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Bloomberg
Orange SA reported a 1.6 percent increase in third-quarter earnings, helped by rising wireless sales in Spain and Africa and demand for faster broadband in its home market of France.
Adjusted earnings before interest, taxes, depreciation and amortization rose to 3.6 billion euros ($3.9 billion), Orange said in a statement Tuesday. That compared with the average analyst estimate of 3.59 billion euros. Revenue rose 0.8 percent to 10.3 billion euros, matching the average estimate.
Chief Executive Officer Stephane Richard is expanding in Africa as price competition weighs on wireless revenue at home and European regulations eat into roaming revenue in the region. Rather than rely on discounts, he’s trying to compete on service and network quality while also touting high-speed broadband services.
Shares of Orange advanced 2.8 percent to 14.48 euros at 9:20 a.m. in Paris, paring the stock’s decline this year to 6.5 percent. Orange in April failed in its attempt to buy Bouygues SA’s wireless business for about 10 billion euros, denying France’s phone industry a consolidation that could have alleviated its cut-throat competition. Instead of being able to save on costs such as equipment purchases and customer service, Orange is stuck with three major rivals.
The carrier added 134,000 fixed-broadband customers and 187,000 mobile clients in the quarter in France, without any promotions in the wireless segment during the period, Chief Financial Officer Ramon Fernandez on a conference call with journalists. The results signal that Orange’s French business may return to growth sooner than expected, analysts at Goldman Sachs Group Inc. said in a note.
Sales climbed 7.8 percent in Spain and 2.5 percent in Africa and the Middle East, while revenue in France declined 0.6 percent. The former French phone monopoly also suffered from the project started by the European Union in 2007 to cut the region’s roaming premiums. The latest mandatory price cut on surcharges was introduced on April 30. The lower European roaming fees will have an impact of about 150 millions euros in 2017, Fernandez said.
Orange plans to start a French banking unit in the first half of 2017 after buying 65 percent of Groupama Bank, Fernandez said. Work toward the division’s debut “is progressing well,” he said.The Paris-based company plans to pay a dividend of 60 euro cents a share for 2016 and reiterated a forecast for higher full-year earnings. “The fourth quarter will be better than the third one,” Fernandez said.