France Telecom S.A. (FTE)

Revenues in France increased to 11.840 billion euros in the first half of 2009, up 1.5% from the first half of 2008 on a comparable basis (+1.2% on an historical basis).

Revenues from Personal Communication Services were up 6.4% on a comparable basis to 5.373 billion euros in the first half of 2009 (+6.3% on an historical basis).

The number of contract customers continued to rise steadily, with 17.327 million contracts at 30 June 2009, a 7.2% increase year-on-year. Contract customers represented 68.5% of the customer base at that date, compared with 66.5% a year earlier. The total number of customers excluding MVNOs (contracts and prepaid offers) rose to 25.287 million at 30 June 2009, an increase of 4.0% year-on-year.

Meanwhile, revenues from data services were up sharply (+26.2% compared with the first half of 2008), generated by both messaging and non-messaging services. Data services accounted for 24.5% of network revenues in the first half of 2009, a gain of 4 points in relation to the first half of 2008 on a comparable basis.

The number of mobile broadband service customers rose 34.1% in one year to a total of 12.073 million at 30 June 2009. Internet Everywhere⁹ in particular is growing rapidly, with 419,000 customers at 30 June 2009 compared with 76,000 a year earlier.

There were 2 million MVNO customers at 30 June 2009, up 23% year-on-year from 1.6 million customers at 30 June 2008.

At 7.073 billion euros in the first half of 2009, revenues in Home Communication Services were down 1.5% on a comparable basis, showing a slight improvement over the second half of 2008 (-1.7%). This is attributable to Consumer Services, which decreased by just 0.4% in the first half of 2009, compared with -1.7% in the second half of 2008. Similarly, International Operator services, which were affected by falling wholesale prices (ADSL access, unbundling and wholesale telephone lines, and interconnection), dropped 0.7% in the first half of 2009, as opposed to a 1.0% increase in the second half of 2008.  

Consumer ADSL broadband services continued to grow at a fast pace, with Internet service revenues up 18.1% in the first half of 2009 on both an historical and comparable basis.  

⁹

See glossary.

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Consumer ADSL broadband subscribers totalled 8.639 million at 30 June 2009, providing year-on-year growth of 10.2% with 799,000 additional subscribers in twelve months. ADSL multiservices continued to be buoyant. At 30 June 2009 there were:

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6.991 million Livebox rentals, an increase of 18% in one year, with Liveboxes representing 81% of all ADSL subscribers at 30 June 2009, up from 75% a year earlier;

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6.339 million Voice over IP customers, an increase of 27% in one year, with Voice over IP representing 73% of ADSL subscribers and 91% of Livebox rentals at 30 June 2009; and

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2.339 million digital TV customers (satellite and ADSL television), a 68% increase from a year ago.  At 30 June 2009, there were 416,000 subscribers to Orange satellite TV, launched on 3 July 2008.

Content services continued to experience rapid growth:

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Video on Demand (VOD) services nearly quadrupled, with 17.4 million downloads in the first half of 2009 against 4.6 million in the first half of 2008.

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There were 393,000 subscribers to the Orange sport channels launched on 9 August 2008 and the Orange cinema series launched on 13 November 2008, compared with 130, 000 subscribers at 31 December 2008.

Meanwhile, the drop in revenues from traditional telephone services slowed, reflecting the slowing decline in the number of traditional telephone subscribers on an annual basis (-9.1% at 30 June 2009, compared with -10.2% at 31 December 2008), in particular due to the contraction of naked ADSL¹⁰ growth and of wholesale subscription sales¹¹. Total revenues from traditional telephone subscriptions and services were down 10.3% in the first half of 2009 after dropping 13.1% in the second half of 2008.   

In addition, other revenues in Home Communication Services were down 16.8% on a comparable basis (-18.9% on an historical basis), reflecting in particular the impact of the Chatel law (free telephone assistance), the discontinuation of the e-commerce business, and a drop in telephone advertising revenues.

Second quarter 2009

Revenues from France totalled 5.928 billion euros, registering growth of 0.6% on an historical basis and 1.0% on a comparable basis. Revenues from Personal Communication Services continued to rise and were up 5.5% in the second quarter after rising 7.3% in the first quarter. Meanwhile, Home Communication Services were down 2.2% after falling 1.2% in the first quarter. The downturn is related both to Consumer Services, where revenues from telephone services decreased more sharply, and to slowing growth in Internet services after several quarters of very strong growth.

EBITDA in France was 4.913 billion euros in the first half of 2009, down 1.2% on an historical basis and -0.9% on a comparable basis. The EBITDA margin was 41.5% in the first half of 2009, a decrease of 1.0 points on both a comparable and an historical basis in relation to the first half of 2008.

The drop in EBITDA on a comparable basis is linked to Home Communication Services, and in particular to increased content purchases, the impact of rate reductions for total unbundling of telephone lines and of wholesale line rentals (WLR), the impact of the telecommunications tax introduced on 7 March 2009 (French audiovisual law), and the costs of additional maintenance caused by the January storm in South-western France. These impacts are partially offset by revenue growth and a drop in labour expenses linked to the reduction of the workforce.

Operating income in France was 3.812 billion euros in the first half of 2009, up 1.1% on an historical basis and up 1.6% on a comparable basis. The decrease in EBITDA was more than offset by the reduction in depreciation and amortisation, primarily associated with mobile operations.

Capital expenditure on tangible and intangible assets (CAPEX) in France stood at 964 million euros in the first half of 2009, down 11.3% from the first half of 2008 on both an historical basis and a comparable basis. CAPEX represents 8.1% of first half 2009 revenues, compared with 9.3% in the first half of 2008.

The drop in CAPEX is due to reduced investment in 2G and 3G mobile network capacity and to slower growth in ADSL broadband services. These impacts are partially offset by rising investment in local loops for fixed services and in service platforms linked to TV content operations.

¹⁰

See glossary.

¹¹

See glossary.

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