Objective be ready for economic recovery

The heavy ship France Telecom maintains the Cape in the storm. Results published yesterday by the incumbent operator in fact prove its resistance to the crisis. In 2008, the turnover of the Group increased by 2.9 on comparable basis, to EUR 53.5 billion. The France is not for nothing in this performance. The mobile business saw its sales rise by 5.2 in 2008 in France, thanks to the iPhone, sold to best 810.000 Orange since November 2007.

In the fixed telephony and the Internet, the Group has grow its turnover for the second consecutive year, of 0.6. And bursting in the audio-visual sector is rather successful since in six months, Orange recruited 300,000 subscribers to its offer of pay television, film and sport. "Expenditure of households in Telecom represent only 2.4 of their budget and they are that it is difficult to cut," held to emphasize Didier Lombard, CEO.

Thus, the leaders of France Telecom prides itself on successfully last year to increase sales faster than the GDP of the country in which the operator is present. With 53 of their customers in the mobile who have opted for a subscription, compared to 36 for Vodafone, they hope through the crisis without too many problems.

Nothing is acquired however, because, for example, on the second half, the Spain, countries particularly affected by the recession, saw its turnover in the mobile down 1.5. Another problem that will meet the French this year, fluctuations in exchange rates. In the United Kingdom, at constant exchange rates, sales increased in the second half. But recorded in euros, net sales decreased by 12 over the last six months of the year due to the depreciation of the British currency. Because of decreases of the book or the Polish zloty yet, some analysts expect to lower sales in 2009.

"Orange 2012"

Didier Lombard remains cautious, even if the operator has stabilized its operational margin to 36.3 of the turnover in 2008 or it has payout of 8 billion euros after investment. France Telecom will certainly pay a dividend of 1.4 euro per share (against 1.3 euro for 2007), i.e. a total of EUR 3.7 billion. But a portion of the cash has also been used to repay debt, to EUR 35.9 billion, at the end of last year.

France Telecom is now less indebted than Telefonica and Deutsche Telekom. And "it will have to continue to reduce this debt" (inherited from the acquisition of Orange in 2000) in times of scarcity of credit, warned Didier Lombard.

The strategic plan presented yesterday by the CEO for the next three years is therefore strongly marked by the sword of Damocles over the head of all industrial, namely, the crisis. The purpose of this roadmap, called "Orange 2012 implying that France Telecom will pass under the banner Orange in three years is mainly to stabilize the decommitted calibrates each year at the level of 2008.

In times of recession, this commitment to relieve cash flow of EUR 8 billion per year over the next three years rained on the stock exchange, which has pushed the action of 2.87, to 17,915 euros yesterday. Indeed, to reassure its shareholders, the group warned: "If new deterioration of the economic environment, investments could be revised downward to reflect the purpose of cash flow." In addition, France Telecom will seek "to limit the decline in the rate of margin..."

To do so, "will not turn upside down the strategy but change the mode of operation", explained Didier Lombard. The group will focus on the simplicity of its offerings to make them accessible to the greatest number, on the reduction of the number of products it sells and on "synergies and the cohesion of the group". The goal is to save 1.5 billion euros annually.

In short, change is announced in continuity, including with respect to voluntary departures will be maintained. With an ambitious goal: achieve 20 of the turnover in 2012 in the audiovisual, music, video games and e-health, against 9 last year. Objective: "be ready for economic recovery."