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France Telecom Reports Q3

PARIS -- Financial elements for Q3 2006
  • Third-quarter 2006 revenues up 1.2% on a comparable basis to 13.1 billion euros (+8.9% on an historical basis)
  • Gross Operating Margin Rate of 37.4% for third quarter 2006, in line with the objectives announced
  • Ratio of Capex/Revenues of 11.6%, compared with 12.0% in the third quarter 2005 and based on data on a comparable basis (11.7% on an historical basis), in line with the first half of 2006
  • France Telecom confirms its ability to generate organic cash flow of 7 billion euros in 2006


Commenting on the third-quarter results, France Telecom Chairman and Chief Executive Officer Didier Lombard stated: "The evolution of our business in the third quarter of this year confirms our expectations. Revenue growth is in line with that recorded in the first half, while our business model continues to evolve.

The gross operating margin rate and investment expenses are in line with the objectives announced, which gives us confidence in our ability to generate organic cash flow of 7 billion euros in 2006. These results reflect the tangible evidence of the deployment of the NExT convergence strategy, which has become a reality for our customers with the launch of our unik offer this quarter."

Gervais Pellissier, Chief Financial Officer of France Telecom, added: "These results reflect the solid balance between growth and profitability in the mature and highly competitive markets of Western Europe and continued profitable growth in high-potential countries. In the French market, we are witnessing an increase in the number of mobile customers (excluding MVNO), particularly in mobile Broadband, whilst our new ADSL offers have proven successful. Today, 53% of our ADSL customers are Livebox equipped. In the United Kingdom, where revenues have remained stable over the course of the third quarter, the intensification of our sales efforts resulted in a return to growth in the contract client base for mobile customers. In Spain, we focused our efforts on preparing for the transition to the Orange brand in early October.

The Enterprise segment, while benefiting from a favorable comparison effect this quarter, continues its transformation towards IP technologies and related services.

Emerging markets again turned in a dynamic performance with overall growth of more than 19%, both in Eastern Europe, particularly with regard to the extension of the TV for mobile offer in Romania, and in Africa where the Group has just launched a triple play offer in Senegal."

Orange (NYSE: FTE)

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