France Telecom SA (FTE) Chief Executive Officer Stephane Richard predicted full-year sales of 44 billion euros ($56 billion), a figure that would top analysts’ estimates, as the company pushes services beyond Europe.
Business in the Middle East and Africa will partially make up for a drop in revenue in some European countries, Richard said today in an interview at a conference in Amman, Jordan. Analysts project sales of 43.4 billion euros this year, based on the average of 25 estimates compiled by Bloomberg. The Paris- based company, which is fighting discounters at home, reported revenue of 45.3 billion euros last year.
“Growth in our revenues still comes from the Middle East and North Africa this year,” Richard said. “There is a drop in revenues in some European markets and positive growth in other European markets.”
Competitive pressures have weighed on prices of phone packages, especially in France, where Iliad SA (ILD) started selling discounted offers in January under the brand name Free. France Telecom, which has 225 million clients worldwide and aims to have 300 million by 2015, generated almost half of its sales from its home market in the third quarter.
France Telecom fell 2.7 percent to 8.33 euros at the close of trading in Paris.
In France, the company also competes with Vivendi SA (VIV) and Bouygues SA. (EN) Iliad garnered 5.4 percent of the market in its first six months by selling cheap packages starting at 2 euros a month.
Prices of phone packages in France have dropped by 8 percent on average over the past 5 1/2 years, with the steepest decline during the first six months of 2012, a study published last week by researcher Arthur D. Little and the French Telecom Federation showed. The decline is expected to continue, with a clear impact on carriers’ sales and profits, the study said.
France Telecom said this month that its operating cash flow wouldn’t grow until 2014, once competition stabilizes in France. It forecast that operating cash flow would drop to about 8 billion euros this year, compared with 9.3 billion euros the year before. Europe’s fourth-largest carrier also reduced its planned dividend in a bid to keep debt under control and avoid credit-rating cuts. The move followed similar dividend reductions from peers such as Madrid-based Telefonica SA. (TEF)
Richard refocused on preserving cash more than eight months ago, when the company trimmed its dividend forecast and abandoned a promise to buy back shares. Still, France Telecom’s debt rating was cut by Fitch Ratings on Oct. 30 on concern that the provider will struggle to raise prices and boost profits.
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