France Telecom 1st Half Net Profit Triples To EUR3.4 Billion
STOCKHOLM -(Dow Jones)- France Telecom SA (FTE), Europe's second-largest telecommunications operator, more than tripled first-half net profit thanks to growth from mobile phone division Orange and asset sales.
Net profit in the first half jumped to EUR3.4 billion from EUR1 billion a year earlier, exceeding analysts' expectations. The year-ago figure was restated to reflect the switch to international financial reporting standards.
France Telecom attributed the earnings growth to a EUR1 billion improvement in its operating performance, with a boost from lower amortization costs. In addition, it booked EUR1.2 billion in gains from the sale of stakes in directories business PagesJaunes SA (1009635.FR), German service provider Mobilcom AG (MOB.XE), and other assets.
Earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 6.2% to EUR9.3 billion, while revenue gained 4.5% to EUR23.7 billion.
Analysts had predicted revenue of around EUR23.5 billion, EBITDA at EUR9 billion and net profit at EUR2.4 billion, although forecasts for the net figure varied due to uncertainty over the impact of exceptional items.
"OK - ahead of expectations across all lines, but nothing that exciting," said one equity strategist who requested anonymity.
France Telecom, like rival incumbents across Europe, is banking on growth in wireless and high-speed Internet to fuel earnings as revenues from fixed-line voice services are hit by increased competition. The company Wednesday agreed to buy 80% of Spanish mobile phone operator Amena for EUR6.4 billion to give it a major presence in one of western Europe's most lucrative wireless markets.
In France Telecom's mobile division, revenues rose 11% to EUR11 billion in the first half, with growth in France and the rest of the world offsetting declines in the U.K.
Overall sales were buoyed by favorable exchange rates and a change in the way the company charged for mobile calls in France, the company said.
Revenue growth in the second quarter accelerated from the first, with sales gaining 5.4% from a year earlier. Revenues from mobile services were particularly strong and rose 12% in the second quarter. The company didn't give a breakdown of second-quarter results.
France Telecom's debt to EBITDA ratio - one of its key performance benchmarks - declined in the first half of the year and reached its target of 2.5 at the end of the period as debt declined by EUR3.5 billion to EUR46.3 billion.
The Amena acquisition will increase France Telecom's net debt by EUR5.8 billion.
Company Web site: http://www.francetelecom.com
-By Magnus Hansson, Dow Jones Newswires;+46 8 545 130 91, magnus.hansson@dowjones.com
(END) Dow Jones Newswires"
Posted to the site on 28th July 2005
