France Telecom profit down, but not all bad news

European carrier France Telecom demonstrated a level of stability in a difficult economic environment, recording a year on year increase of 2.9 per cent in annual revenues to reach Eur53.5bn in 2008.

Consolidated net income for the group was Eur4.5bn in 2008, compared with Eur6.8bn in 2007, largely due to a decrease in operating income and a sizeable increase in corporate tax.

Fourth quarter revenues were almost flat year on year at Eur13.6bn, while operating income for the year dropped 4.9 per cent from Eur10.8bn to Eur10.2bn, although mobile operating income was up 4.2 per cent to Eur10.1bn.

The total number of customers in the France Telecom group hit 182.3 million at year end 2008, following the addition of 11.8 million new customers during the year.

Mobile services performed well, with Orange reporting 121.8 million customers at year end, with 11.8 million new additions. The number of mobile broadband customers was up to 26.7 million, compared with 15.7 million at the end of December 2007.

Broadband ADSL services attracted 12.7 million customers in Europe at end-2008, up 9.1 per cent year on year. While the number of Livebox customers was up 28 per cent, with 7.8 million units sold in Europe at 31 December, 2008, compared with 6.1 million units at the end of 2007.

“In our opinion, the story in today’s results is France Telecom’s ability to drive operational top-line and bottom-line growth in what remains a difficult macro-economic environment. This, coupled with enough visibility to give solid guidance on minimum organic cash flow for the mid-term, highlights why we continue to view Euro telecoms as a beacon of stability in difficult times,” said Michael Kovacocy, European telecoms analyst and sector strategist at Daiwa Securities.

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