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France Telecom on Thursday unveiled first-half profits ahead of expectations, a day after the group confirmed its much anticipated €8.9bn ($10.7bn) acquisition of Amena, Spain's third-largest mobile phone operator.

The telecom group said net income more than trebled to €1bn from €3.4bn on sales up 2.3 per cent on a pro forma basis to €23.7bn.

The group, which said it had seen growth across its internet and mobile phone units, had a big improvement in its operating performance, up from €4.3bn to €6.5bn. During the six months to June 30, France Telecom increased its mobile phone customers by 16.3 per cent to 66.7m, while broadband customers rose 80 per cent to 6.4m.

France Telecom confirmed its targets of full-year operating income of €18.5bn.

On Wednesday Didier Lombard, chief executive of France Telecom, dealt a thinly-veiled rebuke to his government's growing protectionism by applauding Spanish politicians for allowing his group's acquisition of Amena,

“It is very important to know there is no government opposition,” said Mr Lombard, as France Telecom unveiled details of the deal.

His comments appeared to be an implicit criticism of the French government for launching a barrage of protectionist rhetoric in response to this month's rumours about a possible bid by PepsiCo of the US for Danone, the French food and drinks company.

Dominique de Villepin, French prime minister, emphasised his desire to guard against foreign takeover bids by promising to reinforce the “independence” of French strategic companies. “We must regroup our forces to defend France . . . many countries already have effective means to defend their businesses. We must do the same.”

In contrast, Mr Lombard said he spoke with José Montilla, the Spanish industry minister, before launching the Amena bid. He was told Madrid would not intervene in the auction, but would react favourably to a bid from a foreign industrial group. The French boss travels to Spain today. His comments are likely to well-received in Spain, where the socialist government of José Luis Rodriguez Zapatero is keen to establish its market-friendly credentials. However, at Telefónica, whose chairman Cesar Alierta was closely aligned with the former centre-right government, there is a feeling that France Telecom, still largely state-controlled, has an unfair advantage in a fully-liberalised market.

The French group will buy 80 per cent of Amena for €3.4bn in cash and €3bn in shares to be issued via a capital increase reserved for Amena shareholders after the August holidays.

The deal includes €2.4bn of debt and €1.7bn of tax credits. It is expected to close by mid-November.

Mr Lombard's apparent criticism of the French government is surprising as it is France Telecom's biggest shareholder, with a stake that will be diluted to about 33 per cent by the Amena deal.

French politicians have achieved a rare unity in their public denunciation of a possible foreign takeover of Danone. Mr Lombard was credited with shaping much of France's modern industrial policy as scientific and technical director at the ministry of research and technology and then head of industrial strategy at the finance ministry in the 1980s and 1990s.

Copyright The Financial Times Limited 2017. All rights reserved.
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