Communication Companies

The communications companies covered in this section are:

• France Telecom
• SBC Communications
• Telecom Italia SPA

France Telecom

Formerly a part of the French Telecommunications Ministry, France Telecom was created as a legally distinct public sector operator in 1991. It was incorporated in 1996.

The increase in the consolidated revenues of France Telecom was primarily due to growth at Orange (10.8 percent), which represented 36 percent of the overall revenues for 2003. In addition, Wanadoo also registered a growth over the previous year’s figures (26 percent).
 
These increases offset the decline in revenues from the domestic fixed-line business (a decline of 3.0percent). At the international level, TP Group’s business increased from a 6.7 percent share of the of the group’s revenues to 8 percent and Equant’s global services revenues decreased slightly (a drop of 3.7 percent on a comparable basis).

The total number of France Telecom customers, including its controlled communications companies, was 117.1 million as on December 31, 2003. The number of new subscribers in 2003 was 7.7 million, mainly accounted for by wireless services (6.4 million) and Internet activities (0.8 million). The number of customers in fixed-line telephony increased by 0.4 million, mainly in Poland.

France Telecom’s 2004 consolidated revenues were EUR47,157 million, up 4.1 percent on a comparable basis (2.2 percent on actual basis). The change on an actual basis reflects the negative impact of exchange rates, as well as changes in the scope of consolidation, notably the sale of CTE Salvador in October 2003 and Orange Denmark in October 2004.

SBC Communications

SBC was formed as one of several regional holding companies created to hold the AT&T Corp.'s local telecom companies. On January 1 1984, SBC was spawned by the breakup of AT&T, becoming an independent publicly traded telecommunications service provider.  On formation, the company primarily operated in five southwestern states.  SBC’s subsidiaries merged with Pacific Telesis Group in 1997, Southern New England Telecommunications Corporation in 1998 and Ameritech Corporation in 1999, thereby expanding it wire-line operations and becoming the incumbent local exchange carrier in 13 states.

The operating revenues decreased by USD2,295 million, 5.3 percent, in 2003 and USD2,770 million, 6.0 percent, in 2002. This was primarily due to lower voice revenues resulting from the continued loss of retail access lines to Unbundled Network Element-Platform (UNE-P) wholesale lines, as well as the uncertain US economic conditions and increased competition from other communication companies.

The wire-line division accounted for approximately 64 percent of the company’s 2003 consolidated division operating revenues, compared to 66 percent in 2002 and 46 percent of 2003 consolidated division income, compared to 51 percent in 2002. Cingular accounted for approximately 27 percent of the company’s 2003 consolidated division operating revenues, compared to 26 percent in 2002 and 12 percent of 2003 consolidated division income, compared to 11 percent in 2002. Directories accounted for about 8 percent of 2003 and 2002 consolidated division operating revenues and 26 percent of the company’s 2003 consolidated division income, compared to 21 percent in 2002.

The company’s operating income declined by USD2,154 million, 25.0 percent, in 2003, and USD1,885 million, 17.9 percent, in 2002. This downturn can be attributed to an increase in the combined net pension and post-retirement cost and the continued loss of revenues from declining retail access lines as customers move to UNE-P wholesale lines.

The company has shown some improvement in 2004. SBC’s revenues from continuing operations grew 3.1 percent from fourth quarter 2003 to USD10.29 billion in the fourth quarter 2004. Its results were driven by a 10.5 percent growth in data revenues and increased penetration of bundled services such as DSL and long distance.

Telecom Italia SPA

Telecom Italia was founded in 1994, through the merger of Iritel, Telespazio, Italcable, and Sirm into SIP. A year later, a company called Telecom Italia Mobile was formed.

The consolidated operating revenues of the company decreased by 2.2 percent in 2003 compared to 2002.

The Wire-line Business Unit accounted for gross operating revenues of EUR17,216 million in 2003, EUR17,047 million in 2002 and EUR17,174 million in 2001. Revenues from retail telephone (the Wire line segment addressing the retail and mass telecom market) were EUR10,368 million in 2003, a decrease of 1.7 percent compared to 2002 (EUR10,547 million in 2002).

The Wire-line Business Unit successfully limited the intense competitive impact in the retail segment during 2003. Traffic packages (voice offers), loyalty and retention schemes and “win-back” strategies resulted in limited revenue losses while market share on traffic volumes was stable. Revenues from traditional data services (data transmission using data packet technology) decreased from approximately EUR400 million in 2002 to approximately EUR340 million in 2003 due to customer migration to broadband services.

Gross operating revenues from mobile communication services increased by 8.4 percent in 2003 compared to 2002. This increase was primarily due to TIM’s performance in the Italian market (an increase of 6.2 percent), despite increasing competition, and was mainly attributable to an increase in revenues relating to value-added services, with some contribution from international communications companies.

Sales and service revenues for the first nine months of 2004, gross of the portion due to other TLC operators, amounted to EUR11,793 million a decrease of EUR79 million (-0.7 percent) compared to the first nine months of 2003. The decrease was mainly due to the absence of revenues from the resale of satellite capacity (-EUR77m).

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