Orange Beats Estimates as French Wireless Market Recovers

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Orange Earnings Boosted by French Broadband: Fernandez

Orange SA reported sales and earnings exceeding analysts’ estimates as the French phone market recovered and revenue in Africa increased.

Adjusted earnings before interest, taxes, depreciation and amortization were little changed at 3.29 billion euros ($3.6 billion) on sales of 9.89 billion euros, France’s biggest phone carrier said Tuesday. Analysts had predicted Ebitda of 3.14 billion euros on sales of 9.76 billion euros on average, according to data compiled by Bloomberg.

The sales contraction in France improved to 0.8 percent from 1.8 percent in the previous quarter as broadband revenue rose and wireless sales dropped at a slowing pace. The French market is showing signs of recovering after three years of price wars and falling phone bills as Orange expands its faster networks and adds services to compete with discounter Iliad SA.

“Orange is on the right track and advancing, and it’s thanks to high-speed packages,” Chief Financial Officer Ramon Fernandez said on a call with reporters. “Sales are growing for the first time since 2011, excluding regulation.”

Shares of Orange added 2.7 percent to 15.36 euros at 9:01 a.m. in Paris, valuing the carrier at 40.7 billion euros. The stock had climbed 5.6 percent this year through Monday.

Bulking Up

Chief Executive Officer Stephane Richard is also seeking to boost profit with cost cuts and by adding users in faster-growing regions. While Orange still makes about half of its revenue at home, it has expanded into countries from Belgium to Botswana and is eyeing other markets.

In the past year alone it’s begun talks to buy assets from Bharti Airtel Ltd. in Africa, raised its stake in Morocco’s Meditel and bulked up in Spain with the 3.4 billion-euro takeover of Jazztel Plc.

“We have activities providing us with the cash flow necessary and we’ve sold some assets,” Fernandez said in an interview on Bloomberg Television. “We have room to move on M&A.”

A deal with Bharti would bolster Orange’s presence in West Africa and generate synergies, Fernandez said. In the second quarter, revenue in Africa and the Middle East rose 4.5 percent, led by wireless demand in Ivory Coast, The Democratic Republic of Congo, Egypt and Guinea.

Orange reiterated its forecast for full-year adjusted Ebitda of 11.9 billion euros to 12.1 billion euros. The company has also said 2015 will mark a low point and earnings will rise after that.

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