Paris :  France Telecom has said first quarter operating profit declined, missing analysts' estimates, as revenue from business sales fell.

Earnings before interest, tax, depreciation, and amortisation (Ebitda) dropped 5.5 per cent to 3.76 billion euros (Dh18.21 billion) from 3.98 billion euros a year earlier, the Paris-based company said in an e-mailed statement yesterday. Analysts had predicted Ebitda of 3.86 billion euros, the average of 16 estimates. Sales dropped 2.7 per cent to 10.96 billion euros on a comparable basis.

France's biggest phone company aims to participate in consolidation in European mobile-phone markets as revenue growth slows and phone subscriptions may exceed countries' populations. On April 22, Swiss regulators rejected a proposed merger of France Telecom's Swiss operations with those of TDC on competition grounds. The company's enterprise revenue fell 6.9 per cent to 1.77 billion euros in the first quarter.

Targets

"The enterprise business is likely to recover over 2010 as business capital spend recovers," Michael Kovacocy, an analyst at Daiwa Capital Markets in London, said in a note to clients. Confirmed targets "should help ease persistent market concerns of a decrease in this year's guidance," he said.

The company yesterday reiterated its target for organic cash-flow generation of about eight billion euros this year and next.

The enterprise revenue decrease "reflects an accelerated downturn in traditional data services and slower growth in advanced business network services," the company said in yesterday's statement. By contrast, "Africa and the Middle East were particularly dynamic."

France Telecom is looking for growth in emerging markets, especially in Africa, where it has operations in Cameroon, Senegal, and Niger. On April 7, Chief Executive Officer Stephane Richard said the company could spend as much as seven billion euros on deals in Africa and the Middle East, partly targeted at building a bigger "regional cluster" in West Africa.

Revenue in Africa and the Middle East climbed 7.3 per cent in the quarter, compared with a 2.1 per cent decline in France and a 10.2 per cent decline in Poland, the company said yesterday.

On Tuesday, France Telecom and Orascom Telecom Holding announced the terms of a deal to end a two-and-a-half year legal dispute over their joint ownership of the Egyptian Co for Mobile Services, better known as Mobinil. The deal involves France Telecom making a settlement payment of $300 million (Dh1,101 million) to Orascom.