France Telecom posted solid results in line with objectives and ahead of expectations. On a proforma basis, earnings were almost flat due to competition and regulation. EBITDA reached €4.7bn (+7%, but mainly due to acquisitions), but EBITDA margin fell to 36.5% (down 0.7 point). 1Q06 sales rose 2% to €12.8bn, of which fixed revenues fell 2% to €5.6bn, while mobile revenues grew 7% to €6.6bn (and only 2% in France). FT reports 8.1m ADSL subscribers in Europe (of which 4.9m in France), 2.4m subscribers to its LiveBox and 1.2m VOIP subscribers. Capex in the quarter rose 12% to €1.4bn. FT will merge its brands Orange (Mobile) and Wanadoo (Internet) into Orange and launch new services in 2H06.