Moody's cuts France Telecom outlook

Moody's Investors Service said it changed the outlook on the A3 ratings of France Telecom SA to negative from stable.

The agency said the change in outlook reflects Moody's view that France Telecom's operating performance prospects might be affected by the increasingly competitive nature of the French mobile and fixed market segments, regulation and the increasing difficulty experienced by the company in executing operating cost cuts, despite the initiatives that management is implementing.

"Today's announcement reflects our concern that, in the absence of corrective measures, deteriorating cash flow as a result of competitive and regulatory pressures could impair France Telecom's ability to sustain adjusted financial ratios such as adjusted net debt/EBITDA ratio below 2.5x and adjusted retained cash flow/net debt ratio above 20%, in line with the current A3 rating level," said Carlos Winzer, a Moody's senior vice president and lead analyst for France Telecom, in a news release.

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