Orange, the international mobile phone firm controlled by France Telecom, has gone back into profit for the first time since it was floated in 2001.

The Orange strategy is working

Jean-Francois Pontal, Orange chief executive

The company made a net profit for the first six months of 2002 of 218m euros (£137m; $214m), compared with a loss of 500m euros in the same period last year.

But the figures did not include a 1.1bn euro exceptional expense, caused by the mobile operator scratching a quarter off the valuation of its share in the troubled Italian mobile firm Wind.

And the company must also compete for the attention of investors because of the meltdown of its parent, France Telecom.

Bailout

France Telecom bought Orange in early 2001, merging its own mobile operations into the new acquisition.

But the purchase meant a big increase in debt for the French company, and the weight of its borrowings and its own huge write-offs pushed France Telecom to a loss of 12.2bn euros in the first half of this year.

Add to that the resignation on Thursday night - long-predicted, but no less unsettling - of its chief executive Michel Bon, and the picture is an uncomfortable one.

The French government, which retains a sizeable stake in the company, is now talking about a bailout.

Consequences

France Telecom's cash crunch also spells trouble for its part-owned German subsidiary MobilCom, which on Thursday night learnt that its parent firm had withdrawn financial support.

The company has now said it will file for insolvency.

MobilCom's main shareholder and former chief executive Gerhard Schmid said: "Driven entirely by its own interests, France Telecom has stolen away from its responsibilities," he said.

Overtaken

As for Orange, its own listing and its relative financial health means the subsidiary is now worth more than the parent.

Its figures are good, with 16.6% more customers in June than a year earlier - admittedly a much slower growth rate than in the boom years of the 1990s, but still healthy.

Revenue for the first half grew 13.8% to 8.1bn euros.

"The Orange strategy is working," said chief executive Jean-Francois Pontal.

"These results are a long way ahead of expectations at the time of our flotation."