(Bloomberg) -- Orange SA, France’s biggest phone company, reported rising revenue after the carrier refused to cut prices to match cheaper rivals in its home market.
Sales for the entire business rose 0.9% on a comparable basis to €9.99 billion ($10.8 billion) in the second quarter from a year earlier, the company said in a statement on Wednesday. That compared to the €10 billion analysts had forecast, according to the average of a Bloomberg survey. French revenue gained 0.3%.
Orange Chief Executive Officer Christel Heydemann has resisted price cuts from competitors in its home market, betting that higher customer satisfaction would keep subscribers loyal. Out of the country’s four largest competitors, Altice France and Bouygues SA began slashing prices in June, while Orange and Iliad SA held steady.
The company expects revenue from its retail customers to grow between 2% and 4% in the coming quarters as it continues to “defend value,” Heydemann said on an earnings call.
Outside of France, revenue in the rest of Europe fell 2.2% because of a reduction in wholesale services after regulators cut the prices it could charge other carriers for completing calls on its network. The European business also reported lower sales from IT services and equipment.
Orange has also been consolidating its position in other parts of its empire, particularly in Europe where competition has undercut earnings. The company combined its Spanish operations with Masmovil Ibercom SA this year to create Spain’s largest carrier. The €18.6 billion joint venture brought the number of major carriers in the country to three from four.
The company said Wednesday that the MasOrange joint venture created from the merger had reached an agreement with Vodafone Spain to create a shared fiber optic broadband network with about 4 million customers in Spain.
The goal is for MasOrange to own 50% of the joint venture, Heydemann said on the call, without providing further details on the financial structure.
The company, which got most of its growth from Africa and the Middle East, is also weighing a sale of its 40% stake in Mauritius Telecom Ltd., people familiar with the talks said last month. Orange no longer considers the minority holding part of its core business, the people said at the time.
Earnings before interest, taxes, depreciation and amortization after leases rose to €3.11 billion in the quarter. That compared with the €3.09 billion average analyst forecast from Bloomberg’s survey.
What Bloomberg Intelligence Says:
Orange is meeting the challenge of increased domestic competition, growing both 2Q revenue and 1H Ebitdaal by 0.3% — ahead of expectations — on the back of ARPU gains and improving subscriber intake. A robust African business and resilience in France and Europe underpin 1H Ebitda growth of 2.5% vs. analyst estimates for 2.3%, capping the risk of downgrades to full-year consensus for a 2.3% gain.
— Erhan Gurses, BI telecoms analyst
Orange shares were little changed in Paris on Wednesday. The company’s shares have declined about 2.2% so far this year.
(Updates with CEO comments and context throughout)
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