Neuf Cegetel '07 Net Profit +23%; Confirms '08 Goals

PARIS -(Dow Jones)- French telecom provider Neuf Cegetel Tuesday said its 2007 net profit rose 23% on the year, driven by growth in its mass market division, and confirmed its guidance for 2008.

The company, which is subject to a takeover bid from France's second-largest mobile operator SFR, saw net profit for 2007 increase to EUR262 million from EUR213 million a year ago.

Neuf Cegetel, France's second-largest broadband provider with 21% market share at the end of 2007, declared a dividend of EUR0.60 per share, up 50% from 2006.

The results are "in line," but the dividend is slightly lower than anticipated, said Dexia analyst Rob Goyens, who has a reduce rating on Neuf stock.

With the offer pending from SFR, Neuf Cegetel appears to have decided "to keep some of the cash in house," Goyens said.

Neuf Cegetel reported that its 2007 earnings before interest, taxes, depreciation and amortization, or EBITDA, rose 32% to EUR720 million from EUR544 million.

The company confirmed its 2008 targets, which include an adjusted EBITDA margin at 25%, revenue growth of over 20% at its mass market division, 5%-to-10% at its enterprise division, and operating cash flow of about EUR450 million.

The cash-flow target includes Neuf's plan to rig up 1 million households to its next-generation fiber-optic network by the end of 2009.

Mobile operator SFR, which is co-owned by Vivendi and Vodafone Group, outlined a EUR4.4-billion deal to buy Neuf in December.

SFR, which already holds 39.95% of Neuf's capital, plans to buy trading group Louis Dreyfus' 28.64% stake for EUR2.07 billion before buying up the remaining shares at EUR36.50 each. The deal is expected to be completed in the second half of 2008.

"There's not much upside to the offer price of SFR at current levels," said Dexia's Goyens, although amid volatility in financial markets, he said Neuf stock "could be seen as a low-risk cash investment."

At 0804 GMT, Neuf shares were up 0.1%, or EUR0.05, to EUR35.00 compared with a 0.4% rise in France's SBF-120 index.

The company's stock has risen over 22% during the last year, significantly outperforming the DJ Stoxx 600 Telecom index, boosted by strong results and takeover speculation.

In February, Neuf Cegetel reported 2007 revenue up 16% to EUR3.35 billion.

By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com

(END) Dow Jones Newswires

Posted to the site on 11th March 2008