Orange sees signs of improvement in France's telecoms market

PARIS (Reuters) - Orange ORAN.PA signaled the start of an easing in the fierce competition in France's telecoms market, after posting slightly better-than-expected second-quarter results on Thursday.

FILE PHOTO: The logo of French telecoms group Orange is seen at the entrance of the Cyberdefense division headquarters at Nanterre, France, October 5, 2017. REUTERS/Charles Platiau/File Photo

Orange, France’s biggest telecoms group, said it managed to stabilize sales in the country over the period, helped by its bundled offers for the broadband and mobile businesses following high investments on networks.

The French telecoms market has been struggling to escape from a spiral of heavy promotions since Iliad ILD.PA started to offer low-cost mobile services in 2012, prompting Orange and other rivals Bouygues Telecom BOUY.PA and Altice Europe's SFR ATCA.AS to follow suit.

“We see some signs of improvement in the French market,” said Chief Financial Officer Ramon Fernandez, referring to the competitive environment.

There were still heavy promotional activities but the race to gain customers at any cost, through lifetime offers on mobile contracts, was slowing down, he added.

The stabilization of revenues in France helped Orange post slightly better-than-expected sales and profit growth in the second quarter.

Its revenue over the period rose 0.5% from a year earlier on a comparable basis to 10.39 billion euros ($11.57 billion), beating the analyst consensus forecast for a decline of 0.4%.

Core operating profits rose 0.9% to 3.38 billion euros.

A strong performance by its Africa and Middle East region also shored up sales, with revenue growing by 5.8%.

With a core operating profit of 868 million euros in the first half, up 10.5% from a year earlier, the Africa and Middle East region is yielding more earnings than Spain, Orange’s second-biggest market, where the heavy promotions have started to dent sales.

Orange confirmed its full-year guidance, including a slightly lower core operating profit growth than in 2018, as well as lower investments after having reached a peak on investment levels last year.

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