France Telecom reels, plans counterattack

January 12, 2006

France Telecom shares were battered Thursday after it announced it would miss revenue forecasts due to increased competition from Internet telephony.

The company said in a news release the previous day that it would announce its plans in February to accelerate deployment of NEXT, its 2005 strategy to expand broadband DSL deployment.

The company said it had "decided to accelerate its transformation, notably rolling out programs to simplify its brand portfolio, setting up an integrated network and customer relations structure in each country and creating a 'techno-center' to enable the Group to rapidly and coherently develop convergent solutions."

The élan, however, didn't seem to mollify tech investors spooked by the company's prediction that 2005 revenue growth would be around 2 percent or 3 percent rather than the 3 percent or 5 percent predicted earlier.

France Telecom fell nearly 9 percent in heavy trading Thursday while analysts nervously watched other European telecoms for signs of weakness.

Copyright 2006 by United Press International

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