France Telecom feels the pinch: Both revenues and profits down

France Telecom reported a decline in both its revenues and profits in the first quarter of 2009. Other leading European leading telecoms operators are also likely to have a tough time in the forthcoming crop of quarterly results.

The French incumbent's revenues fell to €10.96 billion, a 2.7 per cent drop when compared to the first quarter of 2009, while Ebitda declined by 5.5 per cent to €3.76 billion. The company blamed difficult economic conditions and regulatory intervention, particularly cuts in termination rates, for its disappointing results.

Capex fell, too, in Q1 2010 although the company said that was due to an intensive period of investment in Q4 2009 and a bad winter in Europe (particularly Poland) which meant postponing some work until later this year.

First-quarter 2010 capex fell to 8 per cent of revenues, compared to 9.9 in the same period last year, although the company said investment in 3G and 3G+ networks increased because of the growth in data services (a contributory factor might be that Orange is a distributor of Apple's iPhone in France). The company has confirmed its capex target of 12 per cent of revenues for the whole of 2010.

Some rare good news in the results came courtesy of emerging markets, such as Ivory Coast, Kenya, Senegal and Uganda, which saw 7 per cent revenue growth.

Future growth prospects in large part hang on how France Telecom can exploit the mobile opportunities in such markets. And how it can acquire some more of them. The company has its eye on acquiring operators in Africa and the Middle East.

"If there are assets available, we will look at them, there are no discussion today on the subject, "commented chief financial officer Gervais Pellissier about whether France Telecom might be interested in acquiring some or all of Orascom Telecom.

He also said France Telecom will "probably appeal" against the Swiss regulator's decision to bar a merger between Orange's Swiss subsidiary and rival Sunrise.

For more on this story:
Reuters

For more on this story:
FT Orange mulls €7bn African and Middle East venture
France Telecom to reshuffle the management deck
France Telecom's international director to step down
Orange and SFR blamed for poor 3G in Paris financial district

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