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France Telecom Announces 89 Percent Boost in Profits and Massive Job Cuts

Date: 10/31/2007 11:26:13 PM

PARIS France Telecom SA said Tuesday that 2005 net profit rose 89 percent thanks to EUR1.4 billion in onetime gains but also announced it would slash 17,000 jobs to reduce costs.

In a statement capping a tumultuous year, Europes secondlargest telecoms company said net profit rose to EUR5.71 billion (US$6.79 billion) from EUR3.02 billion (US$3.59 billion) in 2004, the company said in a statement. That figure topped analyst expectations of EUR5.19 billion (US$6.17 billion).

France Telecom said its earnings before interest, taxes, depreciation, and amortization rose 2.8 percent to EUR18.42 billion (US$21.9 billion), while sales rose 6.2 percent to EUR49.04 billion (US$58.3 billion), thanks to the acquisition of Spanish operator Amena and the consolidation of other assets.

The earnings figure fell slightly short of analyst expectations, while the sales figure topped forecasts.

The statement comes after a year of management turmoil and declining share prices for one of the worlds largest providers of highspeed Internet and mobile phone services.

In a conference call with journalists, France Telecom Chief Financial Officer Gervais Pellissier said the company would cut 17,000 jobs, or around 8.5 percent of its 200,000strong work force, over the next three years in an effort to reduce costs. Almost all of those cuts 16,000 would come in France.

In the first half of the year, the manager who had brought France Telecom back from the brink of insolvency Thierry Breton decamped to Frances Finance Ministry.

The companys shares have lost 10 percent of their value already in 2006, and have fallen 23 percent in the past 12 months.

The company plans to integrate mobile and fixedline services in an effort to keep its clients and prevent cheaper, more flexible telecom companies from eroding its profits.

France Telecom said it would pay between 40 percent and 45 percent of its cash flow for its annual dividend in an effort to meet investors demand to return more money to shareholders.

France Telecom said it would maintain its dividend proposal of EUR1 per share for 2005 earnings, and would raise that to €1.20 per share in 2006.

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