France Telecom’s Nice Problem

WSJ has a brief report on France Telecom, which “is expected to generate an estimated 29 billion ($34.92 billion) in cash over the next 3 years. The question is, what to do with it?”

After three years of selling assets and integrating units helped France Telecom cut net debt by nearly 30 billion under French accounting standards, the company’s focus has shifted to exploiting sharp growth in broadband and the convergence of fixed-line and wireless services, and paying higher dividends. How France Telecom will balance sharing its cash with investors and spending on future growth has become the subject of much industry speculation.

France Telecom declined to comment.

Europe’s incumbent telecom operators have cleaned up their balance sheets against a backdrop of accelerating technological change, which is allowing them to offer more services than ever before. The buzzword is convergence: selling mobile and fixed-line services that include television, Internet, games and music along with calls. Yet no single model is proven, and operators are scattered across the globe.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.