Mobile operator France Telecom (Paris, France) is putting its Swiss, Austrian and Portuguese units up for sale, which analysts say could raise as much as $2.9 billion. The announcement came as France Telecom announced second-quarter results just short of analysts' forecasts but stuck to its full-year targets.
The potential asset disposals are part of a broader portfolio review launched by Chief Executive Stephane Richard earlier this year. Amid sluggish growth in mature European markets, Richard is seeking to improve profitability by pulling out of countries where the company is not among the top two players or in businesses where it does not have operational control.
"No talks have yet begun on Switzerland; the process is starting today," said Chief Financial Officer Gervais Pellissier. "We are working with the other shareholders in Austria and Portugal to find ways to alter our stakes there."
The company saw quarterly revenue on a comparable basis slip 1.3% to $16.15 billion as competition intensifies in France ahead of the entry of rival Iliad to the mobile market. France Telecom and its rivals -- Vivendi's SFR and Bouygues Telecom -- have been cutting prices and spending more on marketing ahead of Iliad's launch to try to lock in customers under 12- and 24-month contracts.
Earnings before interest, taxes, depreciation and amortization (EBITDA) on a comparable basis fell 5.9% to $5.5 billion. Analysts were expecting second-quarter revenue of $16.19 billion and EBITDA of $5.6 billion.
Iliad's presence is being felt even before its launch. France Telecom spent more on marketing, which cut 2 basis points off its EBITDA margin to 38.2% in the second quarter.
Richard also said the company would launch a low-cost mobile brand called Sosh this autumn, which will target smartphone users via an online sales model without fixed contracts. Bouygues Telecom recently launched a similar low-cost brand called B&YOU.
(Editing by Greg Mahlich)