UPDATE: France Telecom Launches Sale Of Swiss Business

France Telecom SA (FTE) Thursday said it has launched the sale process of its Swiss business as the group tries to lead its business back to sustained growth in a struggling telecom industry.

The telecoms giant, which recently launched a strategic review of all its businesses with a particular focus on mature European markets, said the board of directors will decide whether to go ahead with a sale depending on the offers it receives.

Chief Financial Officer Gervais Pellissier said the group isn't yet in discussions with any interested parties.

The sale launch comes over a year after France Telecom had to abandon plans to merge its Swiss mobile operations with those of Danish telecom group TDC A/S (TLD) due to opposition from the regulator.

The Paris-based group is also weighing changes in Austria, where it holds 35% in mobile operator One, and in Portugal, where it holds a 20% stake in Sonaecom SGPS SA (SNC.LB).

"We said we would not remain shareholders in assets where we have minority stakes in the long term such as in Austria and Portugal...we are working with the other shareholders about ways to alter our stakes there," Pellissier said.

France Telecom, along with other European operators, has been suffering as revenues stagnate in mature European markets amid increased competition and tougher regulation.

In France, the group's largest market, intense competition weighed on the group's performance in the first half as operators are preparing for the arrival of fourth mobile operator Iliad SA's (ILD.FR) Free Mobile next year.

Still, France Telecom confirmed its full-year targets. The group still aims to pay a dividend of EUR1.4 a share for 2011 and 2012 and confirmed it's targeting operating free cash flow of around EUR9 billion this year. The Paris-based group proposed a stable interim dividend of EUR0.6 a share.

Net profit for the first six months fell to EUR1.95 billion from EUR3.73 billion in the same period last year. Last year's net profit was boosted by income from discontinued operations linked to the creation of a joint venture in the U.K.

Revenue in the six months rose 1.9% to EUR22.57 billion, boosted by recent acquisitions but slightly missing the EUR22.65 billion forecast by a Dow Jones Newswires poll. Earnings before interest, taxes, depreciation and amortization, the company's preferred measure of profitability, fell to EUR7.61 billion, also slightly below analyst views, weighed down by a recent tax hike in France, which was only partially passed on to customers, as well as as difficult market conditions in Egypt and Ivory Coast.

-By Ruth Bender, Dow Jones Newswires; [phone]; [e-mail]