Regulation Hurts France Telecom – Analyst Blog

France Telecom (FTE), which operates one of the world’s leading telecom brands “Orange”, reported first-half 2010 results with consolidated revenue of €22.14 billion ($28.25 billion), down 2.2% year over year. Excluding the regulatory measure, revenues were flat year over year.

 

EBITDA dipped 4.6% to €7.74 billion ($9.88 billion) in the first half of 2010, resulting in an EBITDA margin of 35%, down 90 basis points from the year-ago period. Operating income was €4.71 billion ($6 billion), down 0.9% year over year.

 

 

Revenues in France, the operator’s largest market, declined 2% year over year to €11.59 billion ($14.79 billion), largely due to the erosion in traditional telephone services and regulatory pricing measures, partly offset by a growth in wireless and data services.

 

Revenues in Spain fell 2.3% year over year to €1.87 billion ($2.39 billion) due to the downfall in traditional fixed-line services, partly offset by growth in internet data services.

 

Revenues in Poland plunged 7.5% year over year to €1.96 billion ($2.50 billion). Migration from fixed line phones to mobile as well as regulatory pricing measures affected the revenues from the country.

 

Revenues from rest of the world inched up 1.9% year over year to €3.66 billion ($4.67 billion). Africa and the Middle East revenues rose 8.0% (excluding regulatory measures), driven by strong growth in Africa. In Europe, revenues upped 0.9% (excluding regulatory measures), with 6.3% growth in Belgium and 3.1% rise in Switzerland, partially offset by the downturn in Romania (8.7%). Further, higher mobile sales led to the increase in revenues of 4.8% from the Dominican Republic territory.

 

Revenues from the Enterprise segment dipped 6% year over year to €3.58 billion ($4.57 billion), primarily owing to lower traditional data and fixed line services. Revenues from International carriers and Shared Services upped 2.8% to €780 million ($995 million).

 

 

At the end of the first-half 2010, France Telecom had 182 million total subscribers across its vast operating territories, a 3.8% increase from the year-ago period. Mobile customer base climbed 6.6% year over year to 123 million primarily driven by a growth of 18.4% in Africa and the Middle East to 34 million customers. Mobile customer base rose 3.6% to 26.2 million in France and 10% to 62.8 million in other countries, including Europe.

 

ADSL broadband Internet continues to grow with a 2.2% increase in the first half of 2010 to reach a 13.2 million subscriber base. Digital TV subscriber base grew 34% to 3.6 million.

 

 

France Telecom reduced its net debt to €29.9 billion compared with €32.5 billion at the end of second-half 2009. The ratio of net debt to EBITDA was 1.86 versus 1.95 at the end of second-half 200