05 March 2009

France Telecom announces dividend hike

PARIS, March 4 - France Telecom is well equipped to win market share in 2009 despite the global economic slump, the company said on Wednesday when announcing a 7.7 per cent dividend hike on the back of in-line 2008 earnings.

Europe’s third-largest telecoms operator in terms of market value behind Britain’s Vodafone and Spain’s Telefonica also vowed to keep cash flow generation in 2009 and beyond unchanged at €8bn ($10.1bn) and to keep capital expenditures in a 12-13 per cent of sales range.

France Telecom’s earnings follow positive results from European peers such as Deutsche Telekom or Telefonica that have highlighted the sector’s resilience to the financial crisis.

France Telecom’s 2008 organic cash flow rose to €8bn from €7bn in 2007, in line with its target of organic cash flow of more than €7.8bn.

This brought its ratio of net debt to earnings before interest, tax, depreciation and amortisation (ebitda) to 1.85 at the end 2008, in line with a target of keeping the ratio at less than 2.

But net income fell 35 per cent to €4.07bn from €6.3bn in 2007 because of goodwill writedowns and higher taxes.

Ebitda rose 1.5 per cent to €19.4bn on revenue of €53.5bn, up 1 per cent. On a comparable basis revenue rose 2.9 per cent.

The group proposed a 2008 dividend of €1.40, up from €1.30 in 2007.

Analysts polled by Reuters Estimates had targeted ebitda of €19.18bn on revenue of €53.43bn and a 2008 dividend of €1.40, on average.

France Telecom shares have lost 13 per cent this year, slightly underperforming the European telecoms sector, which has lost 10 per cent. The stock rose as much as 2.6 per cent to €17.86, and traded at €17.73 at 9:08am on Wednesday.

source: Financial Times

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