Orange Predicts Earnings to Decline Further on Price War

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Orange SA, the French telecommunications carrier with networks from Belgium to Botswana, forecast a key measure of profit will fall further this year as it has yet to stem a decline in sales after a three-year price war.

Earnings before interest, taxes, depreciation and amortization will be in a range of 11.9 billion euros ($13.5 billion) to 12.1 billion euros, a decrease of as much as 2.4 percent from a year earlier, when earnings fell 3.6 percent, Paris-based Orange said Tuesday in a statement. Fourth-quarter revenue slipped 1.6 percent to 10 billion euros.

“Sales are on an improving trend, but in 2015 we can’t know for sure there won’t be another slight decline,” Finance Chief Ramon Fernandez said during a conference call. “It’s clear a recovery is underway, but looking forward a lot will depend on how our rivals behave.”

Faced with price wars in France since Iliad SA started selling low-priced packages three years ago, Orange has been cutting back on costs such as marketing and hasn’t replaced retirees in some jobs. Chief Executive Officer Stephane Richard sold assets in markets including Switzerland and the Dominican Republic to bolster operations in countries such as Spain and Egypt.

The carrier is separating its African and Middle East businesses, and is said to have explored acquisitions including assets owned by India’s Bharti Airtel Ltd.

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Fourth-quarter Ebitda fell 2.2 percent to 2.81 billion euros, Orange said. Analysts had predicted Ebitda of 2.78 billion euros on sales of 9.88 billion euros, data compiled by Bloomberg showed.

The shares fell 1.7 percent to 16.08 euros at 9:16 a.m. in Paris. They were up 57 percent in 2014 and have increased 16 percent this year through yesterday.

The stock closed yesterday at a four-year high after people familiar with the matter told Bloomberg News that cable billionaire Patrick Drahi’s Altice SA had stepped up plans for a potential takeover of Bouygues SA’s wireless asset. Such a move would reduce the number of mobile-phone networks in France to three from four as Altice already controls SFR, the country’s second-biggest wireless provider.

Earlier this month, Orange and its German partner Deutsche Telekom AG agreed to sell British wireless venture EE Ltd. to BT Group Plc for $19 billion. Orange’s 3.4 billion-euro bid to buy Spanish broadband provider Jazztel Plc, the French company’s biggest takeover attempt in almost a decade, is being reviewed by European regulators.

Orange said it plans to keep its net debt to Ebitda ratio to about 2 times “over the medium term.” Net debt was 26.1 billion euros at the end of 2014. Orange plans to continue paying a dividend of 60 cents per share for 2015. The company will unveil its business plan through 2020 on March 17.