registration document France Telecom 2009 - Orange.com

4 LEGAL
risk factors
RISKS
frequently involved in legal proceedings with its competitors and
with the regulatory authorities due to its preeminent position in
the markets in which it operates, and the complaints fi led against
France Telecom can, in certain cases, be very substantial.
The outcome of lawsuits is by defi nition unpredictable. In the
case of proceedings with national competition authorities,
the maximum level of fi nes provided for by law is 10% of the
consolidated revenues of the company at fault (or the group
to which it belongs, as the case may be). In 2009, the French
competition authorities imposed two fi nes of 28 million euros
and 63 million euros on France Telecom for abuse of a dominant
position in the French overseas departments and in 2007 the
Offi ce for Electronic Communications (OEC) in Poland imposed
a fi ne of 86 million euros on the TP Group for non-compliance
with its regulatory obligations.
The main proceedings in which France Telecom is involved are
described in Section 20.4 Legal and Arbitration Proceedings
and in Note 32 Litigation to the consolidated fi nancial
statements. Developments in or the results of some or all of the
ongoing proceedings could have a material impact on its results
or fi nancial position.
21. France Telecom’s business activities and results
could be materially adversely affected by legislative,
regulatory or governmental policy changes.
France Telecom’s business activities and operating income
may be materially adversely affected by legislative, regulatory
or government policy changes, and in particular by decisions
taken by regulatory and competition authorities in connection
with:
■ the granting, modifi cation or renewal of licenses. In that regard,
the relevant French authorities awarded a 4 th 3G license to
Free in France (See in Section 4.1 The strong competition
in the telecommunications sector could result in a decline
in France Telecom’s market share or in the profi tability of its
business activities);
■ the opening up of France Telecom’s networks and civil
engineering infrastructure to rival network operators;
■ service rates. For example, the European Commission
regulation of June 18, 2009 has extended to June 2012
the cut in international roaming rates decided in 2007 and
established maximum levels for SMS roaming and data
roaming.
■ the establishment of new taxes and levies. In this regard, the
French Public Audiovisual Reform Act established a 0.9% levy
on the taxable revenues of telecommunications operators,
which France Telecom estimates impacted its annual EBITDA
by around 140 million euros in 2009.
Such decisions could materially adversely affect the Group’s
revenues and results.
22. The integrated- operator and offers convergence
strategy developed by France Telecom and by other
telecommunications and media sector players could be
adversely affected by legislative or case law changes.
France Telecom’s business activities and operating income may
be materially impacted by legislative, regulatory or government
policy changes, and in particular by decisions by regulatory and
competition authorities in connection with France Telecom’s
possible move into new markets, or the possibility of developing
products and services resulting in the convergence of various
markets in which France Telecom operates in countries such as
France or Poland.
In this regard, the current regulatory uncertainty has given rise to
litigation relating in particular to exclusive relationships between
audiovisual distributors and telecommunications operators. In
May 2009, the Paris Appeal Court overturned the February 2009
ruling of the Paris Commercial Court which had prohibited
France Telecom from tying the broadcasting of TV content from
the Orange Foot channel to subscription for an ADSL Orange
access, enabling France Telecom to once again market its
Orange Sport offer to new subscribers; but in parallel the French
Competition Authority opened an investigation following a
complaint from Canal+ and SFR notably involving sales practices
surrounding Orange Sport and Orange broadband access. The
French Competition Authority also issued an opinion in July 2009
on exclusive relationships between audiovisual distributors and
telecommunications operators notably indicating that access
exclusivity should remain an exceptional solution, strictly limited
in time and scope. Regulatory or case law changes in this area
could lead France Telecom to review its content procurement
strategy. These developments could have an adverse impact on
France Telecom’s business activities and results.
23. France Telecom faces risks relating to certain
subsidiaries and joint ventures in which it shares or of
which it does not have control.
France Telecom carries on some of its business activities via
companies it does not control. The documents of incorporation
or agreements governing some of these businesses provide that
certain key decisions such as the approval of business plans or
the timing and amount of dividend payments require the approval
of France Telecom’s partners. Should France Telecom and its
partners disagree regarding these decisions , the contribution of
these companies to France Telecom’s results and the strategy
pursued by France Telecom in the countries in which these
companies are located could be adversely affected.
As regards Mobinil, the France Telecom subsidiary in Egypt,
71.25% consolidated, and for further information on the
outcome of the dispute between France Telecom and Orascom
(minority shareholder of Mobinil) see Note 32 Litigation to the
consolidated fi nancial statements, Section 20.4 Litigation and
arbitration procedures and Section 20.5 Signifi cant change in
the fi nancial or trading position.
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM