France Telecom reports smaller revenue decline in Q2

France Telecom reported first-half revenues down 1.2 percent from a year earlier to EUR 22.14 billion. On a comparable basis, excluding foreign exchange effects and changes in consolidation, revenues were down 2.2 percent. This was led by a 7.5 percent drop in Poland and a 6.0 percent decline in Enterprise, while France was down 2.0 percent. The company blamed the drop in group revenues on regulatory effects, saying revenues were stable when excluding this. The group reported an improved revenue trend in the second quarter, up 0.3 percent compared with a decrease of 0.3 percent in the first quarter, after excluding regulatory measures. This improvement was evident across most of the company's operations, France Telecom said. Overall regulatory effects are expected to take around EUR 1 billion off revenues this year, but excluding this, France Telecom expects stable sales for 2010. The company finished June with 182.0 million customers, up by 3.8 percent or 6.7 million from a year earlier. EBITDA for the first six months was down 3.7 percent to EUR 7.75 billion, and fell 4.6 percent on a comparable basis. Excluding the impact of regulatory measures, EBITDA fell 2.3 percent in the second quarter, after falling 3.0 percent in the first quarter. The EBITDA margin was down 0.9 percent point from a year earlier to 35.0 percent in H1, which puts the company on track for its full-year target, France Telecom said. The company expects a maximum drop of 1 percent point in the EBITDA margin for the full year. Net profit came in at EUR 3.73 billion, up from EUR 2.56 billion a year earlier, boosted by a one-time gain of EUR 1.06 billion from the merger of its UK operations with T-Mobile UK. Capex fell 7.5 percent year-on-year to EUR 2.11 billion or 9.5 percent of revenues. Spending is expected to accelerate in H2, to reach 12 percent of revenues for the full year. France Telecom reiterated a target for around EUR 8 billion in organic cash flow this year, after EUR 2.74 billion in the first half. The company also pledged to pay a dividend of EUR 1.40 per share for 2010, 2011 and 2012. The interim dividend for this year is EUR 0.60 per share. The group is also planning a stock purchase plan for employees.