Feeds

France Telecom takes huge profit hit after swallowing €1.8bn writedown

CFO says it might put 20% of EE on the market

High performance access to file storage

Telecoms is not the fat market it once was as the low spend in the UK 4G auction showed today, and Euro telco giant France Telecom has also felt the pain. The former French monopoly telco had to write down €1.84bn on units in Poland, Egypt and Romania, which was partly to blame for the hefty 79 per cent plunge in profits year-on-year shown in its annual results for 2012.

The parent company of Orange and 50 per cent stakeholder in EE saw its yearly net profit fall from €3.828bn in 2011 to €1.104bn euros in 2012, a drop of 79 per cent.

Operating profit fell by €1bn from €9.3bn in 2011 to €7.9bn in 2012. Revenue fell 3.9 per cent: 2012 brought in €43.52bn, down from €45.3bn in 2011.

Although the hit in profits was mostly down to the impairment charges in its Polish, Egyptian and Romanian assets, the telco also attributed the droop to its spending on networks needed to compete on its home territory in France. France Telecom used to be the monopoly player in France but now faces competition from cut-price rivals - so it's had to take lower margins to hang onto subscribers. Execs also blamed the general European slump and unfavorable regulation.

Operations in Africa and Asia grew - but not enough to compensate for the slump in Europe.

The telco is now looking to cut costs by reducing dividends as well as raising cash for acquisitions by selling its assets. It is also considering an IPO of a minority stake in the UK's EE - its joint venture with Deutsche Telekom. CFO Gervais Pellissier told Bloomberg:

We’re looking at putting a small part of EE, maybe 15 or 20 per cent, on the market at the end of 2013 or beginning of next year. Depending on British market conditions as well as EE’s first-half earnings, we’ll judge whether an IPO is fit.

As for next year, the outlook is even darker with operating cash flow predicted to fall a further billion from 7.9 billion euro this year to "over 7 billion" next year. Dividends per share are likely to be 0.8 euros in 2013. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
prev story

Whitepapers

Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
HP ArcSight ESM solution helps Finansbank
Based on their experience using HP ArcSight Enterprise Security Manager for IT security operations, Finansbank moved to HP ArcSight ESM for fraud management.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.