On the other hand the regulated tariffs will grow

The capacity of resistance and adaptation of France Telecom crisis yesterday reassured investors. "Our business performance in the first half remains solid despite the impact of regulatory measures and economic environment continues to deteriorate," said Didier Lombard, CEO of the historical operator yesterday.

Group turnover declined slightly (0.5) on the first six months of the year at constant exchange rates. Taking into account the impact of the effects of change, it moves back even of 3.2. But as France Telecom was committed, the decline of its sales remains well below that of the GDP in the countries where it is (-2.9, according to the IMF).

The operator is particularly resistant in France where he made nearly half of its sales. They grew by 1.5 in the first half on a comparable basis, including through market, mobile telephony on which Orange account now 25,28 million customers. The Group has sold 1.1 million iPhone in France since 2007 and is now "out of stocks practically everywhere."

France Telecom has also benefited from its presence in Africa and the Middle East where its activity increased by 5.8. He also said he was possibly interested in certain African assets of Zain operator, but "there is not, to our knowledge, of subsidiary initiated sales subsidiary process".

These performance allowed the operator to offset the much more difficult situations Spain (4.8) and Britain (-2,6) where the economic crisis is deep.

There is no less that sales of France Telecom deteriorate over the months. After a growth of 1.7 in the fourth quarter of 2008, and 0.4 in the first quarter of 2009, the turnover contracted by 1.3 in the second quarter (excluding the effect of foreign exchange). And the situation will not improve: sales will remain under pressure in the second half, Didier Lombard warned yesterday. For two reasons: firstly, the GDP of the country where changing the operator should still decrease of 2.6. On the other hand, the regulated tariffs will grow.

Adaptive capacity

Despite this little environment, France Telecom showed that he knew to adapt. If turnover has deteriorated, the gross operating margin has it improved to 35.4 in the second quarter, with the reduction of overhead costs and business expenditures. "The first results of economies and transformation plans helped to cushion the economic slowdown", welcomed the President of the company. France Telecom has also reduced its investments of more than EUR 300 million over the three month money (10.2 of net sales).

For the second half, "we must continue to be reactive and also swift and smaller operators," continued Didier Lombard. Savings programs will be strengthened and the business transformation plan will "rise in power". These measures should "limit erosion" of the gross operating surplus. Combined with the decline in investment, they must also allow France Telecom of an organic cash flow of EUR 8 billion this year, comparable to the level of 2008. Confirmed yesterday, this objective is strengthened with the first six months where cash has already increased by 12.4 to EUR 4.1 billion. Which has helped France Telecom win 3.32 to 17.56 euros yesterday in Paris.

Read "Screen" page 34.