UPDATE 1-Stiff competition caps profit growth at Orange's Polish arm

Fri Jul 25, 2014 6:31am EDT

(Adds full-year goal update)

WARSAW, July 25 (Reuters) - French telecoms group Orange's Polish business posted a smaller than expected 24 percent jump in second-quarter net profit on Friday, saying that cost cuts and tax refunds failed to fully offset persistent competition.

Poland's largest telecoms operator has cut jobs and refinanced 700 million euros ($942.7 million) of debt but continues to struggle with falling fixed-line revenue as it competes for market share with the likes of Deutsche Telekom unit T-Mobile Polska and Polkomtel, controlled by Polish media mogul Zygmunt Solorz-Zak.

However, the Orange business expects its comparative revenue decline to improve in the second half of the year. The last regulatory price cuts were implemented a year ago, so the revenue decline for the last six months of this year should be considerably slower than the 5.4 percent rate in the first half.

Orange Polska reported second-quarter net profit of 94 million zlotys ($30.5 million) on sales of 3.08 billion zlotys, compared with analyst expectations of 101 million zlotys and 3.07 billion zlotys respectively.

It also reiterated full-year organic cash flow guidance of 1.1 billion zlotys after the first-half figure came in at almost 0.5 billion.

It also said that capital expenditure this year could reach 1.8 billion zlotys. The figure could be higher next year, when Poland is expected to hold an auction for 4G mobile spectrum to provide superfast internet services. ($1 = 0.7426 Euros) ($1 = 3.0837 Polish Zlotys) (Reporting by Adrian Krajewski; Editing by David Goodman)