FT 1H10 revenues dip 2.2%, profits boosted by one-time gain

29 Jul 2010

French behemoth France Telecom (FT) said first-half revenues fell 2.2% year-on-year on a comparable basis to EUR22.14 billion (USD28.79 billion) and net profits reached EUR3.73 billion, up from EUR2.56 billion a year earlier, buoyed by a one-time gain of EUR1.06 billion from the merger of its UK operations with T-Mobile UK. The Paris-based operator blamed the drop in consolidated revenues on regulatory effects, saying that, excluding the effect of regulation, revenues were stable compared with the first half of 2009 but the trend improved in the second quarter of 2010, up by 0.3%. First-half EBITDA stood at EUR7.750 billion, down 3.7% year-on-year. Excluding the impact of regulatory measures, FT said EBITDA dropped 2.3% in 2Q10, on the back of a 3% fall in 1Q10. The EBITDA margin fell 0.9 of a percentage point year-on-year to 35%, which FT said was in line with its full-year target. FT is forecasting a maximum 1% drop in the EBITDA margin for FY2010. CAPEX was down 7.5% y-o-y at EUR2.11 billion, equivalent to 9.5% of revenues, although spending is expected to climb in the second half of the year to 12% of revenues. The company also confirmed its target for annual cash flow of about EUR8 billion for 2010 and 2011.

FT reported a 3.8% year-on-year increase in its group customer base to 182 million customers as at 30 June 2010. Broken down, it reported 6.6% growth in the mobile customer base to 123.1 million customers by that date, driven by Africa and the Middle East which together accounted for 34.0 million customers at mid-2010, an increase of 18.4% year-on-year. The French giant also noted 2.2% growth in its ADSL broadband subscriber base (13.2 million customers) and rapid growth of digital TV with 3.6 million subscribers at 30 June 2010, a year-on-year increase of 34%.

Commenting on the first half results, FT chief executive officer Stephane Richard said: ‘Following the announcement of the “conquests 2015” project in early July in which we clarified our businesses and redefined our outlook, it is my pleasure today to present solid half-year financial results. Once again, the Group has shown its resilience despite the unsettling economic conditions in our main markets. The downturn in revenues was more limited in the second quarter than previously, and we continued to attract even more customers – 182 million of them have chosen us, including 131 million under the Orange brand. This trend holds promise for the future because it affects all of our operations, especially mobile services in France, Spain and countries in Africa and the Middle East. In terms of profitability, we have succeeded in adapting to these challenging times and maintained an EBITDA margin of 35% of revenues, in line with our annual objectives. This is why we are reiterating our organic cash flow objectives for 2010 and 2011. And lastly, the Board of Directors accepted my proposal to commit for the coming three years to an annual dividend payment to our shareholders of EUR1.40, while maintaining our ability to invest and to grow.’

France, Orange Group