France Telecom (FT) today published details of its strategic and financial ambitions for the period 2011 to 2015, part of the group’s ongoing ‘Conquests 2015’ programme which is designed to build on a ‘four pillars’ focus on customers, networks, international development and employees. The telco’s press release says the targets are to be pursued in two phases, each with a different emphasis in terms of growth, EBITDA and CAPEX.
In the first phase, covering the period 2011-2013, FT intends to invest in its networks and markets. Dubbed the adaptation phase, as per the press release the group’s strategic plan is defined as follows:
• Position the group for growth, with an aim to progressively accelerate revenue growth over the period (CAGR of +0.6%);
• EBITDA stabilised in 2013 above the 2011 level. This trend should be possible thanks in particular to the stabilisation of EBITDA in France during this timeframe. The group has been preparing since 2010 for an increased level of competition in its domestic market. The group’s goal is to achieve a cumulative EBITDA of around EUR45 billion (USD64 billion) in the 2011-2013 period;
• Undertake an aggressive investment plan aimed at ensuring that the group is positioned as the best next generation network operator, consolidating its competitive advantage in terms of customer satisfaction, and enhancing the group’s ability to monetise new growth opportunities.
• From 2011-2013, the group forecasts cumulative CAPEX of around EUR18.5 billion, including EUR1 billion for fibre-optic deployment in France. This represents an average rate of CAPEX to revenues of 12.6% over the period (excluding FTTH in France). The rate of investment is expected to peak in 2012 (~14%) as the deployment of fibre accelerates and the group fulfils its network coverage and capacity objectives. Taking these items into consideration, FT has announced cumulative operating cash flow guidance (EBITDA – CAPEX) of around EUR27 billion over the 2011-2013 period, excluding exceptional items.
The French behemoth’s second stage – a conquest phase (covering 2014-2015) – is designed to return the group to sustained growth of both revenues and operating cash flow by dint of the investments made in the first phase. As such, the operator says that the trends expected in the 2014-2015 ‘Conquest’ phase should translate into the following ambitions:
• The expected revenue growth rate for the period is +2.7% (2013-2015 CAGR), with a return to growth in France and in the Enterprise segment, and a continued solid contribution from Europe and AMEA;
• EBITDA, with 3.4% growth (2013-2015 CAGR);
• CAPEX, with the return to a normalised investment level of 10% over the period, equal to approximately EUR9.8 billion (excluding FTTH in France, which represents an additional point, for a total CAPEX rate of 11% equal to EUR10.8 billion);
• And operating cash flow, with a CAGR of +9% over the 2013-3015 period.
Meanwhile, FT has also highlighted its desire to reassess its overall portfolio of assets – deemed as one of the other drivers of value creation – as part of which, FT says it ‘does not expect, over the long term, to remain a minority shareholder of assets in which it does not exercise an operational role. In the event of a significant divestiture, the group will examine the possibility of an additional return to its shareholders’.