Orange earnings dip amid stiff competition in France
Orange reported a slight fall in second-half core earnings as France’s biggest telecoms group continued to endure stiff competition in its domestic mobile market.
The country’s largest mobile operator by subscribers said that restated earnings before interest, taxes, depreciation and amortisation (ebitda) was €5.91bn during the first six months of the year — down 0.6 per cent compared with a year earlier.
The figure was slightly below the €5.92bn average of analysts’ forecasts. The restated ebitda margin was 29.4 per cent during the period, a decline of 0.3 percentage points compared with the first half of last year.
However, Orange confirmed its full-year target of a higher restated ebitda compared with 2015.
Stéphane Richard, chairman and chief executive, said on Tuesday that the results “again confirm the group’s positive momentum” though he said that the performance “was achieved in markets that remain highly competitive, particularly France, which experienced aggressive promotional activity”.
Orange shares were down 1.2 per cent at €14.16 in early trading.
The operator said that group operating profit during the first half was €2.14bn, a decrease of €123m compared with the first six months of last year. Revenues were €20.01bn, up 0.3 per cent — though these were flat during the second quarter after increasing 0.6 per cent in the first three months.
In France, its biggest market but where competition among the four principal operators has been fierce, revenue from mobile services fell 5.2 per cent in the second quarter. That was more than the 2.4 per cent decline Orange reported in the first three months to the end of March.
However, the fall in revenue from mobile was partially offset by a 4.4 per cent increase in revenue from fixed broadband services in France.
Orange has been seeking to compete in its domestic market, which accounts for almost half of group revenue, on network quality and services.
A failed bid to buy Bouygues Telecom, the country’s third-biggest operator by mobile subscribers, has removed any short-term hope of market consolidation and increased the likelihood that competition will remain fierce.
In Spain, Orange said that revenues increased 6.2 per cent during the second quarter after growing 1.8 per cent in the first, confirming the country’s continued recovery.
In Africa and the Middle East, growth slowed to 2.3 per cent during the second quarter after increasing 4.4 per cent during the first. Orange said that it had 108.5m customers in the region at the end of June, a decrease of 0.4 per cent on a year earlier. It attributed the fall to strengthened requirements to verify the identities of customers in most countries.