Bloomberg News

France Telecom Cuts Dividend Forecast as Cash Flow Seen Falling

February 22, 2012

A pedestrian walks past a France Telecom SA Orange mobile store in Paris, France. Photographer: Balint  Porneczi/Bloomberg

A pedestrian walks past a France Telecom SA Orange mobile store in Paris, France. Photographer: Balint Porneczi/Bloomberg

France Telecom SA (FTE), the owner of the Orange mobile-phone brand, cut its dividend forecast for this year by as much as 14 percent as it predicts a decline in operating cash flow.

The 2012 payout will be in a range of 1.21 euros to 1.35 euros a share, Chief Financial Officer Gervais Pellissier said on a conference call. The Paris-based company had predicted 1.40 euros in dividend. Operating cash flow will be about 8 billion euros ($10.6 billion) this year, declining from 9.3 billion euros in 2011.

With one of the highest dividend yields in the telecommunications industry in Europe, the company has been under pressure to lower dividend. Telefonica SA reduced its dividend forecast in December.

Earnings before interest, taxes, depreciation and amortization fell 3.9 percent to 3.47 billion euros ($4.6 billion), the Paris-based company said today in an e-mailed statement. Sales slipped 2.6 percent to 11.43 billion euros. Analysts had predicted Ebitda of 3.42 billion euros on sales of 11.38 billion euros, according to data compiled by Bloomberg.

Shares of France Telecom dropped 0.3 percent to 11.45 euros in Paris trading yesterday. The stock had declined 29 percent in the 12 months through yesterday, trailing peers such as Vodafone Group Plc (VOD), Deutsche Telekom AG (DTE) and Telefonica SA (TEF). The Bloomberg Europe Telecommunication Services index declined 15 percent in the same period.

The French operator, which competes with Vivendi SA (VIV)’s SFR, has a dividend yield of 12.2 percent based on yesterday’s closing price, compared with an industry average of 7.8 percent.

France Telecom may spend about $2 billion to buy most of billionaire Naguib Sawiris’s stake in their Egyptian wireless venture and delist the operator. The company this month reached a preliminary agreement with Sawiris’s Orascom Telecom Media & Technology Holding SAE over Egyptian Co. for Mobile Services, the operator known as Mobinil.

To contact the reporter on this story: Marie Mawad in Paris at

To contact the editor responsible for this story: Kenneth Wong at

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