France Telecom SA (FTE) said Wednesday it intends to adjust its shareholder remuneration policy, after reporting lower earnings and revenues for both the fourth quarter and full-year 2011. The Paris-based owner of the Orange brand mobile phones said such a move was warranted given the uncertain macro-economic and competitive environment.
The Group has decided to adapt its dividend policy by aligning it with operating cash flow generation. "The total amount allocated to dividends for fiscal years 2012 and 2013 should be within the range of 40% to 45% of operating cash flow," it said in a statement.
Operating cash flow, which the group defines as EBITDA less capital expenditures, was 9.3 billion euros in 2011 - above the company's annual target of 9 billion euros. But, it projects operating cash flow for 2012 to drop below this target to 8 billion euros.
This lowered expectation was due to an environment already marked by "deterioration in macro-economic indicators, the expectation of increasingly stringent regulations, a higher tax burden, and more intense competitive pressures, particularly in France with the arrival of the fourth mobile operator in January 2012," the group noted. The company's fourth-quarter revenues, on a comparable basis, declined 1.7 percent to 11.43 billion euros, reflecting a slowdown in revenue progression in the second half of the year. EBITDA, a key earnings metric, also decreased from the prior year.
For the full year, net income attributable to equity owners of the company declined to 3.89 billion euros from 4.88 billion euros reported last year. On a per share basis, earnings were 1.46 euros, down from 1.82 euros peer share last year.
Restated EBITDA was 15.08 billion euros, lower than 15.85 billion euros in the prior year.
Revenues for the year, on a comparable basis, declined 1.6 percent to 45.28 billion euros from 46.02 billion euros in the preceding year.
As at December 31, total Group customers increased 8 percent to 226.3 million, driven by rapid growth in mobile services in Africa and the Middle East, which now includes Iraq and the Democratic Republic of Congo. Net additions for the year were 16.7 million.
Stéphane Richard, France Telecom-Orange Chairman and CEO said, "The improvement in our commercial position in 2011 in France, Spain and most of the countries in which we are present in Africa and the Middle East, enabled us to achieve our financial objectives despite a more challenging environment than expected."
Richard added that amid an uncertain macro-economic environment, the company is further strengthening the rigorous financial and operational management approach taken in 2011.
The board will also recommend payment of a dividend of 1.40 euros for 2011. Taking into account the payment of an interim dividend of 0.60 euros on September 8, 2011, the balance due of 0.80 euros per share will be paid in cash on June 13, the company said.
In Paris, France Telecom shares are currently trading at 11.62 euros, up 1.53 percent.
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