France Telecom, while aware that an economic recovery is coming, has yet to see it have a true affect on its earnings.
Plagued by a challenging economy and changing regulatory environment, France Telecom's Q1 2010 Earnings before interest, taxes, depreciation and amortization (EBITDA) decreased 5.5 percent to $4.79 billion from $5.24 billion in Q1 2009, missing analyst forecasts of $5.1 billion. Meanwhile, company revenue declined two percent to $14.5 billion from $14.8 billion in 2009.
While France Telecom is seeing some uptick in the consumer market, business service revenue growth continues to be elusive. "The recovery is clearly still not happening in the enterprise market, but in the wider consumer market we are observing a slow, gradual improvement," Chief Financial Officer Gervais Pellissier said in a conference call with reporters.
At the same time, France Telecom reported it's on track to reach its $10.56 billion cash flow goal this year and that overall 2010 revenue will remain "stable." Regulatory changes continue to make a dent in France Telecom's earnings. In particular, a regulatory decision to reduce the fees it can charge other service providers to connect phone calls could cut $1.32 billion from overall 2010 revenue.
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