By Nick Kostov
Paris-- Orange SA on Tuesday said first-half sales fell less
than expected, as more customers in France opted for premium offers
and the effects of a brutal price war in the country's mobile
market showed signs of easing.
The former French telecom monopoly said sales declined 0.6% to
EUR19.56 billion ($21.6 billion) in the first half, topping
analysts' expectations of EUR19.39 billion as the company moved to
revive profitability after years of decline. Sales in France--its
largest market--were down 1.3%, but analysts had expected a steeper
decline.
Net income for the period was EUR1.27 billion, up 75%, buoyed by
the sale of its stake in its joint venture EE in the U.K. and a
decrease in corporate income tax. Earnings before interest, taxes,
depreciation and amortization fell slightly to EUR5.81 billion in
the first six months of the year from EUR5.88 billion last year.
Excluding exceptional items, Ebitda was flat compared with the same
period last year.
Orange faces fierce competition in many of its markets,
particularly in Europe, where telecom firms are competing hard for
market share by cutting prices for mobile and broadband services.
Along with its rivals, Orange in France has been hurt by a
mobile-service price war sparked by the arrival of a new competitor
in 2012, Iliad SA, although the situation has improved in recent
months as prices stabilized.
"We are particularly pleased with these results which mark a
return to revenue growth in the second quarter, excluding
regulation, for the first time since 2011," chief executive
Stephane Richard said.
Orange shares were up 1.3% in early Paris trading, outpacing the
benchmark CAC-40 index which was up 0.4%.
Earlier this year, Orange said it would aim for sales in 2018 to
be higher than in 2014. The company said Tuesday it had signed up
76,000 new customers in France in the second quarter, with more
customers opting for premium offers and using 4G wireless
technologies.
Continued cost-cutting and a better-than-expected performance by
Orange in France pointed to an "inflection point" back to earnings
growth in the second half, according to analysts at Goldman
Sachs.
Outside France, the company has been busy reviewing its
portfolio of assets and is in exclusive talks to buy four Bharti
Airtel Ltd. subsidiaries in Africa, pushing further into a region
it has looked to for growth in recent years. Orange said it would
pursue a policy of "selective acquisitions" by concentrating on
markets in which it is already present.
In Spain, where Orange completed the acquisition of Spanish
broadband provider Jazztel, the company said revenue declined 2.5%
in the second quarter, an improvement on the 5% drop registered in
the first three months of the year.
Orange confirmed its full-year guidance of achieving earnings
before taxes, depreciation and amortization of between EUR11.9
billion and EUR12.1 billion.
Write to Nick Kostov at Nick.Kostov@wsj.com
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