NEW YORK-France Telecom S.A., the second-largest telecommunications company in Europe, announced March 18 it had returned to profitability by the Dec. 31 close of its fiscal year after incurring losses during the second half of 1996.
The carrier attributed its 1997 results to “increased phone use, explosive growth in wireless services, enhanced competitiveness and aggressive expansion into international markets.”
France Telecom’s net income rose to $2.44 billion in 1997, taking into account a one-time charge of $164 million associated with its initial public offering of stock last fall in a partial privatization. For all of 1996, it posted profits of $344.4 million after a loss of $689 million during the second half of that year.
Revenues for 1997 totaled $25.7 billion, a 3.6-percent increase from 1996 figures. Revenues from wireless services increased year-to-year by 52 percent to $2.8 billion. Wireless revenues comprised 11 percent of total revenues in 1997, up from 7.4 percent in 1996 and 5.5 percent in 1995.
“The upsurge in mobile business has more than offset the decline in fixed wireline revenues,” France Telecom said.
Itineris, the brand name for the carrier’s Global System for Mobile communications cellular service in France, more than doubled its subscriber base during 1997. By Dec. 31, there were 3 million Itineris customers, which comprised 53.3 percent of the domestic cellular market. At year-end 1996, by comparison, France Telecom had 1.33 million Itineris customers, up from 701,000 at the end of 1995.
France Telecom’s domestic paging customer base also more than doubled, to 1.42 million by Dec. 31, compared with 676,000 at the end of 1996 and 368,000 at the close of 1995.
Traffic on its networks also rose, although the carrier’s year-end 1997 report didn’t break out wireline and wireless usage separately. Minutes of use totaled 137.7 billion last year, vs. 129.2 billion in 1996 and 123.5 billion in 1995.
France Telecom said its international wireless business “gained momentum in 1997 from wireless licenses in Denmark, Poland and Portugal … [We] also initiated fixed and mobile network projects in Norway, Spain and Switzerland.”
In Europe, outside of France, the carrier concluded 1997 with 2 million wireless customers in nine other countries. France Telecom also is involved in wireless telecommunications projects in Argentina, Botswana, China, India, Ivory Coast, Japan, Lebanon and Mexico. The Botswana network is gearing up to launch commercial service by mid-year.
Operating income before one-time special charges declined by 12.9 percent to $4.33 billion. “This reflects … start-up costs for new international operations and recruitment of mobile services subscribers, (both of) which required significant expenditures,” the company said.
