France Telecom is to cut shareholder dividends and has delayed a planned share buyback as it seeks to stabilise its business in the face of rising domestic competition and the euro debt crisis.
The Orange parent revealed in its latest earnings this morning that dividends will decrease in 2012 and 2013, while a share buyback promised this year following the recent divestitures of its Swiss and Austrian units has been delayed until at least 2013.
"We are conscious that the macro-economic and competitive context in 2012 remains uncertain, and are therefore further strengthening the rigorous financial and operational management approach taken in 2011, and we have decided to adapt our shareholder remuneration policy to ensure the financial strength of the group at all times,” said CEO Stéphane Richard in a statement.
Another problem facing the firm in its home market has been the impact of new competition in the form of Free Mobile. Orange separately released its “first assessment of the impact of Free Mobile’s launch on Orange France” this morning, revealing that its French mobile subscriber base had declined by 201,000 subscribers (net) as at 15 February as a consequence, representing around 0.7 percent of its base (27 million at year-end 2011).
In the first 48 hours of Free’s launch on 10 January, Orange number portability requests peaked at 150,000 a day, the firm said, “but have now decreased tenfold.“
France Telecom’s full year and Q4 2011 earnings were broadly in line with expectations. In Q4, earnings (EBITDA) slipped 3.9 percent to EUR3.47 billion on sales of EUR11.43 billion, down 2.6 percent. Analysts had predicted EBITDA of EUR3.42 billion on sales of EUR11.38 billion, according to data compiled by Bloomberg. Full-year EBITDA was EUR15.08 billion (down 3.7 percent) on sales of EUR45.28 billion (down 0.5 percent).
“The improvement in our commercial position in 2011 in France, Spain and most of the countries in which we are present in Africa and the Middle East, enabled us to achieve our financial objectives despite a more challenging environment than expected,” added Richard. “Having acquired a foothold in Iraq and the Democratic Republic of Congo this year, the Group now serves more than 226 million customers around the world.”