FT’s profits slump in 2006; reiterates guidance for 2007

6 Mar 2007

France Télécom (FT) today released its full-year financials for 2006, showing net profit for the year slumped 27% to EUR4.139 billion (USD5.45 billion), compared to EUR5.709 billion in 2005, while revenue climbed by 7.5% to EUR51.7 billion. On a like-for-like basis, adjusted for exceptional items, the 2006 profit figure of EUR4.152 billion was slightly ahead of the EUR3.992 billion reported in 2005. The full-year results showed gross operating profit rose 3.3% from a year earlier to EUR18.539 billion, buoyed by strong performances from its mobile phone and broadband businesses. CAPEX in the year reached EUR6.73 billion, representing 13% of revenues (12.5% in 2005), in line with the group’s stated objectives.

FT said its 2006 net profit was hit by intensifying competition in Western European mobile markets, coupled with higher network and information technology costs and increased work on LLU projects. On a more encouraging note, service fees and inter-operator costs remained almost stable on a comparable basis. FT reiterated its 2007 guidance of organic cash flow of EUR6.8 billion and a ‘near stabilisation’ of its margin on earnings before interest, depreciation, tax, depreciation and amortisation (EBITDA). The operator plans to maintain its full-year dividend for 2007 at the 2006 level of EUR1.20 per share. The ratio of net debt to gross operating margin is expected to be less than 2 by the end of 2008.

France, Orange Group