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The write-off - which totals a whopping €10.2bn (£6.3bn) - related to takeovers of telecommunication and Internet companies in 1999 and 2000, France Télécom said in a statement.
Putting the exceptional one-off charge aside and pointing to the €5.2bn (£3.2bn) in operating income for the year, France Télécom Chairman and Chief Executive Officer Michel Bon said the company is "seeing the best results in [its] history".
Bon also waved away investors' and analysts' concerns over the company's €60.7bn (£37.5bn) debt.
"I cannot see why our debt is the market's main concern. Our debt is declining in line with plan," said Bon, speaking at a news conference.
France Télécom, like many of its European counterparts, has been selling off non-core assets to pay off its debt. The company sold property holdings and its stake in chip maker STMicroelectronics, reducing its debt from €64.9bn (£40.1bn) to €60.7bn (£37.5bn) in the six months to 31 December, the company said.
Consolidated revenue in the year rose to €43bn (£26.6bn), up 28% over the year before, because of strong performance from fixed-line and wireless services, France Télécom said.
The results for this year "looks favourable," as the acquisitions which weighed on 2001's results have given the company critical mass to grow, France Télécom said.