The ratings on French telecoms services provider France Telecom S.A. (FT) reflect a disciplined financial policy, strong organic free cash flow generation, leading positions in the French mobile- and fixed-telecoms markets, and the growth opportunity offered by the group's strong, international mobile franchise. FT operates in one of the EU's most competitive domestic broadband markets, where 51% is in the hands of alternative operators, notably through rapid local loop unbundling (LLU). That said, the group has stabilized both its market share in asymmetrical digital subscriber lines (ADSL) and its fixed-line margins by adapting to the competitive environment and proceeding apace with its headcount reduction program. FT also benefits from a strong domestic mobile business in a supportive environment--despite steady regulatory
