Vincent Poulbere
France Telecom faces disappointing revenue growth
In its half-year results, France Telecom has announced revenue growth of 1.4%, on a comparable basis to H1 2005, to €25.86bn. The group's gross operating margin is down by 4.9% to €9.47bn. The Personal Communication Services segment generated revenues up by 6.1% to €13.43bn, while Home Communication Services revenues were down by 2.3% to €11.13bn and Enterprise Communication Services down by 6.7% to €3.82bn. France Telecom has exited the directory segment in France with the sale of its stake in PagesJaunes. In its results presentation, France Telecom announced that its 2006 revenue growth target of 2% will be difficult to reach Comment: France Telecom's financial results are relatively disappointing, but good growth in the mobile (Personal) segment has had a positive effect to counterbalance the deterioration of the fixed and enterprise markets. Overall, France Telecom is impacted by difficulties in generating revenue growth in markets where it is the incumbent (revenues from France are down by 2% and Poland down by 5.7%), and also in the UK with Orange, which posted just 2.2% revenue growth. It has also had to face an increase in costs that is reflected by the drop in its gross operating margin. In particular commercial costs are increasing, which is partly due to the Orange rebranding across the group. Among the positive points, Orange France performed well in the context of increasing competitive pressure, with 6.5% growth in its network revenues and 4.4% customer growth. The various MVNO deals (e.g. with Tele2) and brand agreements (e.g. with M6) signed by Orange France over the previous 12-18 months have contributed to this good result. In addition, it reached 1.9m mobile broadband customers (EDGE or UMTS) as of end June 2006 - roughly 8.5% of its French customer base.
