1.

1 – Company Details

France Telecom Group (France Telecom) is one of the leading providers

of telecommunication services, worldwide. The company is engaged in
offering services covering fixed and mobile communications, data
transmission, the Internet and multimedia, and other added-value services for
individuals, businesses and other telecommunications and operators. France
Telecom offers its services under three principal segments, namely, Personal
Communication Services, Home Communication Services and Enterprise
Communication Service. Various services offered by the company include
networks, security, telephony, collaboration, mobility, applications,
professional services, and large projects management. The company
principally operates in France, the UK, Spain and Poland. As of December 31,
2008, the company had 26.7 million broadband customers, 12.7 million ADSL
broadband customers in Europe, 6.5 million voice over IP customers and 2.1
million IPTV customers. Also, it had more than 182 million customers around
the world. The company is headquartered in Paris, France. The company
reported revenues of (Euro) EUR 53,868.00 million during the fiscal year
ended December 2008, an increase of 0.88% over 2007. The operating profit
of the company was EUR 10,272.00 million during the fiscal year 2008, a
decrease of 4.88% from 2007. The net profit of the company was EUR
4,069.00 million during the fiscal year 2008, a decrease of 35.41% from 2007.
The Company operates a number of subsidiaries, notably under the brand
name Orange (Nexis, 2010). The company headquarters are based in Paris
and below is the full contact information for France Télécom.

Head Office France Télécom

6 Place D’Alleray
75505 Paris Cedex 15
France
Telephone +33 1 44 44 22 22
Fax +33 1 44 44 80 34
Web Address www.FranceTelecom.fr
1.2 – Organisation History

Up to 1988, France Télécom was known as the Direction Générale des

Télécommunications, a division of the Ministry of Posts and
Telecommunications. By the 1990s, France's 100 percent digital phone
system was among the most modern in the world. Yet events in the
telecommunications world would soon overtake the company, and its
monopoly--and the burdens of bureaucracy soon left the company struggling
to catch up to the rest of the worldwide industry, already undergoing a
process of deregulation and privatization that would transform the nature of
the telecommunications business. Eyeing the success of other recently de-
nationalized telephone providers, particularly the British system, renamed
British Telecom; DGT adopted a new name, France Télécom, giving it at least
the appearance of keeping up with modern industry trends. (FundingUniverse,
2010)

The company was privatized in 1997, and the following year lost the
state monopoly as the telecommunications industry opened up to competition.
After this the company began to expand through a number of partnerships
and acquisitions. The Global One partnership formed in January 1996 with
Sprint (US) and Deutsche Telekom, this created an international
communication network and was fully acquired by France Telecom in 2000.
Growth continued in July 1999 when France Telecom acquired an equity
interest in British cable operator NTL. This was followed in October 1999 by
France Telecom's launch of its European Backbone Network.

The company expanded into the Internet in 1998 with the development
of Wanadoo. In 2000, Wanadoo extended its operations into the UK, buying
leading ISP Freeserve. The company also operates in Denmark, Spain,
Belgium and the Netherlands amongst others.

France Telecom made a major expansion in the mobile market in June

2000 by acquiring UK-based mobile operator Orange. The acquisition
completed the company's interests in mobile companies and made it one of
the largest mobile providers in Europe.

Wanadoo has since launched its own growth plan. In late 2000 it
acquired Marcopoly, a website selling household electronics and appliances.
It also purchased Librissimo, a publisher of facsimiles of antique and out of
print books. (DataMonitor, 2002)

1.3 – Organisational Structure

On the next page is a diagram showing the various departments and

manager levels within France Telecom.
(Source: TheOfficialBoard, 2010)
1.4 – Main Products/Services Provided

France Telecom S.A. provides consumers, businesses and other

telecommunications operators with a range of services, including fixed
telephony and mobile telecommunications, data transmission, Internet and
multimedia, and other value-added services. The Group reports seven
operating segments: France, United Kingdom, Poland, Spain, Rest of the
World, Enterprise and International Carrier and Shared Services (IC & SS).
On April 29, 2009, the Company acquired additional 18.36 % interest in FT
Espana. (Reuters, 2010)

According to their website (2010), Orange is the key brand of France

Telecom, one of the world’s leading telecommunications operators. With
131.8 million customers, the Orange brand now covers internet, television and
mobile services in the majority of countries where the Group operates. At the
end of 2009, France Telecom had consolidated sales of 50.9 billion euros,
including its activities in the United Kingdom, and at 31 December 2009, the
Group had a customer base of almost 193 million customers in 32 countries.
These include 132.6 million mobile customers and 13.5 million broadband
internet (ADSL) customers worldwide. Orange is the number three mobile
operator and the number two provider of broadband internet services in
Europe and, under the brand Orange Business Services, is one of the world
leaders in providing telecommunication services to multinational companies. 

In FY2008, the group operates through three business segments: personal

communication services (PCS), home communication services (HCS), and enterprise
communication services (ECS). Effective from January 2009, the group changed its segment
reporting from business segments to country based reporting structure.

The PCS segment includes the mobile telecommunications services of the group in
France, the UK, Spain, Poland and other counties (rest of the world). The segment operates
through Orange subsidiaries in France and the UK; and France Telecom Espana in Spain and
PTK Centertel in Poland operating under the Orange brand. The segment's rest of the world
operations include wholly owned subsidiaries in Belgium (Mobistar), Romania, Slovakia
Switzerland, Moldova (Voxtel), Botswana, Cameroon, Ivory Coast, Madagascar, Dominican
Republic, Senegal (Sonatel Mobiles), Mali (Ikatel), Jordan (Mobilecom), Guinea Bissau,
Guinea, Central African Republic, Niger and Kenya (Telkom Kenya). Rest of the world
operations also include majority owned subsidiary, Mobinil (71%), in Egypt and minority
interests in Mauritius Equatorial (40%) and Guinea (40%) at the end of FY2008.

The PCS segment offers services are based on GSM (global system for mobile), GPRS
(general packet radio services), EDGE (enhanced data rates for GSM evolution), UMTS
(universal mobile telecommunications system) and HSPDA (high speed downlink package
access) technologies. At the end of FY2008, the PCS segment served 182.3 million
customers worldwide, compared to 170.5 million customers in 2007.

The HCS segment includes the fixed-line telecom services including fixed line telephony,
internet services and services to operators, in France, Poland and rest of the world
operations. Rest of the world operations include the company's presence outside Europe in
Latin America, Asia and Pacific, and Middle East and Africa. The group divested most of its
investments in Latin America, and Asia and Pacific in recent times. Its operations in Asia
Pacific include 50% shareholding in Vanuatu Telecom. In Middle East and Africa, its
operations include investments in Ivory Coast through 51% controlling interest in Cote d'Ivoire
Telcom, the incumbent telecommunications operator in the Ivory Coast; 42.3% of the capital
of Sonatel, the incumbent telecommunications operator in Senegal; shareholding of 51% in
Jordan Telecom Company, provider of fixed-line telephony and internet services; 40% of
Mauritius Telecom, the incumbent operator in Mauritius; and an 51% interest in Telkom
Kenya, an incumbent operator in Kenya.

At the end of FY2008, the segment served over 46.8 million fixed lines and 13.8 million
internet customers, including 12.7 million broadband customers.

The ECS segment offers business solutions and communication services to French
enterprise and global business services to companies marketed under the Orange Business
Services brand. The segment includes ECS and its subsidiaries (Etrali, Setib, CVF, Expertel
Consulting, Almerys, Neocles, Silicomp, GTL, EGT, Solicia, Data & Mobile); business-
customer distribution; and Orange Business Solutions (mobiles).

Orange Business Services offers traditional services as well as related IT services in

areas such as call- center services, and horizontal or vertical applications. Its services include
fixed-line telephony and traditional data services, enhanced network services, integration and
outsourcing of critical communication applications, and other business services.

Its integration and outsourcing of critical communication applications services include on

site integration services and outsourced communication applications including customer
relationship management (CRM), IT services, collaborative services (messaging and
conferencing solutions), consulting and support services and network-related value-added
services. IT services include remote management and administration of company
applications; service for hosting, managing and securing company servers; service for
systems integration and specific application development; and multimedia dissemination
systems, such as the management and broadcasting of video content on remote screens.

Orange Business Services's other business services include broadcast services, and
equipment sales and leases. The group provides broadcast services through its subsidiary
GlobeCast. GlobeCast's services are accessible worldwide through 11 technical centers and
18 offices located in Europe, America, Asia, Africa, the Middle-East and Australia. GlobeCast
transmits video and multimedia content on its satellite and optical fiber network on behalf of
television and radio broadcasters, businesses, government institutions and point-of-sale
networks. The company offers services for digitization, aggregation, transmission and
reformatting of content on all types of networks and platforms, including satellite television,
digital terrestrial television, cable networks, video on mobiles, IPTV and dynamic audiovisual
displays.

From the start of FY2009, the group is operating under seven segments: France, UK, Poland,
Spain, AMEA (Africa, Middle East and Asia), EME (Europe and Middle East), enterprise, and
international carrier and shared services (IC & SS). The group's AMEA and EME segments
are grouped as rest of the world operations.
The group's France, UK, Poland and Spain segments and rest of the world operations provide
mobile telephone handsets and networks, and fixed-line telephony, internet services and
carrier services in their respective markets. Rest of the world operations provide these
services in Belgium, Botswana, Cameroon, Cate d'Ivoire, Egypt, Mauritius, Jordan, Kenya,
Madagascar, Mali, Moldavia, Senegal, Dominican Republic, Romania, Slovakia and
Switzerland.
The enterprise segment provides communication solutions and services for businesses in
France and other regions. The IC&SS offers services including deployment of the
international and long-distance network, installation and maintenance of submarine cables,
and sales and services to international carrier. It also offers shared services including the
support and cross-divisional functions across the entire group and the new focus areas
(content, health and online advertising). (Datamonitor, 2009)

1.5 – Competitors

France Telecom faces intense competition in the many markets in which it operates.
Competition increases the customer retention costs, lower prices and the need for capital
expenditures. For instance, in the French mobile market competition further intensified as a
result of the granting of a fourth 3G licenses as well as due to entry of new players from
sectors such as internet players including Yahoo, Google, MSN and Skype. Rising
competition will continue to affect the group’s market share and revenue growth in coming
years. (Datamonitor, 2010) France Telecom’s main worldwide competitors include:

America Online, Inc. (AOL) – An American Internet services and media company.

American Telephone & Telegraph Corp. - an American telecommunications company that

provides voice, video, data, and Internet telecommunications and professional services
to businesses, consumers, and government agencies

BellSouth Corporation - an American telecommunications holding company based inAtlanta,

Georgia.

Bertelsmann AG – a transnational media corporation based in Germany.

Bouygues S.A. – a French industrial group that has products in public works and infrastructure, real
estate development, media and telecommunications services.

CANAL+ - French premium pay television channel similar to that of Sky in the UK which is owned by the
Vivendi Group.

COLT Group S.A. - a telecommunications company providing services to major city-based

customers throughout Europe

Deutsche Telekom AG – a telecommunications company headquartered in Germany. It is

the largest telecommunications company in Europe after Vodafone.

Global Crossing Ltd. - a telecommunications company that provides computer

networking services worldwide.

GTE Corporation -
MCI Inc. - an American telecommunications subsidiary of Verizon Communications that is
headquartered in Virginia.

Olivetti S.p.A. - an Italian manufacturer of computers,printers and other business machines.

This is a subsidiary of Telecom Italia.
Portugal Telecom, SGPS, S.A. - the largest telecommunications service provider in Portugal.

Although it operates mainly in Portugal and Brazil, it has also a significant presence in

Guinea-Bissau, Cape Verde, Mozambique, Timor-Leste, Angola, Kenya, the People's
Republic of China, and São Tomé and Príncipe.
Due to its large market share, Portugal Telecom is considered a de facto monopoly in
fixed telephony in Portugal.

Sprint Corporation - is a telecommunications company based in Kansas. The company

owns and operates the third largest wireless telecommunications network in United
States, with 48.2 million customers,[1] behind Verizon Wireless and AT&T Mobility.

Swisscom - major telecommunications provider in Switzerland. Along with Swiss Post, it is

a successor company to the former state-owned PTT

Telecom Italia Mobile SpA - is Telecom Italia'smobile phone brand, and runs

a GSM, EDGE, UMTS and HSDPA network in Italy andBrazil. In Europe, TIM is part of
the FreeMove alliance. This is an alliance of
several European mobile telecommunications operators, designed to provide better
service integration for its members' roaming customers.

Telefonica, S.A. - s a Spanish broadband and telecommunications provider in Europe and

Latin America. Operating globally, it is the third largest provider in the world,
behind China Mobile and Vodafone.

Liberty Global - an international media company and one of the largest broadband
providers outside the United States of America. It was formed by the merger of Liberty
Media and UGC(UnitedGlobalCom).

Verizon Communications - an American broadbandand telecommunications company

Virgin Media Inc. - a British provider of television, telephone and broadband internet

services to domestic and business customers in the UK

Vodafone Group PLC – a British multinational mobile network operator and the world's
largest mobile telecommunication network company, based on revenue, with a market
value of about £71.2 billion

MCI, Inc. - an American telecommunications subsidiary of Verizon Communications that is

headquartered in Virginia. The corporation was originally formed as a result of the merger
of WorldCom and MCI Communications. The corporation was purchased by Verizon
Communications in 2006, and is now identified as that company's Verizon
Business division with the local residential divisions slowly integrated into local Verizon
subsidiaries.

1.6 – Financial Analysis

The company recorded revenues of $63,886 million in the fiscal year ending December 2009,
a decrease of 14.1% compared to fiscal 2008. Its net income was $4,167 million in fiscal
2009, compared to a net income of $5,658 million in the preceding year.

Below is a consolidated analysis of France Telecom’s financial dealings from 2005 up

to and including 2009.
As we can see from the above information, all aspects generally had seen a steady
year by year increase up until the financial year ending 2009. This will no doubt
largely be attributed to the worldwide financial crisis as well as stricter governmental
regulation in the telecommunications industry.

In terms of the first half of 2010, France Telecom has received consolidated
revenues of 22.1 billion Euros, which is down 2.2% on a comparable basis. Earnings
Before Income Tax, Depreciation and Amortization were 7.7 billion Euros for
the first half of 2010, down 4.6% from the first half of 2009. Regulatory
measures have had a big impact on this, causing a decrease of -164 million
Euros with tougher measures brought into place.
Capital expenditure was 2.1 billion Euros in the first half of 2010 which
was down 7.5% when compared to the first half of 2009, and accounted for
9.5% of revenues, however capital expenditure is predicted to increase in the
second quarter of 2010, rising an estimated 6% when compared with the
second quarter of 2009.

In the first half of 2010, France Telecom’s operating income was 4.71
billion euros, down 6% on a historical basis (approximately -300 million
euros). Reasons behind this include a 294 million euro decline in EBITDA and
a 69 million euro deterioration in the share of income from associates.

France Telecom’s consolidated net income for the first half of 2010 was
3.3965 billion euros, compared to 2.76 billion euros in the first half of 2009, a
difference and subsequent increase of approximately 1.2 billion euros.
Reasons behind this include a 300 million euro decrease in operating income,
a 124 million euro improvement in net financial income generated by the
decrease in the cost of net financial debt. A 345 million euro decrease in
corporate tax related to the reduction in deferred tax expenses. A 1.032 billion
euro increase in net income from discontinued operations related to the joint
venture formed between Orange and T-Mobile in the UK. This joint venture is
called Everything, Everywhere.

The France Telecom group had 2.74 billion euros worth of organic cash flow
in the first half of 2010. Excluding the 964 million euro payment made in the first half of 2010
related to the dispute over the special business tax assessment in France prior to 2003 and
excluding the acquisition spectrum and frequencies for 285 million euros, the Group’s organic cash
flow for the first half of 2010 was down 2.0% on a comparable basis to 3.989 billion euros (-80
million euros). This was mainly due a 691 million euro decrease in the change in total working
capital requirement, excluding an expense of 964 million euros in 2009 linked to the dispute over
the special business tax treatment in France prior to 2003. Secondly this was due to a 394 million
euro decrease in accounts payable to fixed asset suppliers, excluding licenses, linked to the
decrease in CAPEX. (France Telecom, 2010)

At 30 June 2010, France Telecom had net debt of 29.892 billion euros, compared to 32.534 billion
euros at 31 December 2009. Net debt was reduced by 2.642 billion euros in the first half of 2010.
This was related to organic cash flow generation of 3.989 billion euros 5, minus the following items:
- the payment of the balance of the dividend for 2009 to the shareholders of the parent
company (0.80 euro per share), for a total of 2.117 billion euros;
- dividend payments to non-controlling interests of 290 million euros; - acquisitions of
spectrum and frequencies for 285 million euros; - acquisitions and sales of investment
securities (net of cash acquired or transferred) and changes in ownership
interests with no gain/loss of control amounting to 165 million euros;
The ratio of net debt to EBITDA6 was 1.86 at 30 June 2010, compared with 1.95 at 31 December
2009.

Overall France Telecom has seen stable first half 2010 revenues compared with
the first half of 2009, an improvement after the 0.9% downturn recorded in the second half of 2009.
Taking into consideration these financial results and the current economic climate, France
Telecom predicts the following trends for the remainder of 2010.

- revenues: excluding the impact of regulatory measures, revenues are expected to remain
generally stable on a comparable basis in relation to 2009. The impact of regulatory measures for
the year 2010 is estimated to be close to one billion euros.
- EBITDA: the benefit of cost optimization programs and the lessened impact of regulatory
measures in the second half should partially offset the other factors eroding EBITDA margin and
support commercial investments across our footprint. EBITDA margin erosion is thus expected to
be a maximum of one point in 2010.
- maintaining the CAPEX rate at about 12% of revenues for the full year 2010, including a
catch-up of investment in the second half and the restart of investment in fibre optics in France of
about 100 million euros in 2010.
- given this context, the Group confirms its target for organic cash flow generation
of about 8 billion euros in 2010 and 2011, (before the acquisition of frequencies and spectrum for
mobile services and excluding the impact on the 2010 accounts of the dispute related to the
special business tax in France prior to 2003 of 1.017 billion euros, including interest and other
exceptional items),

NOTE: FULL FINANCIAL STATISTICS FOR FIRST HALF 2010 ARE AVAILABLE IN
APPENDICES

1.8 External Factors

There are many different factors externally that are going to impact on France
Telecom’s operations in the future both as oppurtunites and as potential threats to the
organisation. The first of which being the e-health sector. The global demand for
the e-health sector is expected to be high in the coming years, which could
enhance the demand for the company's offerings. It is expected that, the
spending in the health sector could increase by 4 to 5% per year in Western
Europe. Several factors influencing this demand are the increase in life
expectancy and the improvement in living conditions for the elder people.
There is an increase in spending of 30 billion Euros a year for diabetes in the
US, and 170 billion Euros a year for cardiovascular diseases in Europe. The
UK is planning to invest nearly EUR 20 billion over 10 years, and Eastern
Europe would be investing EUR 270 billion. Moreover, there is need to
modernize health systems and relations between practitioners. The
healthcare sector's need for the latest technology is an opportunity for the
company to expand its Orange Healthcare services and thus capitalize by
being one of those that takes advantage of this.

Secondly, the French mobile market is growing rapidly, which could

enhance the demand for the company's offerings, thereby increase the top
line growth. In 2008, ARPU of the French mobile market was higher than most
of the European countries including the UK and Germany. The subscriber
base is also increasing. The number of unique mobile owners in France
climbed from 44.4 million in 2007 to 56.03 million by 2008, which is an
increase of around 303,700 subscribers. It is forecast that the wireless
penetration levels will reach 96% in 2010 and total subscribers in France will
increase from 56 million in 2008 to 60.3 million in 2010. It is also estimated
that this trend could continue for the next decade. The growing mobile market
of France will stimulate the growth of the company.

Globally the telecommunication industry is in a consolidation mode, which

enables companies to strengthen and broaden their scope of operations. It
also enables the companies to develop, implement, and sharing new
technology. A case in point is Verizon Wireless' acquisition of Alltel, and
Japan's DoCoMo's acquisition of a stake in India's Tata Teleservices, even as
Bharti Airtel and MTN Group have been engaged in merger talks, and
Vodafone is eyeing the acquisition of UK operations of T-Mobile. Strategic
initiatives such as these would result in peers, which are financially and
operationally stronger, which may affect France Telecom's revenues and
operating results if it is unable to be part of such consolidation process and
alliances.
The telecom and technology industry is characterized with intense
competition, which could affect its business operations. The company faces
competition from international mobile operators like Verizon wireless
communications, Vodafone, Telecom Italia, Bouygues S.A., Telecom Italia
S.p.A., AT&T Inc. Some of the competitors are recording a stronger growth
and higher operating margin when compared with the company. The financial
superiority of the competitors over the company will pose a serious threat to
its growth and expansion plans. Moreover, the company also stands to lose
its existing customers to its competitors. This intense competition could be a
threat to the company, which adversely affects the operations and financial
position in the future.

The company has operations primarily in the Eurozone, where, analysts

predict that the economic growth will decline from about 1.4% in 2008 to as
low as 0.2% in 2009. Specifically, the GDP growth in Sweden, Finland, and
Norway, the company's key markets, is expected to decrease further by about
4%, 2%, and 3% respectively. As mentioned earlier, the company derives the
majority of its revenue from European nations and a slowdown in Eurozone
could affect its business adversely.

SWOT ANALYSIS

Strengths:
European Market Leader
The company enjoys a leadership position in most of the markets in which it
operates. France Telecom serves over 186 million customers across 30
countries. The company's Orange is the key brand of France Telecom across
Internet, television and mobile services in most of the countries, it operates.
The company also has 13.4 million broadband internet (ADSL) customers in
Europe. The company is Europe's third largest mobile and leader in
broadband services
Strong Margins and Returns
The company recorded strong margins and returns in the fiscal year 2008,
which helps the company strengthen its operations with better pricing
strategies and effective utilization of resources. The company's operating
margin was 19.07% for the fiscal year 2008. This was above the Integrated
Telecommunications Services sector average* of 11.86%. A higher than
sector average* operating margin may indicate efficient cost management or
a strong pricing strategy by the company. However, the company's operating
margin has declined 115 basis points (bps) over 2007 which may indicate that
the company's cost management and pricing strategy is weakening.
Furthermore, its return on equity (ROE) was 14.7% for the fiscal year 2008.
This was above the Integrated Telecommunications Services sector average*
of 13.0%. A higher than sector average* ROE may indicate that the company
is efficiently using the shareholders' money and that it is generating high
returns for its shareholders compared to other companies in the sector.
Strong Growth Prospects
The company was trading at a price/earnings (P/E) ratio of 12.28 at the end of
the fiscal year 2008. This was above the Integrated Telecommunications
Services sector average* of 10.67. A higher than sector average P/E may
indicate that the company may have high growth prospects which are
reflected in its stock's premium pricing. Investors may be expecting higher
earnings growth in the future compared to other companies in the sector.
Key Agreements
France Telecom has entered into several agreements with different
companies, which enable the company to offer value-added services to its
customers. On this line, the company has understandings with entertainment
companies such as Gaumont, Disney and MGM and Asterix, which are
facilitating the company to add new products to the company's video on
demand catalogue, in France. The company signed another agreement with
MGM for the same purpose. This agreement covers regions such as Spain,
Poland, the UK, and France. Moreover, in 2008, Lufthansa Systems, Lenovo,
Airbus, Siemens, Primagaz and Disneyland Resort Paris entrusted the
company with the management of all or part of their communication services.
These agreements with global players could enable the company to enter into
new markets.
Strong Innovative Community
France Telecom has a strong and broad innovation community, which
includes around 5,000 people across four continents, including researchers,
engineers and marketing specialists. The company has various research
centers, and it established two centers in London and Warsaw in 2007, and in
2008, the company opened Orange Lab Cairo. The efforts of these labs have
been focused on voice services and access to content in Arabic. In March
2008, the company started another research center in Jordan, comprising of
1000 people related to marketing, development and implementation. The
company opened another research center in the UK towards the end of 2008.
The company launched new Unik, Fiber, the new Livebox ecosystem and the
Flybox. The company has been launching its new products on an average
period of 6 to 18 months. During 2008, the company also introduced 3G
unlicensed mobile access platforms, and also launched fiber optic pilot in
Catalonia. This enabled the company to garner an Innovation in Innovation
Management award from the Express-Expansion publishing group,
BearingPoint, TNS Sofres and Ecole des Ponts. The award was given for the
company's innovation structure and its work on La Cantine and idClic projects.

Weaknesses:
Limited Liquidity Position
The company's current ratio was 0.58 at the end of the fiscal year 2008. This
was below the Integrated Telecommunications Services sector average* of
1.02. A lower than sector average* current ratio indicates that the company is
in a weaker financial position than other companies in the sector.
Over Dependence
The company's business operations are France-centric. During the fiscal year
2008, geographical contribution of revenues revealed the overdependence on
France. The France region accounted for 53.4%, the UK region accounted for
11.41%, Spain accounted for 7.51%, Poland accounted for 9.61%, the Rest of
Europe accounted for 9.62% and the Rest of the world accounted for 8.45%
of the total revenues. Over dependence on a particular region could affect the
company's operations, and financial position.
Unbalanced Portfolio of Services
France Telecom's unbalanced portfolio of offerings could affect its business
operations. The company provides the services related to the Internet,
television, mobile and all digital, to their customers. The company has three
Principal segments, namely, the Personal Communication Services, the
Home Communication Services, and Enterprise Communication Service. In
the fiscal year 2008, Personal Communication Services segment accounted
for approximately 49%; Home Communication Services segment accounted
for approximately 38%; Enterprise Communication Service (ECS) accounted
for approximately 13%, of the total revenue. This reveals a lack of focus on
the ECS segment of the company. The unbalanced portfolio of services
revenues could affect the overall revenues of the company.

Threats:
Consolidation of Industry

APPENDIX