France Télécom full-year sales fail to excite

5 Feb 2004

France Télécom (FT) yesterday saw its share price fall by 4% in the wake of a disappointing set of financials for 2003, which saw sales down by 1.1% to EUR46.1 billion as a result of falling demand for fixed line services, negative exchange rates and the sale of assets. Nonetheless, the company said that EBITDA for the year rose by 16% to EUR17.3 billion thanks to strong demand for wireless and internet access services; the rise was broadly in line with market expectations. Turnover at Orange was up 5% at EUR17.94 billion, aided by the addition of more than 2.2 million new subscribers, while its internet subsidiary Wanadoo posted a 26% improvement in sales, to EUR2.6 billion, on the back of 2.5 million European broadband users. The gains helped push FT’s operating profits up by 40% year-on-year to EUR9.5 billion. However, turnover at the group’s fixed line, distribution and networks division dropped by 5.6% to EUR21.76 billion, undoing much of the good work done by its other units, and leading to some concerns that FT’s ‘top-line weakness may constrain further improvements on profitability’. The French telco has initiated a wide-ranging reorganisation programme to cut its debt – which fell by EUR23 billion to EUR45 billion during 2003 – including measures to shed 15,000 staff in 2004.