Wanadoo looks forward to a good year

"Wanadoo has all the means necessary to assure growth and its market position," the firm said.

The company, which is 74% owned by France Telecom, made a 30m euro (�20.6m; $32.4m) net profit in 2002 compared with a net loss of 193m euros a year earlier.

Wanadoo's net profit, the first by a European internet service provider, was due to a strong performance in its telephone directory, cutting its online costs and reducing tax liabilities.

In January, Wanadoo reported sales of 2.1bn euros and a subscriber base of 8.54 million in 2002.

Its main rival, Germany's T-Online, is due to report results on 13 March.

Shares gained more than 4% in early trade.

Tax breaks

The company had predicted it would only make a net profit for the first time in 2003.

Losses at its internet portal operations were cut to 166m euros for the year, after a 290m euro loss in 2001, and the company expects to break even this year.

Its UK portal Freeserve continued to make losses, which rose to 92m euros last year from 74m euros a year earlier.

Relocating Freeserve's "place of supply" for its unmetered Anytime service to Madeira to avoid British taxes is expected to save Wanadoo �4.5m (6.6m euros) in 2003.

Madeira charges 13% value added tax, while Britain charges 17.5%.