Orange Profit Up as International Sales Grow -- 4th Update

By Nick Kostov 

PARIS-- Orange SA's shares jumped Tuesday as investors cheered its performance in France despite intense competition in its home market.

The Paris-listed company said sales rose 0.4% to EUR10.32 billion ($11.23 billion) in the three months to Sept. 30. That helped push up third-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, by 1% to EUR3.6 billion, slightly above analysts' expectations of EUR3.58 billion.

Orange's revenue in France fell 0.5% to EUR4.77 billion in the three months, an improvement on a 1.2% drop in the previous quarter. The company said it had added 134,000 domestic fixed broadband customers in the quarter and 187,000 net new mobile contracts in the period without lowering prices in the wireless segment.

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 isn't as intense as feared lately," he said.

Orange shares rose 4.7% to EUR14.77 in afternoon trading in Paris.

Having failed to buy Bouygues Telecom for EUR10 billion 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 EUR20 a month.

Chief Executive Stephane Richard is betting it can beat out rivals by focusing on the quality of its network and services rather than lowering prices like some of his competitors. He is also expanding the company's operations in the Middle East and Africa and is pushing into mobile banking through the acquisition of Groupama Bank.

Revenue rose 5.9% in Spain and 5.1% in Africa and the Middle East.

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 EUR150 million to EUR170 million hit to revenue in 2017, Orange Chief Financial Officer Ramon Fernandez told analysts.

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 EUR0.60 a share.

"The fourth quarter will be better than the third," Mr. Fernandez said.

Write to Nick Kostov at [e-mail]

(END) Dow Jones Newswires

October 25, 2016 08:57 ET (12:57 GMT)

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