Orange reports lower Q2 revenue in France as price war continues

Orange’s Paris headquarters / Image: Orange

Orange reported a slight drop in revenue from its France-based operations for the second quarter of 2016, an indication that the price war on the French mobile telecoms market is not yet over.

The operator, which continues to face strong pricing competition from Free Mobile as well as promotional activity from other rivals, said revenue in France fell 1.7 per cent on a comparable basis year-on-year to €4.7 billion ($5.2 billion) in the second quarter.

Group revenue was stable at €10 billion, boosted by growth in Spain (6.2 per cent) and the Middle East and Africa (2.3 per cent). Group restated EBITDA was 0.1 per cent lower year-on-year at €3.34 billion. For the full year of 2016, Orange confirmed that restated EBITDA would be higher than in 2015 on a comparable basis.

Reuters noted that the share prices of Orange, Bouygues Telecom and SFR all fell following the Orange results announcement

"The fall of Orange's stock stems from the deterioration of the situation in France, because of the aggressive promotions of its competitors," a Paris-based analyst told Reuters.

It had been hoped that the proposed acquisition of Bouygues Telecom by Orange would alleviate the situation on the mobile market, but the failure of the discussions means that the market's four players remain under pressure.

Orange CFO Ramon Fernandez said it had not been certain whether prices "would go in one way or another" following the collapse of the talks.

"Well, we witnessed the very aggressive commercial approach of our competitors in the second quarter," Fernandez said, Reuters reported.

In the first six months of the year, Orange report a slight annual increase of 0.3 per cent in overall revenue to €20 billion, while revenue from France was 1.2 per cent lower at €9.34 billion. Group restated EBITDA was 0.6 per cent lower year-on-year at €5.91 billion, while EBITDA in France was 2.6 per cent lower at €3.23 billion.

Net income was notably higher at €3.32 billion compared to €1.27 billion in the first half of 2015. However, this was mostly attributable to a €1.81 billion contribution from the sale of Orange's 50 per cent stake in EE to BT.

At the end of June, Orange had 22.7 million 4G customers in Europe and 9.4 million in June.

For more:
- see the Orange results
- see this Reuters article

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