France Telecom: An Opportunity To Buy This 10% Dividend Yielder At 52-Week Lows

We are bullish on France Telecom (FTE) despite the recent dividend cut as the company is on track to meeting its full year guidance. Despite tough economic conditions in the region and fierce competition, the company has succeeded in bringing back customer growth domestically with solid growth coming from its African and Middle Eastern segments. Currently, the stock is trading near $10.50, almost 1% off its 52 week low and we believe this could be a good entry point for investors seeking capital appreciation and dividend income. The recent dividend cut implies a dividend yield of almost 10%. The stock is trading at a forward P/E of 6x which is at a discount to its competitors.

The company's management has confirmed its FY12 guidance for operating cash flows to be close to 8 billion euros. Its cash flows are under constant pressure due to discount offerings by its peers, however, it seems likely that the company will be able to meet the 8 billion target based on the recent results.
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