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Wednesday, 29 January, 2003, 15:39 GMT
Sales rise at France Telecom
A France Telecom phone card
France Telecom is heavily in debt
Sales at France Telecom, one of the world's most indebted companies, have risen in 2002.

Sales at mobile phone arm Orange and internet division Wannadoo improved, but its domestic fixed-line activities is under pressure.

France Telecom sales grew 8% last year to 46.6bn euros (30.8bn), which was lower than analyst expectations.

France Telecom is a stock we're revisiting now because it looks more interesting

strategist at Sarasin Investment Management

But the French giant said earnings before interest, taxes, depreciation and amortisation for 2002 would be "substantially higher than the market consensus."

Refinancing

In Paris, shares in the French telecoms company rallied almost 4% to 24.32 euro on the news.

They bounced back up from sharp falls earlier in the morning, as its promise of better than expected earnings drew in bargain hunters, dealers said.

France Telecom is more than 70bn euros in debt following an extravagant buying spree during the telecoms boom in the late 1990s.

On Wednesday, chief financial officer Michel Combes said the company is currently in talks for a 5bn euros refinancing loan.

Mobile hopes

The state-controlled giant said growth for this year will be driven by its internet arm Wannadoo and Orange, Europe's third largest mobile phone group.

Orange netted added 1.1 million customers to its database over the crucial Christmas period.

It has so far has sold more than 250,000 picture phones, but said consumers only purchased about 40,000 of its top-end smart phones over the festive period.

Meanwhile, rival Vodafone recently announced it sold 380,000 of its new picture messaging data phones and expected to hit a sales target of one million by the end of March.

Orange, 85%-owned by France Telecom, is expected to appoint a successor to chief executive Jean-Francois Pontal next month.

Shares rebound

France Telecom stock lost more than 60% of its value last year on concerns about its enormous debt mountain.

But so far this year, shares have staged a strong comeback by rebounding nearly 40%, partly due to successful refinancing of debt payments and growing confidence in new chairman Thierry Breton.

Under Mr Breton's leadership, France Telecom has focused on its core activities and the reduction of its debts.

"France Telecom is a stock we're revisiting now because it looks more interesting," said a strategist at Sarasin Investment Management in London.

"With the management change, strategy now is looking much more cash flow and profitability-oriented."

See also:

05 Dec 02 | Business
04 Dec 02 | Business
29 Nov 02 | Business
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