UPDATE 1-Bouygues steps up telecoms cost cuts as loss deepens

Thu May 15, 2014 2:40pm EDT

* Group operating loss deepens in Q1 to 96 mln euros

* Bouygues Telecom seeks 300 mln euros in extra cost savings

* Business has standalone plan but all options open -CFO

* Bouygues Telecom to focus on 4G, fixed broadband (Adds CFO comments on Bouygues Telecom, detail, context)

By Natalie Huet

PARIS, May 15 (Reuters) - French conglomerate Bouygues said it was cutting more costs at its telecom unit to strengthen it as a standalone player but was also keeping an open mind and looking at potential tie-ups with other operators.

Chief Financial Officer Philippe Marien told reporters the telecoms unit, which has been hit hard by a mobile price war and recently lost a takeover battle for Vivendi's SFR, aimed to achieve an additional 300 million euros ($411 million) in annual cost savings by 2016.

He declined to say how many jobs could be cut as a result. Unions fear it could shed up to 2,000, or over a fifth of its staff, as part of the restructuring.

Bouygues saw its operating loss deepen in the first quarter due to a 23 percent drop in operating profit at the telecom business. However, revenue rose 5 percent at its main construction business, and it confirmed its full-year targets.

Asked to comment on calls from unions and the government for Bouygues Telecom to tie up with another operator, Marien said the group was closely monitoring the sector and weighing every option, but saw the future for the unit as an independent player.

"All scenarios are on the table," Marien said. "All telecom operators ... are considering all possibilities and all opportunities... Today, we are very focused on putting in place our standalone plan."

Bouygues Telecom last month lost a fierce takeover battle for Vivendi's SFR telecom unit that would have propelled it from third-biggest to No. 1 telecoms player in France ahead of former monopoly Orange.

Losing SFR to cable firm Numericable has further weakened Bouygues Telecom, already fighting a price war sparked by upstart operator Iliad, and the government has called for the sector to consolidate further to stop "destructive competition" and instead spur investment.

Beyond cost cuts, Marien said the plan for the telecoms unit would focus on the rollout of its very-high speed 4G network and on the fixed broadband market, which respectively brought in 400,000 and 100,000 new customers over the quarter.

Bouygues confirmed its full-year target for slightly positive free cash flow at Bouygues Telecom, and for group sales to be close to their 2013 level.

First-quarter group revenue rose 3 percent to 6.84 billion euros. The group posted a net profit thanks to exceptional items but its operating loss deepened to 96 million euros from 77 million in the same period a year ago.

According to a company-provided poll of seven analysts, median forecasts for Bouygues had given quarterly sales of 6.54 billion euros, a current operating loss of 90 million and a net loss of 63 million.

($1 = 0.7294 Euros) (Editing by James Regan and David Evans)

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