France Telecom is to cut its shareholder dividend for this year and next, after admitting it is facing “a more difficult environment than initially expected.”

The firm behind the Orange mobile brand says it will pay a dividend of at least EUR0.80 in 2012 and 2013, down from the EUR1.21 to EUR1.35 indicated for 2012 earlier this year.

The firm warned it was facing “deteriorating macro-economic outlook, strong competition in the French mobile market [via Iliad’s Free Mobile] and continued regulatory pressure.” However, it said it expects the situation to improve from 2014.

“In 2013, operating cash flow will face additional downward pressure due to the significant pricing impact of a fourth player entering the French mobile market, and a macroeconomic and regulatory environment that will continue to be challenging,” said CEO Stephane Richard. “Measures begun in 2011 to deal with these multiple shocks will be expanded on in 2013.”

Group revenue dropped 3.5 percent to EUR10.76 billion in Q3, or by 1.1 percent excluding the regulatory impact. Sales in France, which accounted for almost half of the group total, fell by 5.4 percent to EUR5.28 billion. Earnings (EBITDA) were down 7.3 percent to EUR3.65 billion, representing 33.9 percent of revenue (down 1.4 percentage points from a year ago).

Analysts had expected third-quarter revenue of 10.74 billion euros and EBITDA of 3.62 billion, according to a poll of 12 analysts by Reuters.

The group had 227.2 million customers at 30 September 2012 (excluding MVNOs), an increase of 3.1 percent year-on-year. This comprised 168.8 million mobile subscribers, a 4.6 percent increase.