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UPDATE 1-France Telecom promises M&A caution, mulls buybacks

* Will pursue disciplined M&A strategy in emerging markets

* Will not use excess cash to reduce debt

* Considering share buybacks

(Adds CEO comments, detail)

BARCELONA, Nov 17 (Reuters) - France Telecom FTE.PA said it would be disciplined about acquisitions in emerging markets and may consider share buybacks to return excess cash to shareholders, its chief executive said.

“We will have a very rigorous M+A strategy with a focus on emerging markets,” Stephane Richard told Morgan Stanley’s TMT conference in Barcelona on Wednesday.

“That does not mean we will necessarily spend excess cash on M+A in emerging markets,” he added, addressing investors concerns that France Telecom could enter risky endeavours in its effort to find growth outside of Europe.

Richard also ruled out that the company would consider using any additional cash to reduce debt but would mull ways to return money to investors.

“No excess cash will be allocated to debt reduction,” he said, arguing that market conditions were not suitable and that he was comfortable with the company’s ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA).

“If we don’t have any news that are value creative for shareholders...we will work on share buybacks or other forms of return to shareholders,” said Richard, who took the helm at Europe’s third-largest telecom operator by market capitalisation in March.

Richard said that telecom operators would be focussed on even more cost reduction in the future.

“We have no alternative than to focus on cost efficiency. We are in an industry where top line is flatish or slightly growing,” Richard said. (Reporting by Nicola Leske; editing by Elaine Hardcastle)

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