France Telecom CEO confident of €44B sales in 2012, looks to MEA

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France Telecom (FT) CEO Stephane Richard predicted that the company will achieve €44 billion in revenue this year, ahead of a poll of analysts conducted by Bloomberg that had been forecasting 2012 sales of €43.4 billion.

However, this forecast will see FT's revenues fall below the €45.3 billion recorded last year as the company struggles to combat fierce competition in its domestic market.

Richard said that the expected decline in sales in France and at some other European operations will not be fully balanced by growth from FT's operations in the Middle East and Africa (MEA).

"Growth in our revenues still comes from the Middle East and North Africa this year," Richard told Bloomberg. "There is a drop in revenues in some European markets and positive growth in other European markets."

FT, which generated almost 50 per cent of sales from its home market in the third quarter, said earlier this month that its operating cash flow would not grow until 2014, once competition stabilises in France. FT expects that operating cash flow will drop to about €8 billion this year, compared with €9.3 billion last year, according to Bloomberg.

While the MEA region is helping to offset FT's European troubles, its recent purchase of Egypt's Mobinil is taking time to produce results after the political turmoil of last year.

Mobinil revealed last month it had slumped to a net loss of €12 million in the first three quarters of 2012, compared to a loss of €9.77 million a year ago, according to Reuters. The company blamed this performance on the cost of upgrading its network to 3G, and is confident that 2013 will be better.

"We will continue to invest," Mobinil CEO Yves Gauthier said, adding that the operator typically invests €257 million annually. "2013 will be a year of profitability ... a year of improvement and a growing year," he told Reuters.

However, FT CEO Richard was less forgiving, claiming the Egyptian market was too crowded and with high penetration rates. "We have to switch from business models which were basically founded on voice revenue to a business model with a larger part on services and data revenue provided (that) we are able to invent an economic model for those services," Richard told Reuters.

For more:
- see this Bloomberg article
- see this Reuters article

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