* Operating profit rises 5 pct on 1 pct sales dip
* Net loss of 757 mln euro follows Alstom writedown
* Bouygues unveils cut-price triple play package
* Shares in French telcos sag as price war heats up
(Recasts with new cut-price telecom offer, CEO comments on
sector, Alstom stake)
By Natalie Huet and Gwénaëlle Barzic
PARIS, Feb 26 French construction-to-telecoms
group Bouygues unveiled higher core profit and a new
low-cost fixed line package on Wednesday, heating up a domestic
price war that has been weighing on revenue.
The conglomerate said it would rely on a robust construction
business and competitive telephone packages this year after
savings at its telecom and television units helped lift
operating profit by 5 percent in 2013.
The owner of France's third-largest telecom operator and TF1
, the country's biggest private broadcaster, has been
slashing costs to cope with a price war sparked by the 2012
launch of Iliad's low-cost Free Mobile service.
The fierce competition has fuelled intensive speculation
about potential consolidation in the French telecoms sector.
Vivendi-owned SFR, France's second-largest mobile
phone operator, has already been approached over a tie-up with
cable firm Numericable, and a source close to the
talks said this was prompting rivals, such as Bouygues and
Iliad, to consider bidding too.
Chief Executive Martin Bouygues said he was keeping a close
watch on the situation but refused to comment on talk of a
possible tie-up with SFR.
Bouygues recently struck a deal with SFR to share part of
their mobile networks, a move through which it hopes to save 100
million euros a year from 2017-2018.
With its latest triple-play offer, which it says will enable
French households to save 150 euros per year on average,
Bouygues Telecom now also aims to reach 20 percent market share
in the domestic fixed-line segment as soon as possible.
"We believe that a mature market like this one needs to be
shaken up with innovative offers," Chief Executive Martin
Bouygues told a news conference.
He declined to say what margins the group would be achieving
with the offer but said that for some operators, the fixed-line
segment currently featured Ebitda margins above 40 percent,
similar to those of luxury goods.
The new triple-play package includes television, Internet
and unlimited calls to landlines for 19.99 euros ($27.45) a
month. Iliad immediately hit back by saying it would include
more TV channels free of charge in its own entry-level offer.
Shares in Bouygues, which had rallied at the open on the
back of the annual results, trimmed their gains after the
announcement and were flat at 30.24 euros at 1253 GMT. Shares
in Iliad fell 7.8 percent, Orange 3.8 percent and SFR
parent Vivendi 1.8 percent.
BOUYGUES "COMFORTABLE" IN ALSTOM DESPITE WRITE-DOWN
Bouygues forecast sales this year would be close to 2013
levels and kept its dividend stable at 1.60 euros per share.
Cost cuts at Bouygues Telecom reached 599 million euros last
year, but the unit's earnings before interest, tax, depreciation
and amortisation (EBITDA) came in at 880 million, slightly below
a target of 900 million. Sales fell 11 percent to 4.7 billion.
The group, which also builds roads, said current operating
profit rose 5 percent to 1.34 billion euros ($1.84 billion) last
year, even as sales dipped 1 percent to 33.3 billion. Analysts
polled by Reuters expected operating profit of 1.3 billion on
sales of 33.2 billion.
However, Bouygues registered a full-year net loss of 757
million euros, the first net loss since 1995, following a 1.4
billion writedown on its 29 percent stake in train and turbine
While its construction business and road unit Colas
both had higher order books last year, up 3 percent
and 6 percent respectively, Alstom has been hit by a drop in
orders for power equipment, and its contribution to Bouygues'
annual net profit fell 30 percent to 168 million euros.
Alstom's cash burn and depressed shares had prompted
Bouygues to write down the value of its stake by about 31
percent earlier this month.
The move has fuelled speculation that Bouygues might be
getting impatient and looking for the exit, but its CEO called
Alstom a "remarkably well-managed business" and said heavy
industry was a cyclical sector that would eventually see an
uptick in orders as the economy improves.
($1 = 0.7282 euros)
(Additional reporting by Gilles Guillaume; Editing by James
Regan and Stephen Powell)