UPDATE 2-Conglomerate Bouygues bolstered by strength in telecoms arm

* Q1 operating loss 58 mln euros vs 94 mln loss year-ago

* Colas losses partly offset by strong Bouygues Telecom

* Keeps outlook, shares up 3 pct (Adds deputy CEO comments, shares, analyst)

PARIS, May 16 (Reuters) - Bouygues posted a smaller-than-expected first-quarter loss on Thursday as telecoms helped offset weakness at the French conglomerate’s Colas road-building business.

The family-controlled owner of TF1, France’s biggest private TV broadcaster, said its current operating loss narrowed to 58 million euros ($65 million) from 94 million a year earlier and beat the loss of 87 million expected in a company-compiled poll of six analysts.

Revenue rose 16% to 7.93 billion euros, topping the 7.26 billion expected by analysts.

Bouygues stuck to its forecast for improved group profitability this year, driving its shares up 3% in early session trading.

Losses of 298 million euros at Colas, whose road building activity traditionally slows down during the winter months, were partly offset by a profit of 91 million euros at Bouygues Telecom and a profit of 63 million euros at TF1.


Bouygues, which failed to merge its telecoms unit with market leader Orange three years ago, reiterated its forecast for some 300 million euros of free cash flow at Bouygues Telecom this year.

Bouygues Telecom won 459,000 new mobile customers and 59,000 new fixed customers in the quarter. Its revenue rose 13% to 1.45 billion euros while its operating profit grew by 32 million euros, helped by price hikes.

“Bouygues is clearly the winner this quarter in French telecoms,” wrote analysts at Credit Suisse.

When asked about trends in the French telecoms sector, Deputy CEO Philippe Marien said the pressure to spend on promotions was still there but was starting to ease.

“The market is competitive but clearly less fierce than it was,” said Marien, adding there were higher mobile subscription prices and a lower customer churn rate.

Orange, France’s former monopoly, last month reported its quarterly sales in France fell for the first time since 2017, highlighting the battle for market share.

Bouygues Telecom and domestic rivals Iliad, Orange and Altice Europe’s SFR are in a race to win customers for their fixed and mobile businesses while having to spend billions of euros on upgrading their networks.

$1 = 0.8922 euros $1 = 0.8920 euros Reporting by Dominique Vidalon; additional reporting by Laetitia Volga; editing by Sudip Kar-Gupta and Jason Neely