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France Tel sees African business slow

France Telecom on Thursday stuck to its cash flow goal for 2008, in spite of feeling the impact of the economic slowdown on its Spanish business and in some African countries.

The former French monopoly operator recorded a 2.3 per cent increase in revenue growth in the three months to September.

The company said it was on track to generate more than €7.8bn ($10bn) in free cash flow this year.

However, slower growth in some of its African operations could be a warning signal for the company, which is counting on the continent as its main source of rapid emerging market revenue growth.

Shares in France Telecom have outperformed those of its European peers over the past four months and the company is sticking by its plans to pay more in dividends than last year’s €1.30 per share.

Since the beginning of the year France Telecom’s revenue growth has outstripped economic growth in the countries in which it operates, “which shows the resilience of our business”, said Gervais Pellissier, finance director.

Weaker economic growth in Spain squeezed mobile revenues, which were down by 1.8 per cent in the third quarter.

But Mr Pellissier said France Telecom still envisaged doing better than its rivals in that market.

Vodafone’s share price fell heavily in July when it revealed a sharper than expected fall in its Spanish earnings.

The slowdown in France Telecom’s Spanish operations was cushioned by solid growth in its French and British mobile businesses. The decline in the company’s traditional fixed-line business in France has also slowed.

France Telecom has stepped up its expansion in Africa in recent months and now has operations in more than a dozen countries.

Growth in revenues from the company’s operations in Africa, the Middle East and central and eastern Europe slowed to 7 per cent in the third quarter, from 8.3 per cent in the first half of the year.

However, France Telecom is relatively less exposed to emerging markets, which accounted for 15 per cent of its revenues in the first nine months of 2008. Its African operations are still small.

The deceleration was confined to a few African countries hit hard by higher food and oil prices, and revenues were still growing strongly, the company suggested.

Источник: Financial Times

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