Feeds

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

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

Providing a secure and efficient Helpdesk

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. ®

Beginner's guide to SSL certificates

More from The Register

next story
Scrapping the Human Rights Act: What about privacy and freedom of expression?
Justice minister's attack to destroy ability to challenge state
WHY did Sunday Mirror stoop to slurping selfies for smut sting?
Tabloid splashes, MP resigns - but there's a BIG copyright issue here
Hey Brit taxpayers. You just spent £4m on Central London ‘innovation playground’
Catapult me a Mojito, I feel an Digital Innovation coming on
Google hits back at 'Dear Rupert' over search dominance claims
Choc Factory sniffs: 'We're not pirate-lovers - also, you publish The Sun'
EU to accuse Ireland of giving Apple an overly peachy tax deal – report
Probe expected to say single-digit rate was unlawful
Inequality increasing? BOLLOCKS! You heard me: 'Screw the 1%'
There's morality and then there's economics ...
While you queued for an iPhone 6, Apple's Cook sold shares worth $35m
Right before the stock took a 3.8% dive amid bent and broken mobe drama
EU probes Google’s Android omerta again: Talk now, or else
Spill those Android secrets, or we’ll fine you
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
The next step in data security
With recent increased privacy concerns and computers becoming more powerful, the chance of hackers being able to crack smaller-sized RSA keys increases.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.