Orange continues to suffer in French price war

25 October 2013 | Kavit Majithia

Competition in the French mobile market has affected the earnings of Orange as the company’s customers continue to generate lower average revenues for the group.

The continuing price war in France is a result of the entrance of low-cost mobile operator Iliad into the country, which has now been present for two years.

Orange claims, despite lower revenues, it is on course to meet its financial targets, with the group increasing its cost-cutting efforts.

Q3 earnings, before interest, taxes, depreciation and amortisation fell by 7.7% to €3.4 billion across the group, with group revenues also down by 5.5% to €10.2 billion. Orange was affected by a fall in sales in almost all of its markets, including Africa, with the only exception coming in Spain.

Investors will nevertheless be buoyed by the fact that the company has boosted its subscriber numbers and has indicted a renewed faith in UK subsidiary EE, after it reportedly delayed its plans to float a minority stake in the company.

Orange and its EE partner Deutsche Telekom are said to be happy with EE’s 4G launch, and the companies are now re-evaluating their strategy for it.

Orange has also moved to develop higher-priced mobile packages over 4G, with mobile service revenue in France decreasing by 8.1% year-on-year.

The company is still aiming to deliver a €7 billion cash flow for 2014, and the Financial Times reports it will sell off its Dominican Republic business for up to €900 million.