France Telecom sees drop in net profits

20 February 2013 | Laura Hedges

France Telecom’s net profit plummeted from €3.8 billion in 2011, to €820 million last year in part due to a €1.84 billion impairment charge in three international markets.

The French operator faced the charge on goodwill and assets in 2012 for its operations in Poland, Egypt and Romania.
 
"We’ve seen risks intensify in some of our geographies, so we took impairment charges to comply with accounting rules," said Gervais Pellissier, finance director at France Telecom.

Further, the arrival of low-cost, domestic rival, Iliad, owned by entrepreneur and billionaire Xavier Niel, has forced France Telecom to cut its prices as Iliad secured 5.4% of the mobile market last year.

Sales fell 3% from €44.7 billion to €43.5 billion in 2012 and operating income almost halved, but the company said that operating cash flow for 2013 will be €1 billion less than in 2012.

"We’re confirming our operating cash flow will stabilise or rebound in 2014 on the back of better revenue outside of France and cost cuts in France," Pellissier added.

The French government is rumoured to be looking to replace France Telecom’s current CEO, Stéphane Richard, this year.

Topics: France Telecom, Stéphane Richard