LONDON (Dow Jones) -- France Telecom, Europe's second biggest phone company, on Wednesday said it will propose more than doubling its dividend for the year, while it continues to slash spending and launches a development plan based on convergence of telecom services.
The company proposed paying shareholders a 2005 dividend of one euro a share, at the high end of estimates, and up from the 48 eurocents a share it paid to shareholders in 2004.
France Telecom (FTE) also said it will switch to the Orange brand name within 18 months for mobile, broadband, triple-play and enterprise divisions.
However, in France and Poland, it will continue to use France Telecom and TP legacy brands for fixed-line services.
France Telecom sees 200 million euros in savings a year, starting in 2008, from using the Orange name, according to slides released on its Web site. The upfront cost will be 200 million euros, taken before the end of 2006
France Telecom shares were last up 3% in Paris.
The group also confirmed its target for 2005 sales up between 3% and 5% on a comparable basis, anticipated gross operating profit of more than 18.5 billion euros and a net debt to EBITDA ratio below 2.5.
Beyond 2005, France said it expects the increase in gross operating profit through 2008 to exceed a sales growth target of between 3% and 5% during the period.
Apart from the name change, its plan, called NExT, includes other initiatives with a focus on simplicity.
"The most obvious step is to provide a better, simplified experience," said Chief Executive Didier Lombard at the investor day.
U.S. carriers like Verizon Communications (VZ) have been among the first to adopt the "single portal" approach, whereby customers receive just one bill for all their services and have one point of contact.
France Telecom is planning for a unified customer support service by the end of 2006.
Currently, customers must contact France Telecom, Orange or Wanadoo depending on whether they have an issue with their fixed-line, mobile or Internet service.
In addition France Telecom said it's looking for more simplicity in its interface.
"If a customer just wants to make phone calls, that's fine with us and we will make it as simple as possible. But if the customer wants to use video, we will make that experience as seamless as possible too," Lombard said.
The other area of focus for the plan is broadband. France Telecom said it's targeting more than 12 million clients for broadband fixed-line hookups by 2008, including more than 8 million subscribers for its Livebox wireless device, with which users can link their phone, TV and Internet using Wi-Fi. The Livebox target includes 6 million users in France.
"France Telecom is targeting 8 million triple play customers by 2008, of which 6 million are in France. The implication of 2 million internationally suggests a continued push towards unbundling in the U.K.," Merrill Lynch analysts told clients.
In addition, the company said it expects more than 12 million customers by 2008 for broadband mobile services, which include so-called third- generation services or 3G, including 6 million in France and 5 million in the U.K.
Finally, France Telecom is betting on more than 1 million subscribers for MaLigne TV in France, its offering for television via the Internet.
Another notable change is that France Telecom said it will remove the 500 million euro acquisition ceiling it had imposed on itself as it sought to cut its debt.
Instead, the group said it will pursue deals as long as they enhance the company's free cash generation per share ratio and don't compromise its ability to increase its dividend and meet its debt targets.
The decision is likely to reignite speculation that France Telecom is preparing a four-billion pound bid for British peer Cable & Wireless PLC (CWP).
France Telecom previously denied the Sunday Telegraph report, saying it was "pure fantasy."
Cable & Wireless shares rose 1.8% in London.
(END) Dow Jones Newswires "
Posted to the site on 29th June 2005
Posted to: www.cellular-news.com/story/13295.php