Wanadoo makes push for profit

PARIS, France -- Wanadoo, Europe's second largest Internet service provider, managed to narrow its losses as more customers opted for faster access and said it was on target to make a profit next year.

France Telecom's Wanadoo made net loss of 39 million euros ($38.8 million) in the first six months of this year, the company said on Wednesday. That was down from 102 million euros in the year earlier period.

ISPs are betting their futures on more customers buying faster Internet access, also known as broadband, to boost growth and make a profit, as they cast of their cash-burning reputations.

Italy's Tiscali, Europe's No. 3, was the first to make a quarterly profit at the Ebitda level -- earnings before interest, tax, depreciation and amortisation -- but fell back into the red in the second quarter as customers defected to rivals.

But analysts expect France Telecom's Wanadoo and Deutsche Telekom's T-Online, Europe's biggest ISP, are poised to dominate the sector.

"I confirm our goal to reach a net profit in 2003 if things remain constant,'' Wanadoo Chairman Nicolas Dufourcq said in a conference call. Dufourcq said the company made an Ebitda level profit of 28 million euros.

Wanadoo, whose stock has lost more than 15 percent of its value this year, edged up 0.2 percent to 4.79 euros in midday Paris trading.

But analysts remain sceptical that Wanadoo's results and robust figures last month from Germany's T-Online will reawaken investor interest in the sector.

"It must be very frustrating to be an ISP board member right now. The operational progress for companies like Wanadoo and T-Online continues to improve but it's not reflected in the share price,'' Kai Kaufmann, Internet analyst at Dresdner Kleinwort Wasserstein, told Reuters.

Dufourcq dampened speculation that Wanadoo would open merger talks with Italian rival Tiscali, saying 2002 would be spent on integrating UK loss-making ISP Freeserve and Spain's eresMas.

Analysts polled by Reuters had forecast that Wanadoo would meet its goal of eight million subscribers by the year-end. At the end of the first half it had 6.83 million subscribers, and 833,000 or 12 percent of those subscribe to higher-margin broadband services.