 2.5% stake in telecoms group Orange for 1.1 billion euros ($1.3 billion) on Friday, while retaining its position alongside the French state as the telecoms operator's largest shareholder.

The bank said it was acting jointly with the state, which owns a separate stake through public shareholding agency APE.

Bpifrance confirmed the two will hold a combined 20.4% stake in the telecoms operator after the deal, remaining the largest shareholder.

Reuters reported on Thursday that the French state was in the process of selling a small part of its combined stake in Orange, citing people familiar with the matter.

Shares in Orange — which have gained 20% this year — were trading 3% lower in early Paris trading, in line with the deal price of €16.5 euros.

Despite the stake sale, Bpifrance said in a statement it maintained its confidence in Orange's leadership and the strategy announced back in February.

France can reduce its Orange stake because French law grants double voting rights to shareholders who have held registered shares for at least ​two years, one ​of the sources told Reuters on Thursday.

Bpifrance and APE will keep about 27% of voting rights in Orange, with board representation unchanged.

($1 = 0.8685 euros)

(Reporting by Gianluca Lo Nostro; Editing by Milla Nissi-Prussak)