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Cell, Net drive France Tel profit
PARIS, France (Reuters) -- France Telecom reported a strong rise in third-quarter operating income on Wednesday and raised its forecast for 2003 core earnings thanks to healthy growth at its cell phone and Internet units. State-controlled France Telecom's earnings and outlook improved despite a 2.7 percent drop in sales, as growth at its Orange mobile phone unit and Wanadoo Internet service provider failed to make up for a decline at its fixed line arm. France Telecom, reporting what analysts called a mixed set of results, said operating income was 2.8 billion euros, up 27.1 percent from a year ago. Sales were 11.646 billion euros, down from 11.971 billion on a reported basis. On a like-for-like basis, sales at France Telecom were up 3.3 percent. France Telecom's operating income before depreciation and amortisation less capital expenditure -- equivalent to earnings before interest, tax, depreciation and amortisation (EBITDA) -- was 3.6 billion euros for the quarter, compared to 2.6 billion euros a year ago. On a comparable basis, it said the EBITDA increase included 451 million euros of capital expenditure gains, 265 million euros of operating expenditure gains and 370 million euros in increased revenues. Analysts said the figures were a mixed bag, with quarterly sales working out to a nine-month figure of 34.5 billion euros, in line with analysts' forecasts for 34.55 billion. "The sales are in line,'' said one London-based telecoms analyst. However, nine-month EBITDA at 9.9 billion euros fell short of analysts' forecasts for 12.87 billion euros. Shares in France Telecom, which are up about 49 percent so far this year after a 61 percent drop in 2002, opened some two percent higher but quickly gave up some of those gains and by 0821 GMT were trading at 21.96 euros, up 0.87 percent. RESTRUCTURING WORKINGThe company said it would report full-year EBITDA of over 17 billion euros, up from an earlier forecast of about 16.8 billion euros. It confirmed its other financial targets for the year, including operating income of more than 9.2 billion euros, sales growth of three to five percent on a like-for-like basis and operating free cash flow of more than four billion euros. The company also confirmed its target of generating free cash flow of 15 billion euros through 2005 and a ratio of net debt to operating income before depreciation and amortisation of less than three by the end of 2003. The company said its capital expenditure totaled 1.1 billion euros for the third quarter, down 34 percent. It also said that between January and June of this year it had cut the number of its suppliers by 60 percent and that further cuts were in the works. Sales at Orange rose to 4.7 billion euros thanks to strong average revenue per user. Orange also said its total controlled customer base as of September 30 was up by 3.7 million customers at 46.9 million compared to the year-earlier level. In the third quarter, Orange added 1.325 million customers. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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