France Telecom reports profit plunge on writedowns

France Telecom reported on Wednesday a plunge in net profit last year owing to writedowns but its sales figures beat analysts' expectations in a context of a price war in France and Poland.

Net profit fell to 820 million euros ($1.1 billion), or a fifth of the figure for 2011.

Sales fell by 3.9 percent to 43.5 billion euros.

Finance director Gervais Pellissier said in a telephone press conference that the group, which owns the Orange mobile phone brand, had achieved its target of operational cash flow of 8.0 billion euros in a "difficult" climate.

The company said that it was holding to its target of cash flow this year of 7.0 billion euros despite a slightly more difficult context in France and in Europe.

The price of shares in France Telecom was showing a fall of 0.54 percent to 7.68 euros. in mid-morning trading.

Pellissier said that the company would have to accelerate the way it adapted to the new shape of the telecom services market and had set four priorities for this year.

These were the transformation of the French business model, dealing with its problems in Poland, accelerating mutual activities across Europe and innovation to retain clients.

The group said that "the effects of increased competition in European countries, particularly in France, were being compensated for partly by sustained growth of activities in Africa and the Middle East, an increase of 5.3 percent, and in Spain, 3.6 percent."

The mobile telephone market in France was thrown into turmoil last year by deep price-cutting by operator Free Mobile.

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