France's Orange cuts costs to save margins amid mobile price war

PARIS, April 29 Tue Apr 29, 2014 1:45am EDT

PARIS, April 29 (Reuters) - France's biggest telecom operator Orange continued cutting costs on everything from staff to mobile phone marketing, allowing it to hold profit margins steady despite lower sales across its major markets.

The group on Tuesday posted in-line sales and operating profits in the first-quarter and confirmed its goal to reach 12 to 12.5 million euros in earnings before interest, tax, depreciation and amortisation (EBITDA) this year.

With pressure strongest in Orange's key markets of France and Poland, sales fell 3.8 percent to 9.8 billion euro ($1.11 billion) on a comparable basis, excluding a 333 million euro charge to settle outstanding litigation with rival Bouygues and other one-off items.

Group EBITDA fell 3.8 percent 3.02 billion euros, yielding an operating margin of 30.8 percent.

Analysts expected first-quarter revenues of 9.8 billion euros, EBITDA of 2.99 billion euros, and an operating margin of 30.5 percent, according to consensus calculated by Orange.

Europe's fourth-largest telecom group by sales continues to be under pressure in France where Chief Financial Officer Gervais Pellisier said some 20 percent of its client base remained on older, higher tariffs that would hit profits when they shift to newer, lower mobile plans.

France has been in the throes of a price war since low-cost player Iliad launched a mobile service in January 2012. (Reporting by Leila Abboud and Gwenaelle Barzic; Editing by)

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