Orange strikes confident tone for French market after sales rise

France's biggest telecoms operator Orange said on Thursday it saw potential for revenue growth in its competitive home market after a good fourth quarter there offset a downturn in Spain, helping lift its shares. Orange, led by Chief Executive Stéphane Richard, has for years faced a squeeze on revenues and margins as it fights a domestic price war with smaller French rivals Altice Europe's SFR, Bouygues Telecom and Iliad.

The Paris-based company said its fourth-quarter core operating profits rose 1.3% from a year earlier to 3.29 billion euros ($3.58 billion), as sales returned to growth in France and rose sharply in Africa and the Middle East.

Group sales advanced by 1.1% to 11.1 billion euros. Sales in Spain, Orange's second-biggest market after France, fell 2.3% as a flow of low-cost offers in the country dented demand for some its services. Group results were in line with the average of analysts' expectations compiled by the company.

The good commercial performance in France would help boost group cash flow from telecom activities in 2020 as operators increase prices, Chief Financial Officer Ramon Fernandez said. "The French market supports this perspective, as we've seen a gradual, slow improvement," he told reporters, pointing to improved cash flow that was expected to exceed 2.3 billion euros this year. Orange's shares were up by about 1.4% in early trading, valuing the group at 34.3 billion euros.

Investments on equipment and other fixed assets rose last year as it upgraded broadband networks, prompting analysts to question Orange's ability to keep debt at current levels.