WND Telecom

France Telecom gave an improved full-year outlook after reporting strong results for the third quarter. The company posted revenues up 3.3 percent from a year earlier to EUR 13.508 billion, while gross operating profit increased 4.3 percent to EUR 5.094 billion. The margin improved 0.6 point from a year earlier to 37.7 percent in Q3. The operator said it saw an improved performance in more mature Western European markets, particularly the UK, Spain and its home market France. It now expects the gross operating margin to stabilise this year versus 2006, while its target for organic free cash flow in 2007 has been raised to EUR 6.8 billion from EUR 7.5 billion.

Sales at the personal communications division rose 5.6 percent to EUR 7.546 billion. The company added 4.3 million mobile customers in the period for a total 106.9 million at the end of September. The number of Edge and UMTS customers grew to 10.535 million, from just 3.896 million a year ago, while the MVNO base in Europe increased to 1.68 million from 734,000 a year ago.

Home communication sales were up 0.9 percent to EUR 5.672 billion in the third quarter. The number of consumer broadband customers totalled 11.441 million in Europe at the end of September, up 22.4 percent year-on-year on a comparable basis. Multi-play customers also increased, to 5.717 million Livebox users, 4.185 million VoIP customers and 1.017 million IPTV subscribers.

Enterprise sales rose 3.3 percent to EUR 1.914 billion. France Telecom attributed the improved growth rate to a slowdown in the decline in revenues from traditional data services, as the migration to IP services slowed. It also saw a stabilising French fixed-line market. It continued to see strong demand for IP VPN and ICT services, as well as its Business Everywhere mobility offer, which now has 550,000 users in France.

Capital expenditure in the quarter totalled EUR 1.434 billion, down 5.7 percent from a year ago, while France Telecom expects to increase the amount in Q4. Looking ahead for Q4, France Telecom warned that cuts in roaming rates will start to have the full effect and tough competition in Western Europe may lead to higher subscriber acquisition costs. It also plans to continue to expand unlimited mobile service offers and maintain its focus on cost reductions. Growth in emerging markets, especially for mobile services, is expected to slow somewhat due to tougher competition and higher penetration levels.