France Telecom’s 1H profits down 19% on tax; proposes interim dividend

31 Jul 2008

Paris-based France Telecom (FT), Europe’s third largest telecoms company by revenues, reported a 19% drop in first-half profit as higher tax charges wiped out growth in the operator’s wireless and fixed line businesses. However, the telco still proposed an interim dividend – a first for the company – after first-half underlying profits came slightly ahead of market expectations. FT’s net income dipped to EUR2.68 billion (USD4.20 billion) in the period January-June, down from EUR3.31 billion in the first half of 2007, the company said in a statement; a Bloomberg poll of 14 analysts was predicting net profit of EUR2.7 billion. FT’s earnings before interest, tax, depreciation and amortisation (EBITDA) was EUR9.68 billion, up from EUR9.42 million in 1H 2007, and compared favourably with market expectations of around EUR9.62 billion. FT has proposed an interim dividend of EUR0.60 euro a share, said Finance Director Gervais Pellissier, adding ‘The board has decided to start this practice of an interim payment every year’.

FT’s fixed line division posted its fourth consecutive profit gain, buoyed by the introduction of new services such as IPTV and video-on-demand (VoD) downloads. First-half sales from its fixed line arm rose 1.5% year-on-year to EUR26.3 billion, broadly in line with market forecasts, and domestically, FT’s fixed line business – especially its broadband services – continue to look solid. First-half gross operating profits from fixed operations were up 2.1% to EUR3.88 billion. Elsewhere, group earnings were also bolstered from strong mobile growth in Poland, it said. Telekomunikacja Polksa, the Polish incumbent controlled by FT, said its second-quarter net income jumped 41% year-on-year, driven by a sharp rise in wireless customers, which more than offset a drop in fixed line sales.

France, Orange Group