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France Telecom’s H1 2010 results give investors a reassuring message. This publication, above consensus expectations, is noteworthy for the dividend policy announced for the next 3 years (2010 to 2012): guidance of EUR 1.40 per year (NB: equivalent to a current dividend yield of 9.3%!). In general, the recovery of organic growth has been confirmed, thanks to the resilience of the domestic market, improvement in Poland and in the business customer segment. The financial targets for 2010/2011 have been confirmed. PLUS code maintained.
Although the first quarter results of France Telecom have been affected by the new regulatory measures, they remain somewhat disappointing. While performance in the EM geographical zones was firm and improving in Spain and Poland, the main disappointment came from domestic activity and the corporate customers’ division. However, the new management remains reassuring and has confirmed its financial targets for 2010 with FCF of EUR 8 billion, excluding the acquisition of new frequencies. PLUS code confirmed.
France Télécom benefits from a defensive business model, with much of its activity on its domestic market. The operator recently published strong results for 2009 and maintained prudent prospects for 2010 with organic CF targets of EUR 8 billion for 2010 and 2011. Following a difficult period on the social front in
France, the new CEO, S. Richard, is taking matters in hand again.
Apart from exceptional items, the quality of France Telecom’s results for 2009 is good. The management’s message was reassuring with the emphasis on a clear strategy. FT is a well-oiled machine and has several advantages on the stock market: credible targets, real flexibility for a measured external growth policy and the potential held out by internal consolidation operations. Sentiment on this share is therefore improving. PLUS code maintained.
France Telecom has announced robust Q3 results; they were, however, adversely affected by new regulatory provisions (MTR) and by a macro-economic environment which remains under pressure. The fact that margins are holding up well and the confirmation of the Group’s organic CF target of EUR 8 billion for 2009 support the management’s forecasts for 2010 and 2011 (stable FCF). A provision of EUR 1 billion and some doubt over the trend of business in 2010 cooled market sentiment temporarily. PLUS code maintained.
France Telecom benefits from a defensive business model ideally suited to the uncertainty of the current market, which also complements our more offensive recommendations in the European Telecoms sector (Telefonica and Vodafone). FT recently confirmed its 2009 targets (organic FCF of EUR 8 bn, in particular). The group is maintaining FCF at the same level for fiscal years 2010 and 2011. Both valuation and dividend yield are attractive. PLUS rating unchanged.
France Telecom has published good results for the 1st half of 2009 (above expectations), despite the continuing heavy pressure on revenues. Margins have stood up well and the confirmation of the group’s organic CF target at EUR 8 billion for 2009 has increased visibility for the second half, despite the fact that the macroeconomic and regulatory environment will remain difficult. We believe that the share still has substantial potential to make further gains. PLUS code confirmed.
Results published by France Telecom for Q1 2009 were slightly below consensus, reflecting the fact that the economic downturn is now affecting the entire European telecom sector. Despite the further deterioration of the market environment which has proved worse than expected within the sector, the historic operator is still well equipped to steer its way out of this crisis without damage to its essential quality of cash flow generation (EUR8 billion in 2009e). We believe that the share still has strong upside potential. PLUS code confirmed.
France Telecom benefits from a defensive business model, making it an ideal complement to current market uncertainties and our other more aggressive recommendations in the European telecommunications sector (Telefonica and Vodafone). The main characteristics of this operator are its simple industrial profile, a lower operating risk than its competitors and a very small financial risk. We are introducing this recommendation with a PLUS code.
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