The ratings on France Telecom S.A. (FT), one of the world's largest integrated telecommunications operators, reflect Standard&Poor's Ratings Services' view of the company's leading positions in the French mobile and fixed-line telecoms markets and the wide diversification that its growing international mobile franchise provides. These business positions, together with good operating efficiency maintained through cost cutting, have generated sizable operating margins and strong organic free operating cash flow (FOCF). The ratings also factor in what we see as FT's prudent financial policy, reflected in a medium-term leverage target of reported net debt to EBITDA of below 2.0x. The ratings remain constrained, however, by the difficult macroeconomic conditions in some of FT's markets, continuing stiff competition in France's broadband
