Leading supplier of fixed and mobile telecommunications services in France. Large, international mobile-telephony franchise encompassing 62 million subscribers across 20 countries. Good group profitability (37.6%) and organic free cash flows (€7.3 billion) in 2005. Conservative financial policy aimed at unadjusted net debt to gross operating margin (GOM; a proxy for EBITDA) of 2x by year-end 2008. Bold regulation and fierce competition at the access level, particularly in the French asymmetric digital subscriber lines (ADSL) market, and strong competition in the U.K. mobile market. Rapid technological changes that are transforming the traditional fixed-line business model, with a still uncertain impact on sales and margins. Somewhat limited flexibility to reduce labor costs, owing to the still-high number of civil servants in France.
