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Africa rescues Orange's sales as competition bites in Europe

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Africa rescues Orange's sales as competition bites in Europe
FILE PHOTO: The logo of French telecom operator Orange is pictured during the Viva Tech start-up and technology summit in Paris, France, May 25, 2018. REUTERS/Charles Platiau/File Photo   -   Copyright  Charles Platiau(Reuters)
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By Mathieu Rosemain

PARIS (Reuters) – Strong demand in Africa and the Middle East helped telecoms company Orange <ORAN.PA> offset a fall in its two main European markets, France and Spain, where heavy promotions dented quarterly sales.

France’s biggest telecoms firm, which has bet on bundling offers for broadband and mobile and high investments in its networks, has been struggling with cut-price competition since Iliad <ILD.PA> started to offer low cost mobile services in 2012 in the country.

A new round of promotions in Spain, where competitors include Vodafone <VOD.L> and Masmovil <MASM.MC>, saw Orange’s third-quarter sales there fall by 2.5% on a comparable basis. The fall was 0.4% in France.

However, the group benefited from 7.6% growth in Africa and the Middle East, helped by strong growth in subscriber numbers and the success of its money transfer services.

Overall, third-quarter group sales rose 0.8% on a comparable basis to 10.6 billion euros ($11.8 billion), while core operating profit climbed 0.2% to 3.62 billion euros, in line with expectations.

Orange shares dipped more than 1% in early trade.

The company also signalled it would update markets at an investor day on Dec. 4 about a possible sale of its mobile and fibre networks in Europe.

“We’ve already made a number of comments on how to best value our infrastructure assets,” Chief Financial Officer Ramon Fernandez told reporters on a call. “We’ll tell you a lot more on December 4.”

French rivals Bouygues Telecom <BOUY.PA>, Iliad and Altice Europe’s SFR <ATCA.AS> have all opened their mobile networks to other investors.

Orange confirmed its full-year guidance, including for slightly lower core operating profit growth than in 2018, as well as lower investments after they peaked last year.

($1 = 0.9019 euros)

(Reporting by Mathieu Rosemain; Editing by Matthias Blamont and Mark Potter)

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