Fitch affirms France Telecom

Fitch Ratings said it affirmed France Telecom's ratings at issuer default and senior unsecured A- and short-term F1. Its hybrid instruments, the Titres a Duree Indeterminee Remboursables en Actions, were affirmed at BBB+.

The outlook is stable.

"These ratings reflect France Telecom's strong market positions in both mobile and broadband in France, a diversified portfolio of foreign operations and an improving capital structure," Frederic Beaumelou, an associate director for Fitch, said in an agency rating.

In 2006, its net debt-to-EBITDA ratio improved to 2.3 times from 2.65 times.

The company will continue to evolve in a challenging environment, Fitch said. In the mobile business, the company faces stiff competition in the mature markets of the United Kingdom and Spain.

Despite business risks, the company forecasts stable organic cash flow and has reiterated its goal to cut its net debt-to-EBITDA to 2 times by the end of 2008.

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