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Fixed-line decline hits France Telecom

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Author: WildC@rd

"Today, I can tell you we will not be at 2 per cent but I cannot tell you where we will be," said Gervais Pellissier, France Telecom's finance director, during a conference call. The announcement came as France's incumbent telecom operator unveiled that net profits had dropped to €2.35bn ($3bn), compared to profits of €3.36bn a year earlier and analysts' expectations of €2.45bn. This was despite a 1.4 per cent increase in revenues to €25.86bn. Like its peers, France Telecom has seen earnings from its traditional landline phone services come under pressure amid mounting competition from the likes of Iliad, which had recently launched a cheap "bundle" package that provides internet, fixed and mobile telephony and television over broadband. That has prompted the former monopoly to seek takeovers to expand outside France, including the takeover of Spanish mobile-phone company Amena last year. In the six months to June 30, sales from its fixed-line unit, which account for more than 43 per cent of the group's overall revenue fell 0.3 per cent to €11.13bn. The decline was partially offset by a stronger performance from its mobile phone division, where sales rose by more than a fifth to Ј13.42bn. While sales growth in its core French market remained anaemic at 1.8 per cent, revenue from Poland and the rest of the world rose 24.2 per cent and 18 per cent respectively. In an effort to diversify into new products and services, France Telecom has been building up its war chest. Earlier this week, the group agreed to sell its 54 per cent stake in PagesJaunes, the directory business, to KKR for €3.3bn. Shares in France Telecom were down 9 cents at €16.51 in early trade in Paris.
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