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France Telecom defies downturn

France Telecom underlined its resilience to the economic downturn by on Wednesday vowing to repeat 2008’s record cash flow of €8bn in 2009 and for the following two years.

Revenues were up 1.7 per cent in the fourth quarter of 2008, in spite of the financial crisis and economic slump.

Net income fell 35 per cent to €4bn from €6.3bn a year earlier, due to a writedown that included €140m to lower the value of its Spanish internet unit as well as e-commerce businesses that have been shut down or sold.

The company also wrote down the value of its 20 per cent stake in Portugal’s Sonaecom, a leading telecoms company, because of a decline in the value of its shares.

The company predicted a “slight decrease” in operating profit for 2009 as it is squeezed by tighter price regulation, particularly in its French home market.

The group was helped by a strong performance in its UK mobile operations last year while its business services unit promised to “consolidate our leadership” against stricken rival BT Global Services.

However, the company promised investors it would continue to generate €8bn in organic cash flow and would cut investment if the economy turned “cataclysmic”.

It still aimed to pay out at least 45 per cent of cash over the next three years.

Didier Lombard, chief executive, said the company would put in place a fresh cost-cutting programme designed to save €1.5bn a year by 2012 from headcount reductions and the roll-out of simplified and standardised technologies across all of its markets.

He also suggested that the group would drop its France Telecom name and adopt the Orange brand for all of its majority-owned operations “when the economy picks up” and certainly by 2012.

Mr Lombard said the company was not looking to make any sizeable acquisitions, thereby returning to the strategy of rolling out cash-generating internet and mobile services and reducing debt that it had pursued before last year’s abortive $40bn takeover of TeliaSonera, the Nordic group.

France Telecom has made several small acquisitions in Africa in recent years, branching out from its traditional French language countries.

It has also invested heavily in television and film content for its online and mobile TV services, but is facing tougher regulatory conditions. France’s appeal court last month upheld a competition council ruling that in effect struck down Orange’s exclusive deal to sell Apple’s iPhone in France.

On Monday, domestic rivals SFR Neuf Cegetel and Iliad said they would lodge a complaint with the European Commission about an alleged abuse of dominant position by the former incumbent.

Источник: Financial Times

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