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Orange's network investments success

Tuesday, July 29 09:54:47

Telecoms operator Orange's investment in faster fibre and mobile broadband networks in its French home market has started to pay off, as its high-end focus insulates it from cut- price fixed plans offered by rival Bouygues.

As France's largest carrier reported second-quarter results in line with forecasts on Tuesday, it said that some 60 percent of new mobile customers were signing up for high-end plans that include 4G and that 50,000 new customers had signed up to its fibre broadband offers, taking the total to 415,000.

Orange shares are up about 30 percent so far this year, the biggest gainers among Europe's large-cap telecom firms, as investors bet on its recovery from a French price war touched off by low-cost player Iliad's entry to the mobile market in 2012 as well as possible consolidation.

Bouygues took the price battle to the fixed broadband market this March with a TV, Internet and fixed-line phone bundle at 19.99 euros ($26.9) a month, a move that analysts said risked hurting Orange since it has the largest fixed client base.

Investment in networks rose to 1.34 billion euros in the second quarter, or 13.7 percent of revenue compared with 12.7 percent a year earlier.

To cope with tough competition and falling prices across its major markets of France, Spain and Poland, Orange has been cutting costs on everything from marketing to office space. It pledged to keep up the effort and upped its annual cost-cutting target to 300 million euros from an earlier goal of 250 million euros.

Shares in Orange, a former monopoly which is 27 percent owned by the state, rose 1.6 percent when the market opened before falling back to be flat in mid-morning trade. (Reuters)

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