Numericable Gains Customers on Way to Complete SFR Deal in 2014

Numericable Group (NUM), France’s largest cable operator, said it gained subscribers and grew the average phone bill in the second quarter, as it moves to complete its $23 billion acquisition of mobile operator SFR by year-end.

The net loss was 118 million euros ($158 million), partly due to financing costs for the SFR deal, while sales increased 3 percent to 336 million euros, the company, based in a suburb outside Paris, said today in a statement. Analysts had predicted revenue of 333 million euros, according to the average of estimates compiled by Bloomberg.

Billionaire founder Patrick Drahi is looking to expand his grip on cable and mobile companies in Europe as the industry consolidates to reduce costs and revive earnings. Numericable in April agreed to buy SFR, France’s second-largest carrier, from Vivendi SA (VIV), and in June unveiled a deal to buy Virgin Mobile’s unit in the country.

“Our competitors were aggressive in the second quarter,” Thierry Lemaitre, Numericable’s finance chief, said on a conference call. “We could’ve feared that it would hinder our ability to conquer new clients -- but no such thing happened.”

Meanwhile, rivals Orange SA (ORA), Bouygues SA (EN) and Iliad SA (ILD) have sought unsuccessfully to further consolidate the French market through combinations. Phone and cable carriers across Europe are seeking mergers and acquisitions to help ease competitive pressure on prices -- a pursuit made more likely after the European Commission this month approved a reduction in the number of wireless-network providers in Germany.

Rising Bills

In France, Iliad entered the market in January 2012 by selling discounted mobile-phone packages, fueling price competition. Iliad’s founder and owner, French billionaire Xavier Niel, made his boldest move yet last week by offering a $15 billion cash bid for control of T-Mobile US Inc.

Numericable said the average phone bill grew 3 percent in the quarter to 43.60 euros per subscriber, while its customer base increased by 59,000 to 1.7 million.

The cable operator confirmed it aims to close the purchase of SFR by year-end.

Numericable shares rose 3.2 percent to 40.83 euros today in Paris. The stock has gained 65 percent since Numericable’s initial public offering in November.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net Ville Heiskanen

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