June 22 (Bloomberg) -- Bouygues SA, the world's third- biggest construction company, said it plans to increase its stake in a mobile-phone business that helped boost first-quarter profit by 41 percent. The stock rose to its highest since 2001.

Net income climbed to 96 million euros ($117 million) from 68 million euros a year earlier, Bouygues said today. The Paris-based company plans to pay almost 500 million euros for the 6.5 percent of Bouygues Telecom held by BNP Paribas SA, said Blandine Delafon, a spokeswoman for the builder.

``Bouygues continued to show a solid commercial performance during the first three months,'' the company said in a statement. Business at the phones unit was ``brisk'' and construction demand ``buoyant,'' the company said.

Chief Executive Officer Martin Bouygues, 53, created the phone business a decade ago after taking over the construction company founded by his father. The unit has grown to become France's third-biggest mobile network and the company's most- profitable business. Bouygues will have a 90 percent stake if it goes ahead with the purchase from BNP Paribas.

Shares of Bouygues gained as much as 98 cents, or 3 percent, to 33.95 euros, the highest since Dec. 13, 2001, and were trading at that price as of 9:07 a.m. in Paris. The stock has gained 16 percent so far this year, valuing the company at 11.3 billion euros.

Bouygues currently owns 83 percent of Bouygues Telecom, which posted its first annual profit in 2002. Earnings are increasing as customers sign up for more expensive calling plans and for services such as i-mode Internet access, text messaging and personalized ring tones.

Higher Sales Goal

Bouygues lifted its full-year sales target by 1.8 percent to 23.1 billion euros. The company said it may also be interested in acquiring toll-road operators being sold by the French government.

Net income was more than the 83 million euros expected by analysts surveyed by Bloomberg News, according to the median average of five estimates.

Founded in 1952, Bouygues helped build Charles de Gaulle airport in Paris, the subway in Sydney and presidential complexes in Turkmenistan and Kazakhstan. It owns 42 percent of Television Francaise 1 SA, France's most-watched TV channel.

It also controls almost all of Colas SA, the world's biggest roadbuilder and Bouygues's biggest unit by sales. Bouygues Construction is the parent company's second-largest division.

The agreement with BNP allows Bouygues to buy the Bouygues Telecom stake for 477 million euros to 495 million euros between July 1, 2005, and July 31, 2007, or for 497 million euros between Sept. 1 and Sept. 30, 2007, minus dividends, Bouygues said.

The acquisition price values Bouygues Telecom at about 7.6 billion euros, representing 70 percent of Bouygues's market value.

Construction Gains

Bouygues has also been gaining on French construction work. Housing starts rose 9.7 percent in the three months ended in April from a year earlier as homebuilders kept pace with demand underpinned by tax breaks and borrowing costs at the lowest in France since 1946.

First-quarter sales at climbed 3.5 percent to 4.85 billion euros, the company said on May 3. Revenue at the phone division jumped 23 percent to 1.07 billion euros, partly boosted by a change in accounting for calls between mobile phones.

The company's debt is rated A-, seventh from the top investment grade, at Standard & Poor's.

To contact the reporter on this story: Nicolas Johnson in Paris nicojohnson@bloomberg.net.

Last Updated: June 22, 2005 03:21 EDT