PARIS: Orange SA, France’s largest telecom company whose plan to buy rival Bouygues Telecom broke down earlier this month, said Tuesday that revenue rose 3.5% in the first quarter, boosted by a return to revenue growth in Spain and higher sales to companies.
Orange said revenue rose to €10 billion ($11.27 billion) in the three months ended March as a price war in the French telecom operator’s home market continued to show signs of easing.
That helped push up first-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, by 1.9% to €2.57 billion, slightly below the expectation of analysts polled by FactSet.
“For the third consecutive quarter, Orange revenues have grown, again validating our strategy of differentiation through quality and investment,” said Stéphane Richard, chairman and chief executive of Orange.
France’s former telecom monopoly tried unsuccessfully to negotiate the purchase of Bouygues SA’s telecommunications unit in recent months in a deal that would have consolidated a sector whose profitability has been eroded by a fierce price war since 2012.
The talks collapsed amid disagreements with the French government over the size of the stake Bouygues could build up in Orange and the risks associated with trying to get the deal approved by the country’s competition authorities.
The failure to buy Bouygues Telecom for as much as €10 billion dashed prospects for consolidation in the competitive French market where a 4G mobile phone plan is available for under €20 a month. Orange is betting it can beat out rivals by focusing on the quality of its network and services rather than lowering prices. Mr. Richard is also taking steps to expand in the Middle East and Africa and into financial services in a bid to boost sales.
“We always said we were the ones that least needed consolidation in France and that remains true,” Orange Chief Financial Officer Ramon Fernandez told reporters.
Orange’s revenue in France fell 0.7% to €4.69 billion in the three months, hit by declining sales from mobile services. Fixed-line revenues in France grew 0.1% as the company added 96,000 broadband customers in the period.
Elsewhere in Europe, Orange said revenue grew 0.4%, boosted by Spain, Belgium and Romania.
The company confirmed its full-year target of posting higher Ebitda in 2016 than in 2015 on a comparable basis.
