France Telecom 1Q Revenue EUR11.62 Billion Vs EUR11.51 Billion

PARIS -(Dow Jones)- France Telecom SA (FTE) said Thursday that its first quarter revenue rose 3.5% to EUR11.62 billion from EUR11.51 billion, due to the favorable impact of exchange rate and gains from a new billing mechanism.

However, France Telecom said in a statement the result was adversely impacted by consolidation activity, notably by the disposal of Orange Denmark.

Meanwhile, gross operating margin amounted to EUR4.38 billion, up 3.3% from last year's figure thanks to cost cutting efforts, though the company didn't provide comparable data. The result represented a gross operating margin ratio of 37.7%, France Telecom said in a statement.

The company presented the figures under new IFRS accounting rules.

France Telecom said foreign exchange variations had a positive impact of EUR138 million on the company's first-quarter revenue.

The figure also got a boost from a government decision to end the so-called Bill-and-Keep mechanism by Orange Telecom, France Telecom's mobile unit, on Jan. 1 2005. The end of that system resulted in an increase in call termination charges paid back to third-party mobile operators, adding EUR201 million to France Telecom's revenue in the first quarter.

The company said capital expenditure increased 29.4% from the same quarter in 2004, and represented 10% of revenue. The company has been investing in broadband services, both for its fixed and mobile networks.

France Telecom said its first-quarter results enabled the group to reaffirm its guidance for 2005. The company has set a target of 3% to 5% revenue growth, a gross operating margin of over EUR18.5 billion, and ratio of net debt to gross operating margin below 2.5 times at the end of 2005. France Telecom is also targeting the ratio of capital expenditure to revenue at the upper end of a 10% to 12% range.

Company Web site: www.francetelecom.com

-By Adriana Brasileiro, Dow Jones Newswires; +33 1 40 17 17 40, adriana.brasileiro@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 28th April 2005