France Telecom, owner of the Orange brand, reported lower earnings and revenue for the first quarter today, admitting that economic and regulatory conditions are continuing to negatively affect its operations in many key markets. EBITDA declined 5.5 percent to EUR3.76 billion, for an operating margin of 34.3 percent. According to Reuters, analysts had expected EBITDA of EUR3.84 billion or a 34.9 percent margin. Revenues fell 2.7 percent to EUR10.96 billion, in line with expectations of EUR11.01 billion. Despite lowering network costs, profits were hit by regulatory changes – notably lower mobile termination rates – in many of its European markets. However, the firm was able to reaffirm its full-year guidance, which included setting annual capex levels at around 12 percent of revenues. “The recovery is clearly not here yet in the enterprise market and in the broader consumer market it is likely to be slow and gradual,” CFO Gervais Pellissier said in a conference call. “If you look at our revenues overall, it does not reflect that the dynamism has fully returned to the economy.”

Pellissier also noted that France Telecom is likely to appeal the recent decision by Swiss regulators to block its merger with rival mobile operator Sunrise in the country. “We will probably appeal, although the final decision hasn’t been made yet,” said Pellissier. “It is a way to protect our rights since we can always abandon the appeal later as we study the case and the issues.” Meanwhile, the latest results were the first to be overseen by new CEO Stéphane Richard (pictured) who tookover at the firm in March. Richard noted in a statement that “the process of defining the Group’s new business plan is well underway and by the summer we will present France Telecom’s commitments and action plan for the next five years.”