France Telecom posts reassuring figures

French carrier France Telecom reassured investors on Thursday with financial results that bode well for the European telecoms sector, according to analysts.

The French incumbent posted a gross operating margin (equivalent to EBITDA) for the third quarter of Eur5.09bn, flat against the same period last year. Consolidated revenue climbed 2.3 per cent on a comparable basis to Eur13.5bn.

European telecoms analyst and sector strategist at the Daiwa Institute of Research, Michael Kovacocy, said the company’s results were generally bang in line with expectations and offered a reassuring outlook for operational and financial stability.

Revenues at the Personal Communication Services unit were up 5.1 per cent on a comparable basis to Eur7.6bn, as the number of mobile broadband customers almost doubled year on year to 23.2 million. Quarterly revenue at the Home Communication Services unit was down 1.2 per cent to Eur5.7bn due to price battles, and the decline in traditional telephone services. While Enterprise Communication Services recorded quarterly growth of 1.2 per cent, offsetting fears of business investment contraction.

Kovacocy notes that there was some language in the results which pointed to softness of demand in emerging markets due to the economic turbulence, but said he believes the impact on operations and financials to have been relatively minor so far.

However, the French carrier has still not shaken off bad reputation gained from its aborted attempt to take over Nordic carrier TeliaSonera. “France Telecom has still not adequately convinced the market nor us that its days of dangerous M&A are finished,” Kovacocy said. The analyst applauded recent moves into non-Francophone Africa, such as the company’s acquisitions in Uganda, Niger and Kenya, and a renewed interest in Ghana, but said that industry watchers would, “Continue to be wary of pan-European, non in-country consolidation, scale moves from the French powerhouse.”