The European telecoms market had been depressed following another profit warning from the largest fixed-line carrier, Deutsche Telekom AG. The announcement by Vodafone Group Plc that it had exceeded customer growth forecasts also went some way to reassuring a jittery market.
Now the French carrier has said that sales for the fourth quarter rose 3.2% on a historical basis to 13.262bn euros ($17.27bn) from 12.851bn euros ($16.73bn) in the year-ago quarter. The rise came thanks to the improved sales of FT’s sales generated by its Home Communication Services in France and its Enterprise Communication Services group, which offset a reduction in call termination rates in several countries (notably Poland).
Sales for the year rose 7.5% on a historical basis to 51.702bn euros ($67.3bn), with the increase mostly down its acquisition of the Amena Movil, for 10.6bn euros ($12.9bn) in July 2005.
However, the carrier warned that net income is expected to be between 4bn euros ($5.21bn) to 4.2bn euros ($5.47bn), compared to 5.7bn euros ($7.4bn) in 2005.
FT also recorded a 15% rise in the mobile customer base, giving it a total customer of 97.6 million at the end of December. It says this was mostly down to development markets such as Poland, which recorded a healthy rise in users. It saw a sharp rise in mobile broadband customers (Orange customers who qualify for free broadband) from 1.6 million a year ago, to 5.8 million at year-end.
FT also pointed to the rapid development of ADSL broadband and associated Multi-service offers, which has limited the decline from home services to 1.9%. FT now has 9.7 million broadband customers in Europe, a 30% increase. It also seen the rapid development of ADSL Multi-service, with 4.1 million Liveboxes deployed in Europe at year-end, with 2.5 million VoIP customers and 590,000 ASDL digital TV customers.
These are satisfying results for the Group, said chairman and CEO Didier Lombard in a statement. 2006 was marked by the Group’s renewal, including the transfer of our operations under the Orange brand, both in Europe and elsewhere.
In addition, the success of our new convergence offers and the enhanced content we are offering on broadband, mobiles and TV is today a reality, he added. We are managing this transformation, including the various programs aimed at driving down and optimizing costs, all the while maintaining our profitability. As a result, the earnings that we are presenting today mean that we can confirm our key objective for 2007 of maintaining the level of our organic cash flow.
FT said that organic cash flow of 7.15bn euros ($9.3bn) in 2006, was ahead of stated forecasts of 6.95bn euros ($9.05bn).
Looking forward to 2007, FT said that its objective is maintain the generation of organic cash flow at 6.8bn euros ($8.85bn). France Telecom said it will raise its dividend for 2006 by 20% to 1.20 euros ($1.56) per share.
The improved results is welcome news considering FT’s string of poor results over the past eighteen months, including at least two profit warnings and warnings that it will not hit its organic full-year sales growth target.
