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Euro Giants Take Cover

Ray Le Maistre
7/30/2009

3:45 PM -- If you're a European incumbent telecom operator, it's time to stock up with durables and head for the bunker, because the recession-induced storm is rolling in.

We heard recently from a bunch of the Tier 2 European carriers that predicted tough times ahead -- see Euro Sales Slipping Away -- and now BT Group plc (NYSE: BT; London: BTA) and Orange (NYSE: FTE) have added to the growing list of operators feeling the squeeze on the Old Continent, with Telefónica SA (NYSE: TEF) seemingly coping better than its peers.

  • France Telecom noted today that, during the second half of this year, it's expecting to take a hit of around €770 million (US$1.08 billion) to its top-line revenues because of "regulatory measures," and experience a "slight reduction in the level of activity" because of the global economic malaise. Pah! (See France Telecom Reports H1.)

  • BT, which has been hampered recently by an almighty mess at its Global Services division, is sticking with its previous guidance of a "decline in revenue of 4 percent to 5 percent" during the current financial year, which ends March 31, 2010. (See BT Reports Q1.)

    Like FT and every other carrier that's not asleep at the wheel, BT is slashing its costs and expects to reduce capital expenditure and operating expenses by more than £1 billion ($1.65 billion) this fiscal year.

  • Telefónica has also been cutting costs as sales have come under pressure in Europe. But it's holding up better than its European brethren, as the Spanish giant has its Latin American growth markets to help pump up its sales numbers, and it's sticking to its full year guidance of overall growth in revenues and operating income. (See Telefónica Reports H1.)

    — Ray Le Maistre, International News Editor, Light Reading

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