PARIS -(Dow Jones)- France Telecom, Wednesday reported improved first-quarter revenue and margins, driven by growth in its mobile-phone operations across Europe and Africa, and reiterated its hunger for consolidation in Europe.
"From our point of view, there's a favorable context for the group to look at consolidation opportunities" while respecting its dividend and gearing ratio commitments, Chief Financial Officer Gervais Pellissier told a conference call.
Pellissier said France Telecom remained interested in acquiring Nordic operator TeliaSonera, but that negotiations hadn't yet begun.
Revenue for the quarter ended March 31 increased 1.4% to EUR13.03 billion from EUR12.84 billion a year earlier, slightly above an average forecast of EUR13 billion from 15 analysts polled by Dow Jones Newswires.
The increased revenue helped third-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, grow 2.9% to EUR4.79 billion from EUR4.66 billion, beating the EUR4.73 billion forecast by analysts.
The Ebitda margin widened to 36.8% from 36.3% a year earlier, as France's incumbent operator grew revenue and kept costs under control. The company reduced its headcount by 4,641 on the year to 185,874, Pellissier said.
"Some people expected a small rise in the margin, but not this big," said Dexia analyst Rob Goyens, who has a neutral rating on France Telecom stock.
"I expect it to be well-received in today's market," Goyens said, while adding that the reaction "could be a bit muted" due to ongoing uncertainty over the company's M&A ambitions.
The results kept the company on track for its 2008 targets of cash flow over EUR7.8 billion and a stable Ebitda margin, Pellissier said.
For the first and third quarters, France Telecom doesn't report earnings below the Ebitda line.
The company's shares closed Tuesday down EUR0.19, or 0.9%, to EUR20.34 in an overall weaker market.
Before Wednesday, France Telecom's share price had fallen more than 17% since the start of the year, broadly in line with the DJ Stoxx European telecommunications index, dragged down by concern over the company's appetite for large-scale acquisitions.
The company startled investors and analysts in April when it said it was considering a bid for TeliaSonera. The interest came as M&A has returned to the fore among Europe's incumbent operators - most recently, German giant Deutsche Telekom was linked Sunday with a bid for U.S. operator Sprint Nextel Corp.
-By Jethro Mullen, Dow Jones Newswires; 33 1 4017 1738; jethro.mullen@dowjones.com
(END) Dow Jones Newswires
Posted to the site on 7th May 2008
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