France Telecom CEO Plans Asset Sales on Domestic Competition
France Telecom SA (FTE) Chief Executive Officer Stephane Richard today laid out plans to explore the sale of European assets, partner with firms like Google Inc. on network costs and target low- and high-end consumers to fight mounting domestic competition.
The company is likely to sell a European asset worth more than 1 billion euros ($1.4 billion) in the next 12 months as part of a review of its operations outside France, Richard said at the company’s investor day in Paris. It’s also hopeful deals can be reached with companies such as Google and Apple Inc. to manage the costs of building ever-faster networks, he said.
Richard is looking to emerging markets, new technologies, and possible asset sales to revitalize France Telecom ahead of the entry of a fourth mobile operator, Iliad SA (ILD), in the French market next year. Paris-based France Telecom may sell its minority stakes in operators in Austria and Portugal, the CEO said last week.
“The coming months in the French market are going to be tough,” Richard said today. To match what’s expected to be aggressive competition from Iliad for price-conscious consumers, France Telecom will expand its offerings at the low end of the mobile market, domestic business head Delphine Ernotte said.
France Telecom earlier today unveiled a series of financial targets for a return to overall growth within five years, including shaving more than 3 billion euros from its cost base by 2015. It’s also planning about 18.5 billion euros of capital expenditure for 2011 to 2013, much of it devoted to ultra-fast fourth-generation wireless and fiber-optic networks in France.
The goals set out today are “ambitious” and more aggressive than expected given the telecommunications sector’s challenges in Europe, Thomas Friedrich, an analyst at UniCredit in Munich, wrote in a note. The French market, which accounted for about half of company revenue last year, will be the key determinant of the plan’s success, he said.
The company will continue hunting for emerging-market acquisitions following deals in Morocco, Iraq, and Egypt, Richard said today. The CEO, 49, last year unveiled a plan to double emerging-market revenue by 2015, largely through acquisitions focused on Africa and the Middle East.
Richard has led a group of European telecommunications executives who have charged that Google, Apple, and Facebook Inc. are getting a free ride on telecommunications networks by not contributing directly to maintenance and expansion. France Telecom and other operators are confident a deal can be struck that focuses on assistance with more efficient network technology, Executive Vice President Pierre Louette said today.
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