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France Tel posts record $23b loss
PARIS, France (CNN) -- France Telecom posted a record 2002 net loss of 20.7 billion euros ($22.6 billion) after new chief executive Thierry Breton wrote off his predecessors acquisitions. The full-year loss was far bigger than analysts polled by Reuters had anticipated. They were expecting a net loss of 18.75 billion euros, compared to the previous year's loss of 8.3 billion euros. Breton was parachuted in by investors, the biggest of which is the French government, to rescue Europe's second-largest phone company from the burden of a 70 billion euro debt mountain -- about three times the value of the company. Former chief executive Michel Bon spent more than 100 billion euros on acquisitions during the telecom, technology and dot-com boom as Europe's telecom companies battled to grab market share and growth at the expense of profits and debt. Britain's BT Group and Dutch carrier Royal KPN have already approached shareholders for additional funds to reduce their debt and are now turning around businesses and profitability.
Breton hopes to raise 15 billion euros through the sale of new shares to existing investors. The French government, which has a 56.5 percent stake in the telecom operator, has said it is willing to give up majority control and promised to pump 9 billion euros into the former phone monopoly. The company has already outlined plans to cut debts by 30 billion euros over the next three years. Breton promised investors he world cut debt and boost earnings before interest, tax, depreciation and amortization to above 20 billion euros by 2005. France Telecom said debt stood at 68 billion euros at the end of 2002, down from 70 billion at the end of the first half. France Telecom's stock, which has slumped about 90 percent from its peak in 2000, fell 2.1 percent to 18.64 euros in early Paris trading on Wednesday. Its stock is worth a fraction of its October 1997 floating price of 27.75 euros. Core profits, or earnings before interest, tax, depreciation and amortization (EBITDA), were 14.92 billion euros, up from 12.32 billion in 2001, while operating profit totaled 6.81 billion against 5.2 billion euros the year before. France Telecom said asset write-downs totaled 18.2 billion euros for its MobilCom wireless business in Germany, business communications unit Equant and cable company NTL. Separately, France Telecom's Orange, Europe's third-largest wireless operator, reported a 2002 net loss of 4.54 billion euros as one-off items erased slightly stronger than expected EBITDA of 5.15 billion euros. Reuters contributed to this report.
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