Paris: France Telecom, the country's biggest phone operator, said it will maintain its per-share annual dividend of 1.40 euros (Dh6.71) through 2012 as second-quarter profit slid 2.5 per cent.
Earnings before interest, taxes, depreciation and amortisation (ebidta) fell to 3.98 billion euros from 4.08 billion euros a year earlier, the Paris-based company said in an e-mailed statement. The profit matched analysts' estimates.
Revenue slipped 1.7 per cent to 11.2 billion euros. The firm's dividend pledge may reassure markets that had been concerned it may cut back on the cash payout, analysts said.
"There were fears that France Telecom might replace part of the cash dividends with a share buyback," Saeed Baradar, Societe Generale's telecommunications sales specialist, wrote in a note to clients. The three-year confirmation "will have a positive impact."
France Telecom aims to overhaul its domestic business and find new clients abroad under new chief executive officer Stephane Richard. This month, Richard unveiled a plan to increase the company's customers to 300 million by 2015, from almost 200 million now.
The company said it sees an impact of about 1 billion euros from regulatory measures in 2010. Excluding that, revenue in the full year will be stable, it predicted. Ebitda margin erosion for the year will be a maximum of one per centage point, it said.
Reasonably cautious
"We remain, like all big consumer businesses, reasonably cautious [about market conditions]," chief financial officer Gervais Pellissier said.
"In general, growth is a bit less strong than we anticipated in macroeconomic terms."
The company said it will maintain capital expenditure at 12 per cent of revenue in 2010. It confirmed its target for annual cash flow of about 8 billion euros for 2010 and 2011. Africa and the Middle East led the company's revenue growth with an 8 per cent increase in the first half.
It is one of the main "motors of growth" for France Telecom, the CFO said.
Sales in Spain rose 2.5 per cent, while those in France climbed 0.3 per cent between now and 2012, the company said July 5.
France Telecom is looking for expansion in Africa and the Middle East to complement existing operations in countries including Jordan, Kenya, and Cameroon. The company is willing to spend as much as 7 billion euros on deals in the region, Richard said in April.
Richard has made employee welfare a priority after a series of suicides by workers hastened the departure of his predecessor as CEO, Didier Lombard, who is now chairman.
A "new social contract" with employees will cost about 200 million euros between now and 2012, the company said July 5.
Since taking over in March, Richard has signalled a break with Lombard's interest in developing exclusive content for France Telecom's communications platforms.
The company will instead look for partnerships with existing content providers that could include minority investments, Richard said.
