FT’s 2008 profits slump 35.4% to USD5.1bn

4 Mar 2009

French former state-controlled telecoms incumbent France Telecom (FT) said its net profits fell to EUR4.07 billion (USD5.10 billion) in 2008, from EUR6.30 billion in 2007, although consolidated revenues rose 2.9% on a comparable basis to EUR53.49 billion. Operating profit was down 4.9% at EUR10.27 billion, a fact which FT attributed to lower gains on asset sales and higher restructuring expenses. The company did not divulge net profit for the fourth quarter but did reveal that turnover in the last three months of the year was flat at around EUR13.60 billion, as the acquisition of a mobile operator in Kenya helped offset forex losses.

FT had a total of 182.3 million customers as at 31 December 2008, including 121.8 million mobile customers (up 11% year-on-year), and 12.7 million ADSL broadband customers (up 9%). The operator, in which the French government still holds a roughly 27% stake, is aiming to keep its free cash flow for 2009 in line with the EUR8 billion figure achieved in 2008. Its 2009 CAPEX target, of between 12% and 13% of revenues is also the same as 2008, although it hinted it could trim investments below this level if the economic downturn worsens.

To coincide with its 2008 financial results, FT has released details of its ‘Orange 2012’ strategy plan, which is designed to build upon the work done through its 2006-2008 NExT plan (New Experience in Telecoms). The company says Orange 2012 will apply new action plans in order to achieve an ambitious objective for organic cash flow generation. The Orange 2012 initiatives are focused around three priorities:

- Simplifying the customer experience, by addressing the profusion of technologies and provide accessible services to as many people as possible;

- Enhancing the agility with which the group carries out its business, by rationalising its offers so as to accelerate its time to market and seize new opportunities;

- Ensuring performance that is durable over time. Orange 2012 aims to capitalise further on synergies available across the group’s geographic footprint and to complete the rollout of the integrated operator model: this will include further sharing of networks, information systems and platforms, the extension of innovative initiatives to the greatest possible number of markets and the extension of the Orange brand.

Orange 2012’s financial target is to maintain annual organic cashflow over the 2009-2011 period at a level equivalent to that achieved in 2008 (EUR8 billion), based on current macroeconomic forecasts before any acquisition of spectrum. This assumes that investment will remain steady at 12% to 13% of revenues. The group’s new action plans should generate up to EUR1.5 billion in terms of annual savings on costs or investments. This will facilitate the group in achieving its Orange 2012 financial ambition by balancing the negative factors impacting margins linked in particular to the economic, the competitive or the regulatory environments.

France, Orange Group