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Mobile war undermines France Telecom's profit

Mobile war undermines France Telecom's profit
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France Telecom has said it will reduce its dividend payments to shareholders this year and is putting off a promised buyback of shares.

It blamed that on a mobile phone price war with rival Iliad.

Since Iliad launched its ultra low-cost mobile offers in January, chief financial officer Gervais Pellissier said France Telecom has lost over 200,000 customers.

France Telecom’s revenues and operating profits deteriorated last year but not more than was expected.

They were hit by regulatory measures, new taxes, and political unrest that affected its Egypt and Ivory Coast units.

France Telecom’s moves are a sign of the times as Europe’s telecom operators struggle to find growth amid intense regulatory pressure and tough price competition.

Spain’s Telefonica trimmed dividends in December and is focusing on paying down debt, while Dutch operator KPN slashed its returns to shareholders via buybacks.

Telecom Italia may cut its dividend when it reports results on Thursday, analysts say, while investors will also look to see what Deutsche Telekom does.

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