Orange revenue hit as Iliad price war takes a toll

 
Oliver Smith
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ORANGE, the largest mobile operator in France, reported a four per cent drop in revenues during its third quarter to 30 September yesterday, as sales in its key home market slid amid a price war with low-cost mobile rival Iliad.

The operator – which partially owns UK network EE along with Deutsche Telekom – reported revenues of €10.1bn (£8.6bn), broadly in line with market expectations, and the company confirmed it remains on track to hit its annual targets.

“Overall, these results, which are the fruit of the efforts of all of the group’s employees, give us confidence that we will achieve our 2013 objectives and reinforce our ambitions for 2014,” said Orange chairman and chief executive Stephane Richard.

Analysts had been expecting third-quarter revenue of €10.2bn according to a Reuters poll of eight analysts.

The hit to Orange’s revenue from regulations on mobile call fees was lighter than a year earlier, helping slow the quarter’s revenue decline.

Commercial performance in the company’s core French market also improved with the signing of 298,000 net additions of mobile customers.

“In France, we recorded our best net sales figures for three years, adding around 300,000 new customers, mainly on high end tariffs such as Origami and Open,” added Richard.

Finance chief Gervais Pellissier said the group was still working to stabilise its operating profit sometime next year, a target given in February, but the commercial pressures in France made it hard to say if it would be able to.

Much will depend on how rival Iliad moves into high-end mobile offers where customers get help buying smartphones, which it is expected to do by Christmas, as well as whether European regulators further cut roaming fees.

“I can’t tell you now that we will be able to achieve our goal of stabilising operating profit next year, but it’s still our intention,” he said.

Orange saw its share price drop 5.3 per cent yesterday on the news of its results, to close at €10 a share.