France Telecom to shed 17,000 jobs

PARIS, France (Reuters) -- France Telecom unveiled plans to push forward with a restructuring that would include cutting 17,000 jobs worldwide, while it promised investors a 20 percent hike in their dividend this year.
The French telecoms operator, weeks after a profit warning triggered by the loss of fixed-line revenues to the Internet, also posted a 2.8 percent rise in full-year core earnings on Tuesday, in line with the most recent market estimates.
Earnings before interest, tax, depreciation and amortization (EBITDA) -- which it also describes as gross operating margin -- of 18.42 billion euros ($21.9 billion) compared with a Reuters consensus forecast of 18.46 billion and with 17.92 billion euros in 2004.
The owner of the country's top mobile operator, Orange, proposed a dividend of 1 euro for 2005 and 1.20 euros for 2006, beating market expectations of a 1 euro sum for 2006.
"The results are broadly in line with expectations, but the dividend for 2006 is slightly higher than expected," one London-based analyst said.
France Telecom shares were tentatively indicated higher ahead of the open.
The group said it planned to cut 16,000 jobs in France and 1,000 abroad between 2006 and 2008, which together amounted to about 8 to 10 percent of its staff.
However, it stressed that the reductions -- part of an "adaptation of the cost structure" -- would not involve forced redundancies and that the departures were in line with previous efforts to trim the workforce through natural wastage.

Looking ahead

For 2006, France Telecom said it expected sales to rise 7 percent on a published basis and 2 percent on a like-for-like basis and it aimed to generate underlying cash flow of 7 billion euros.
However, it said EBITDA as a percentage of sales would drop by 1 to 2 percentage points in 2006 against 2005.
"Revenues are slightly higher. The guidance is unchanged which in itself is good news after two profit warnings in recent months," a trader at a foreign bank in Paris said.
"The dividend that goes to 1 euros in 2005 and 1.20 in 2006 is good news. All in all its rather good, certainly not the disaster some were bracing for. Shares should add 1 to 2 percent this morning," the trader said.
Europe's second-largest telecoms operator in terms of sales was one of the worst performers among CAC 40 blue chip stocks in 2005. In January, it issued a profit warning and abruptly ousted its finance director.
Its shares, which lost more than 27 percent in the past six months and more than 14 percent in the last month alone, closed barely changed on Monday at 18.60 euros.
France Telecom said it wished to strongly increase shareholder return in the next few years and aimed to distribute 40 to 45 percent of its underlying cash flow.
The company also said it was targeting a ratio of capital expenditures to revenues of about 13 percent for 2006.

Source: CNN