Iliad Boosts Revenue as Promotions Help Attract Customers

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  • French carrier wins about 400,000 wireless users in first half
  • Billionaire Niel’s company also set to enter Italian market

Iliad SA, the French low-cost phone carrier founded by billionaire Xavier Niel, reported an increase in first-half sales and earnings as the company won customers amid new promotions.

Sales rose 6.3 percent to 2.3 billion euros ($2.6 billion), the Paris-based carrier said Wednesday, matching the average of three analysts’ estimates. Earnings before interest, taxes, depreciation and amortization climbed 11.5 percent to 808.5 million euros.

Iliad is continuing to add users at a rapid clip, four years after emerging as France’s fourth mobile carrier and shaking up the country’s phone market with its low-cost offers. The company won about 400,000 wireless subscribers and 123,000 broadband users during the first six months of 2016, bringing its total number of customers to more than 18 million.

Promotions such as cheaper roaming charges outside France, as well as flash sales during “strategic periods of the year” helped Iliad win market share, Thomas Reynaud, deputy chief executive officer, said in an interview.

Shares of Iliad advanced 1.6 percent to 180.30 euros at 9:15 a.m. in Paris, valuing the company at 10.6 billion euros.

Iliad’s market entry in 2012 sparked a price war that has slowed down sales growth and undermined earnings at the three incumbent rivals, prompting them to seek combinations. Billionaire Patrick Drahi merged the phone carrier SFR with cable provider Numericable about two years ago, and Orange SA’s attempt to buy the phone business of Bouygues SA collapsed this year.

Iliad, meanwhile, is considering expanding beyond France for the first time. The company agreed last month to acquire assets in Italy from CK Hutchison Holdings Ltd. and VimpelCom Ltd., which are combining their operations in the country. Iliad expects regulators to approve the transaction by Sept. 8, Reynaud said.

If the deal is approved, Iliad will finance the transaction with cash flow and debt, he said. The company won’t raise money through a capital increase for the purchase, he said.

Iliad stuck to its 2020 financial forecasts. The company is targeting earnings before interest, taxes, depreciation and amortization of 40 percent of sales by the end of 2020, up from 33.8 percent in 2015. Reynaud also confirmed Iliad’s investments will be higher this year than the 1.2 billion euros spent in 2015.