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France Telecom warns of sales slowdown

Hit by VoIP and increased competition

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Shares in France Telecom (FT) were on the slide today after the giant telco warned that it was unlikely to generate as much cash this year as it had predicted.

In a statement issued yesterday evening, FT blamed "accelerated technological changes, competitive pressure and the regulatory environment" for its decision to confirm that growth continues to slow.

Which means that, like other traditional telcos, FT is being hit by the growth in broadband telephony services (VoIP), increased competition from rivals and cuts in call termination rates imposed by regulators.

Last year, FT predicted that revenues would grow by around three to five per cent but has now downgraded that figure to between two to three per cent.

Analysts at Morgan Stanley have already crunched the numbers and reckon this lack of growth will cost the telco around €1bn in EBITDA (earnings before interest etc) revenue.

To combat the decline FT has announced it plans to accelerate plans to speed up its massive restructuring exercise announced last summer.

Key to this shake-up are ambitious plans to ditch its Wanadoo ISP brand and plug all its services (telco and interent) under the Orange logo to provide punters with a "whole new world of services in the areas of communication, infotainment and everyday life".

Execs claim that the company's New Experience in Telecom (NExT) initiative would "give customers access to a universe of services that are both high value and simple".

"France Telecom has decided to accelerate its transformation, notably rolling out programs to simplify its brand portfolio as of 2006, setting up an integrated network and customer relations structure in each country," said the telco in a statement.

By lunch shares in FT were down 8.5 per cent (€1.84) at €19.83 on the Paris stock exchange ®

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