France Telecom looking to “adapt and conquer”

France Telecom (FT) has announced a two-phased strategic and financial plan for 2011-2015 which the company is calling “adapt to conquer.” Announced at the telco’s Investor Day on Tuesday, the strategy, which is part of the group’s ongoing “Conquests” programme, will focus on investment and cost reduction to improve cash flow and growth at the company.

An initial adaption phase will see FT investing in networks and markets to the tune of €18.5bn, including €1bn on rolling out fibre in France. The second, “conquest” phase will see the company looking to return to sustained growth built on the back of the investments made in the first phase. The Group is also looking to drive savings of at least €3bn by 2015 (including over €2bn by the end of 2013) over its 2010 cost base; with this in mind, FT announced its intention to “ramp up” its recent procurement joint-venture with Deutsche Telkom. Under the terms of that JV, the two telcos announced plans to combine procurement activities in an effort to save €400-900m over the next three years. Under that arrangement, Deutsche Telekom and France Telecom agreed to work together to identify common ground on wifi roaming, M2M services, and RAN sharing, among other things. In 2009, the pair agreed to merge their UK-based mobile phone units.

In addition to its network investment plans, FT said that, over the long term, it did not expect to remain a minority shareholder of assets in which it “does not exercise an operational role,” adding that “in the event of a significant divestiture, the Group will examine the possibility of an additional return to its shareholders.” Chairman and CEO of FT, Stephane Richard, said that the telco expected to capitalise on “a number of positive factors between now and 2015”, among them the economic outlook in the countries in which FT operates, an increasingly favourable regulatory environment and “our new strategy for building partnerships with other players in the digital ecosystem.”

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