For the six months ending June 30, the group recorded net income of 3.4bn euros ($4.12bn), compared to 1bn euros ($1.21bn) for the same period last year. France Telecom attributed the earnings growth to a 1.2bn euros ($1.45bn) in gains from the sale of stakes in directories business PagesJaunes SA, the German service provider Mobilcom AG, as well as other assets. Sales grew 4.5% to 23.7bn euros ($28.75bn).
Analysts had predicted a net profit at 2.4bn euros ($2.91bn) on revenues of around 23.5bn euros ($28.53bn). Its American Depositary Shares (ADS) shares rose 1.87% to $30.53 on the New York Stock Exchange, as of 5.30pm BST on Thursday.
France Telecom continues to rely heavily on its mobile unit, Orange, which ranks third in Europe in terms of customers. Indeed, the operator gained 135,000 new subscribers in France and 125,000 in the UK, and increased its total subscriber base by 16.3% to 66.7 million.
Orange’s sales rose 6.7% to 4.7bn euros ($5.7bn), while total fixed-line revenues remained flat, rising only 0.2% to 11.16bn euros ($13.54bn).
The group’s European broadband customer numbers leapt 80% to 6.4 million over the past year.
France Telecom also made some headway with its enormous debt burden. Net debt fell to 46.3bn euros ($56.22bn) at end of June from 49.8bn euros ($60.47bn) at the end of 2004.
However, analysts and the market are concerned that France Telecom is once again back on the acquisition trial. France Telecom built up massive debts as a result of a reckless expansion strategy in the late 1990s, and debt peaked at 68bn euros ($87.87bn) in 2002. This led to questions over the carrier’s viability, and it took an illegal state aid package from the French government, plus a change of management and massive job cuts to get the carrier back on its feet.
In early June, the French government also reduced its holding in the carrier, but demand was so weak for the shares that the banks underwriting the offer have reportedly been left holding an unspecified number of shares that will have to be sold at a later date.
Last week France Telecom said it would purchase Spain’s third-ranked mobile operator for 10.6bn euros ($12.9bn), of which 6.4bn euros would be cash ($7.77bn) and the rest paper. It is also in talks to acquire a 3.8% stake held by the Polish government in the dominant Polish operator TPSA, which would give France Telecom a majority holding in eastern Europe’s largest telecoms operator. In addition, the French carrier is also interested in increasing its stake in Jordan Telecom.
Looking forward, it confirmed its targets of full-year operating income of 18.5bn euros ($22.47bn).
