Orange Profit Up as International Sales Grow

PARIS—Orange SA's sales growth picked up in the third quarter as mobile services revenue increased in Spain and the Middle East but intense competition in its home market of France weighed on results.

Sales rose 0.4% to €10.32 billion ($11.23 billion) in the three months to Sept. 30, France's biggest phone carrier said Tuesday. That helped push up third-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, by 1% to €3.6 billion, slightly above analysts' expectations of €3.58 billion.

Having failed to buy Bouygues Telecom in April, Orange is now stuck competing with three rivals in the French market where a 4G mobile phone plan is available for less than €20 a month. Orange is betting it can beat out rivals by focusing on the quality of its network and services rather than lowering prices. It is also expanding in the Middle East and Africa.

Orange's revenue in France fell 0.5% to €4.77 billion in the three months, hit by declining sales from mobile services. In its domestic market, the company added 134,000 domestic fixed broadband customers in the quarter and 187,000 net new mobile contracts.

Raymond James analyst Stephane Beyazian said fixed line growth in France almost offset the decline in mobile revenue, "hence it is reassuring that competition in French mobile is not as intense as feared lately," he said.

Revenue rose 7.8% in Spain and 2.5% in the Middle East on a comparable basis. Sales continued to be pressured by the European Union's push to cut roaming charges in the region ahead of plans to abolish them altogether.

That change should result in a €150 million to €170 million hit to revenue in 2017, Orange chief financial officer Ramon Fernandez told analysts.

Orange shares rose 3.6% to €14.60 in early trading in Paris.

Orange confirmed its full-year target of posting higher Ebitda in 2016 than in 2015 on a comparable basis. It also said it plans to propose a dividend of €0.60 a share.

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

October 25, 2016 04:25 ET (08:25 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.