France Telecom SA (FTE), which provides businesses under the Orange brand, reported Wednesday a sharp decline in fiscal 2012 profit, reflecting higher impairment and other charges, as well as lower revenues. The French telecom operator's mobile subscribers increased mainly on growth in Africa and the Middle East.
Looking ahead for 2013, the company confirmed its operating cash flow target of more than 7 billion euros, despite heightened competitive pressure, and also announced an interim dividend.
Chairman and CEO Stéphane Richard said, "During a particularly turbulent 2012, the Group showed its resilience by achieving its financial targets, notably an operational cash flow of 8 billion euros... However, the economic situation and the continued price war in most European countries necessitated an acceleration in the Group's transformation programme."
In its full year, net income attributable to equity owners of the company plunged to 820 million euros from 3.90 billion euros a year before. The latest annual results were hurt by the negative impact of the new Part-Time for Seniors agreement of 726 million euros and the impairment of goodwill and assets of 1.841 billion euros, while prior year's impairment charges were 991 million euros.
Excluding items, the Group's share of net income was 3.39 billion euros, a 30.7 percent drop on a comparable basis from last year.
Annual revenues were 43.52 billion euros, a 2.7 percent decrease on a comparable basis, from last year's 45.28 billion euros. Excluding the impact of regulatory measures, revenues edged down 0.6 percent.
In the fourth quarter, revenues totaled 10.92 billion euros, down 3.2 percent on a comparable basis. Excluding the impact of regulatory measures, the decrease was 1.1 percent.
The company noted that the impact of increased competitive pressure in European countries, notably in France, was partially offset by the strong growth of operations in Africa and the Middle East and in Spain.
In France, the national roaming contract signed with the new market entrant partially offset the impact of price decreases.
France Telecom-Orange had 230.7 million customers at the year-end, 3 percent higher than last year, with the customer base up 4.5 percent. In France, the mobile customer base rose 0.4 percent.
The company's full-year restated EBITDA was 13.79 billion euros, down 7.4 percent from last year on a comparable basis. The EBITDA margin of 31.7 percent fell slightly by 1.6 percentage points due to direct cost savings, the control of labour expenses, and the stabilisation of other indirect costs with savings achieved as part of the Chrysalid plan.
The company noted that its operating cash flow target is based on its priorities of accelerating the transformation of cost structure in order to reduce the cost base in 2013, and generate revenue growth in mobile data services of at least 10 percent.
Further, the company said an interim dividend payment of 0.30 euros per share for 2013 would be paid in cash in December.
In Paris, France Telecom shares are currently trading at 7.60 euros, down 0.12 euros or 1.57 percent.
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