Orange and Telekom Austria Q3 results show glimmers of hope

It's the quarterly results season, meaning that company quiet periods have ended and pale-faced staff can now venture out into the wider world to reacquaint themselves with friends, family, and industry contacts--at least until the next results deadline looms.

With this latest round of third-quarter results, there are some bright spots in mobile markets that were previously pretty gloomy. In France, for example, Orange performed much better than expected in the three months from July to end-September.

The operator was able to halt the pace of revenue decline and made progress with cutting costs. Importantly, the company kept its EBITDA margin stable. Nevertheless, Orange still has a fair task ahead to return itself to revenue growth, and continues to reiterate that French operators want consolidation and they want it now.

For sure, Orange itself does not wish to take the first step towards further consolidation of the French mobile market. But as SFR and Numericable move closer to completing their planned merger after the French cable operator won conditional approval for the deal this week, Orange, Bouygues Telecom and Free Mobile will be more than aware that they are set to face competition from a new converged heavyweight: Numericable's purchase of SFR will create the second-biggest player behind Orange and ahead of Bouygues Telecom.

Meanwhile Austria is a market that has already witnessed consolidation--a process that reduced the number of its mobile players from four to three, which is exactly what Orange wants to see happen in France.

The acquisition of Orange Austria by Three Austria has already been of benefit to the market's mobile operators, which no longer face the kind of prices that Telekom Austria previously described as unsustainable. At one point, for example, Orange Austria was offering 1 GB of data plus 1000 minutes and 1000 SMS for €7.50: "That's clearly a price where you cannot invest any longer," Telekom Austria spokesman Peter Schiefer said at the time.

Telekom Austria itself was able to produce a strong set of third-quarter results that brought approving nods from analysts and showed continued signs of improvement on its domestic mobile market.

The company even seems to have partly dug itself out of the hole created when it was forced to make an impairment charge of €400 million for Bulgaria in the first half of 2014.

Still as Telekom Austria CEO Hannes Ametsreiter warned, it's not quite time to throw out those cost-cutting clippers yet. "We are still facing considerable difficulties on certain markets and the general economic trend is not growth-supportive either," he said.

There could be more bright spells ahead, but wintry squalls and the odd bit of thunder can never be fully ruled out in this environment.--Anne

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