2007 annual results: a very good Group performance

France Telecom today announces its audited financial results for 2007.

Consolidated revenues rose to €52.959 billion at 31 December 2007, growth of 2.8% on a comparable basis. Growth was particularly strong in the fourth quarter of 2007 (+3.6% on a comparable basis).

In 2007, the Group met or exceeded all of its operational and financial objectives
• gross operating margin (GOM) of €19.1 billion, up 3.4% on a comparable basis

• GOM rate (GOM/revenues) of 36.1%, stabilised compared with 2006 (+0.2 points)

• organic cash flow of €7.8 billion, above the objective of €7.5 billion

• capital expenditure (CAPEX) of €7.0 billion, with an investment rate (CAPEX/revenues) of 13.2%, in line with the stated objective of about 13% of revenues

• Group share of net income of € 6.3 billion, compared with €4.1 billion in 2006. On a comparable basis, after adjusting for the main non-recurring items, it was €4.6 billion in 2007, up from €3.7 billion in 2006

• net debt to GOM ratio of 1.99 and net debt at yearend of €38.0 billion. The 2008 objective was therefore met one year early

• a dividend of €1.30 per share for 2007 will be proposed to the Annual General Meeting of Shareholders of 27 May 2008 and payable on 3 June 2008.

2008 objectives

• organic cash flow of more than €7.8 billion based on:
• the stability of the GOM rate
• maintaining the investment rate (CAPEX /revenues) at about 13% of revenues
• these objectives are set in the context of moderate growth of the main Western European markets, continued development of new services, and the continuation of a favourable trend in markets with high growth potential


policy for use of cash

With regard to indebtedness, the ratio of net debt to GOM will be maintained in the medium term at a level of less than 2 in current market conditions. In this context, and given the organic cash flow generation expected for 2008, the Board of Directors indicates that the dividend, to be proposed to the Annual General Meeting of Shareholders for 2008, will be greater than €1.30 per share. The Board of Directors reserves the option of raising the distribution rate above 45% of organic cash flow, if appropriate. In addition, each year the Board of Directors will examine the possibility of additional shareholder remuneration taking into account its cash flow projections and its investment projects.

key figures

2007 2006 2006 Change Change
In millions of euros historical basis comparable basis
(unaudited) historical basis comparable basis
(unaudited)
Consolidated revenues 52 959 51 702 51 541 2.4% 2.8%
of which:
Personal Communication Services 29 119 27 745 27 538 5.0% 5.7%
Home Communication Services 22 671 22 487 22 725 0.8% -0.2%
Enterprise Communication Services 7 721 7 652 7 689 0.9% 0.4%
Inter-segment eliminations -6 552 -6 182 -6 411 - -
Gross operating margin (GOM) 19 116 18 539 18 486 3.1% 3.4%
GOM/Revenues ratio 36.1% 35.9% 35.9% +0.2 pt +0.2 pt
GOM by business segment:
Personal Communication Services 9 977 9 686 9 434 3.0% 5.8%
Home Communication Services 7 799 7 265 7 641 7.3% 2.1%
Enterprise Communication Services 1 343 1 590 1 414 -15.6% -5.1%
Inter-segment eliminations -3 -2 -3 - -
Operating income 10 799 6 988
Net income Group share
6 300 4 139
CAPEX (excluding GSM and UMTS licenses) 6 979 6 732 6 721 3.7% 3.8%
CAPEX/Revenues ratio 13.2% 13.0% 13.0% +0.2 pt +0.2 pt

Excluding disposal of PagesJaunes
Organic cash flow 7 818 7 157 6 906
Net financial debt 37 980 42 017
Net financial debt/GOM ratio 1.99 2.27

The Board of Directors of France Telecom SA met on 5 February 2008 and examined the Group's financial statements.
Commenting on the 2007 results, France Telecom Chairman and Chief Executive Officer Didier Lombard said: “The NExT plan, designed to turn the Group into Europe's leading convergent operator, has transformed our businesses completely just two years after it was launched. With more than 170 million customers worldwide today, two-thirds of whom are under the Orange brand, the Group is clearly positioned as one of the major players in its sector. The results we present today exceed the commitments we made, including that of debt reduction, and reinforce our vision of the communications of tomorrow. In 2007, our customers benefited fully from the growth of new usages and services and the expansion of our networks.

This very strong performance reflects the excellent contribution made by the Group's employees, who will be rewarded through existing results-based remuneration systems. In addition, we are studying the possibility of awarding a supplementary profit-related payment to all employees with respect to 2007.

The Group’s transformation is bearing fruit and therefore we are entering 2008 with strong fundamentals. We will continue to develop new services that will accelerate our growth over the medium term. We are confident in our ability to maintain the gross operating margin rate at the current level and to generate organic cash flow greater than that of 2007.

As a result, we are able to propose the payment of a dividend of €1.30 per share for 2007 to the Annual General Meeting of Shareholders and expect to increase our distribution rate in the years to come.”

for further information
The slide presentation prepared for the publication of the 2007 annual results can be viewed on the France Telecom website at http://www.francetelecom.com

Priyanka Jain
Mutual PR
9350427472
Priyanka@mutualpr.com

France Telecom, one of the world's leading telecommunications operators, serves more than 147 million customers on five continents (220 countries or territories) as of March 31, 2006 and had consolidated sales of 49 billion Euros in IFRS in 2005 (12,8 billion Euros for the 1st quarter 2006).Launched in June 2005, the NExT program (New Experience in Telecommunications) will allow the Group to pursue its transformation as an integrated operator and to make France Telecom the benchmark for new telecommunications services in Europe. On June 1, 2006, Orange thus became the single brand for Internet, television and mobile in France and the United Kingdom, and Orange Business Services the brand name for the services offered to businesses worldwide. France Telecom is number two mobile operator and provider of internet services in Europe and amongst the world leaders in providing telecommunication services to multi-national companies.
France Telecom (NYSE:FTE) is listed on Euronext Paris Eurolist market and on the New York Stock Exchange.

This release was published on openPR.