Orange Sales Rebound Stalls Amid French Mobile Competition

  • Revenue little changed after rising in previous quarter
  • Orange added 93,000 domestic fixed broadband clients in France

Orange SA’s sales recovery stalled in the second quarter as competition in the French mobile-phone market weighed on wireless revenue, offsetting increasing demand for broadband services.

Sales were little changed at 10.07 billion euros ($11.1 billion), France’s biggest phone carrier said in a statement Tuesday. Adjusted earnings before interest, taxes, depreciation and amortization rose 0.1 percent on a comparable basis to 3.34 billion euros. Both were in line with the average analyst estimates in a Bloomberg survey.

After a failed attempt to buy Bouygues SA’s phone business, Orange is stuck with three major rivals in one of Europe’s most competitive markets. Sales are stalling after starting to recover in recent quarters, with Chief Executive Officer Stephane Richard seeking to compete on service, network quality and innovation, rather than aggressive discounts.

“This is a softer pace than in the previous quarter,” Stephane Beyazian, an analyst at Raymond James, said in a note. Revenue advanced 0.6 percent in the first quarter.

Orange shares fell 2.6 percent to 13.98 euros at 10:20 a.m. in Paris.

While price pressure increased in the French mobile market, Orange added 93,000 domestic fixed broadband customers in the quarter in its domestic market. The Paris-based operator reiterated its target for rising full-year Ebitda.

The carrier decided not to participate in the price war in the French mobile market to preserve the quality of its network, Chief Financial Officer Ramon Fernandez said during a conference call with journalists.

"We will keep our efforts to continue to invest and to improve the quality of our networks," he said. “We will keep a selective acquisition policy privileging our current geographical areas and value creation.”

Fernandez said the U.K.’s decision to leave the European Union will have no impact on Orange. The telecommunications industry is "quite protected" from economic slowdown, he said.

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