registration document France Telecom 2009 - Orange.com

analysis of the financial position and earnings
9
ANALYSIS OF THE GROUP’S FINANCIAL POSITION AND EARNINGS
On a comparable basis, the France Telecom Group’s EBITDA
fell by 12.1% or 2,038 million euros to 14,794 million euros in
2009. The decline between 2008 and 2009 was attributable
mainly to:
■ the recognition of a 964 million euro expense in 2009 relating
to the ruling by the European Court of First Instance (ECFI)
in respect of the dispute over the special business tax
(taxe professionnelle) regime in France prior to 2003 (see
Section 9.1.1.4 Key events in 2009 and Notes 18, 26, 30, 31
and 32 to the consolidated fi nancial statements);
■ a 1.8% or 856 million euro decline in revenues due mainly
to slower business in Poland and Spain, and the decline in
Business Services revenues;
■ an 8.2% or 689 million euro increase in labour expenses,
due mainly to the recognition in 2009 of a 569 million euro
provision covering the implementation of the “Part-Time
Seniors” plan in France following the signing in November
2009 of an agreement concerning the employment of older
personnel (see Section 9.1.1.4 Key events in 2009 and Notes
5, 24 and 31 to the consolidated fi nancial statements); and
■ an 18.1% or 264 million euro increase in other operating
expenses (net of other operating income), stemming chiefl y
from i) the application of a tax on services provided by
electronic communications operators in France (an audiovisual
tax of 0.9% of taxable revenues), and ii) a 63 million euro fi ne
against Orange Caraïbe (see Note 32 to the consolidated
fi nancial statements).
These unfavorable elements were partially offset by:
■ a 3,7% or 238 million euro drop in service fees and interoperator
costs, mainly refl ecting cuts to call termination
prices and roaming rates; and
■ i) a 235 million euro improvement in the share of profi ts
(losses) of associates, and ii) a 198 million euro reduction in
restructuring costs.
2008 vs. 2007
The ratio of EBITDA to Group revenues was 35.8% in 2008,
down 2.3 points on both a historical and a comparable basis
compared to 2007.
On a historical basis, the France Telecom Group’s EBITDA
fell by 3.8% or 667 million euros between 2007 and 2008 to
17,083 million euros. The decline in EBITDA between 2007 and
2008 includes:
■ the negative impact of changes in the scope of consolidation
and other changes, which represented 175 million euros,
and mainly comprised the disposal of Orange’s mobile and
Internet businesses in the Netherlands on October 1, 2007
for 97 million euros and the acquisition of Ya.com on July 31,
2007 for 58 million euros;
■ partially offset by the positive impact of foreign exchange
fl uctuations, which totaled 144 million euros, predominantly
due to change in the value of the Polish zloty (157 million
euros) against the euro.
On a comparable basis, the France Telecom Group’s EBITDA
fell by 3.6% between 2007 and 2008 to 17,083 million euros.
The 636 million euro decline in EBITDA between 2007 and 2008
was attributable mainly to:
■ i) a 794 million reduction in gains (losses) on disposal of
assets, ii) a 256 million euro increase in restructuring costs,
and iii) a 210 million euro deterioration in the share of profi ts
(losses) of associates;
■ a 10.6% or 664 million euro increase in commercial expenses
and content purchases, mainly in France, notably as a result
of i) the upscaling of handsets and other products sold,
combined with the special efforts made to promote and
develop mobile broadband handsets, and ii) a signifi cant
growth in content purchases;
■ a 4.0% or 252 million euro increase in service fees and
inter-operator costs, mainly refl ecting the increase in mobile
telephony activity and international traffi c; and
■ a 3.8% or 101 million euro increase in other network expenses
and IT expenses, relating mainly to the fi xed-line telephony
business in France, stemming primarily from the rapid growth
of multi-service ADSL broadband offers.
These negative aspects were partially offset by:
■ a 2.6% or 1,222 million euro increase in revenues, driven in
particular by business growth in the Rest of the World and in
France; and
■ a 4.7% or 425 million euro reduction in labour expenses, due
mainly to the reduction in share-based compensation and the
decline in wages and employee benefi t expenses.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM
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