registration document France Telecom 2009 - Orange.com

4 FINANCIAL
risk factors
RISKS
Equity risk
32. France Telecom’s results and financial position could be
adversely affected by a downturn in the equity markets.
Volatility in the equity markets, and especially a downward
trend in such markets, could have an adverse impact on
France Telecom’s results, in the event of a fall in the stock
prices of France Telecom’s listed subsidiaries, in particular
TP S.A. (Poland), Mobistar (Belgium) and ECMS (Egypt), if it
subsequently becomes necessary to recognize impairment
losses on the corresponding assets.
In addition, the Group is exposed to equity market risks via the
hedging assets of some of its pension plans, including defi ned
benefi t plans, and via free share award plans and similar
compensation programs.
See Note 28.6 Equity Market Risk and Note 24.2 Pensions
and Other Long-Term Employee Benefi t Obligations to the
consolidated fi nancial statements.
33. France Telecom’s share price may fluctuate due to a
wide range of factors.
These factors include:
■ changes by fi nancial analysts of forecasts or recommendations
regarding France Telecom or the sector in which
France Telecom operates;
■ a rating change by rating agencies or a material change in
debt levels;
■ the recruitment or departure of key employees;
■ more generally, equity market fl uctuations.
In general and as a result of the global economic and fi nancial
crisis, equity markets worldwide have been highly volatile
over the past twelve months, in terms of prices and trading
volumes. Because of this volatility, prices may be permanently
decorrelated from the position and/or current outlook of the
listed company. Investors obliged to sell shares during specifi c
periods that are generally unfavorable for sellers would have to
suffer the consequences. As a result, investors are asked to
take all necessary precautions and to rely only upon their own
analysis of the fi nancial position of and outlook for the Company.
34. Future sales by the French Government or FSI of
shares in France Telecom may negatively impact
France Telecom’s share price.
At December 31, 2009, the French Government, directly or
indirectly, held, via ERAP and in concert with Fonds Stratégique
d’Investissement, 26.97% of the capital and 26.99% of
the voting rights in France Telecom (see Chapter 18 Major
shareholders). Should the French Government or FSI decide to
reduce their interest in France Telecom, such a sale, or even the
belief that such a sale is imminent, could have an adverse effect
on France Telecom’s share price.
■ the announcement by France Telecom or its competitors of
strategic partnerships, their results, changes in their capital
structure or other important changes in their businesses;
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2009 REGISTRATION DOCUMENT / FRANCE TELECOM