Telecoms group Orange says competition dented sales growth, confirms targets

PARIS (Reuters) - Orange, France’s biggest telecoms operator, strengthened profits in the third quarter despite heavy competition in its home country and Spain that dented sales growth.

FILE PHOTO: The logo of French telecoms operator Orange at the Viva Tech start-up and technology summit in Paris, France, May 25, 2018. REUTERS/Charles Platiau/File Photo

The results, which met market expectations, underscore the relevance of the group’s strategic focus on combined fixed-mobile offers, Orange said in a statement on Thursday.

The so-called “convergent” offers helped core operating profits rise by 3 percent to 3.69 billion euros ($4.2 billion).

Group revenues, however, grew by a mere 0.6 percent over the period to 10.3 billion euros, due to hefty promotions offered by telecoms operators in Spain and in France, where the price war has intensified over the last few quarters.

“This game will some day have to stop,” Chief Financial Officer Ramon Fernandez said during a call with reporters.

He insisted the group had kept away from the most aggressive promotions currently seen in France, where rivals Iliad, Altice Europe and Bouygues Telecom all seek to grow market share in the broadband market.

Nevertheless, Orange said it had won both fixed and mobile customers in France between July and September, which represents the sixth straight quarter of growth in the country.

The group, which has pledged to hit peak investments in 2018 to upgrade its networks, said capital expenditure jumped 10.9 percent to 1.77 billion euros, above market expectations.

This in turn impacted operating free cash flow, which fell by 3.5 percent over the period to 1.92 billion.

Orange nevertheless confirmed its full-year targets, including a target for annual growth in both adjusted EBITDA and operating free cash flow.

Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Sudip Kar-Gupta