France telecom 1st-half profit may drop 18% on higher taxes

Tag : telecommunication services
France Telecom SA, Europe's third- largest phone company, may report first-half profit dropped 18 percent as higher taxes wiped out growth in wireless earnings.

Net income may have fallen to 2.7 billion euros ($4.2 billion) from 3.31 billion euros a year earlier, based on the median estimate of 14 analysts surveyed by Bloomberg News. Gross operating profit, a measure comparable to earnings before interest, tax, depreciation and amortization, may have risen 2.2 percent, based on the estimates.

France Telecom, based in Paris, may announce a stock buyback after its 244 billion-krona ($40.2 billion) bid for TeliaSonera AB failed in June, said Rob Goyens, an analyst at Dexia in Brussels. Mobile-phone sales probably grew in France and Poland as the company added subscribers, while wireless revenue in the U.K. may have fallen, according to the estimates.

"Management could provide more indications on the future use of cash after the failed attempt to buy TeliaSonera," Goyens wrote in a report this month. "France Telecom may positively surprise with the announcement of a buyback."

France Telecom is scheduled to report full-year earnings tomorrow at 7:30 a.m. in Paris. France Telecom declined to comment on the estimates, spokesman Tom Wright said by e-mail. The company has said it may return excess cash at the end of the year to shareholders.