* Q1 core profits down 0.3%
* Q1 sales in Spain dive by 7.4%
* Orange shares down 2% (Recasts story, adds quote, details)
PARIS, April 22 (Reuters) - Orange, France’s biggest telecoms firm, signalled that cut-throat competition in Spain was here to stay, weighing on investor sentiment as the group posted a worse-than-expected performance in its second-biggest market.
Orange’s shares were down by close to 2% in Paris trading, making it the second-worst performer on France’s benchmark stock index CAC 40, in spite of quarterly results that met market expectations.
Sales in Spain have dived by more than 7% over the first three months of the year, worse than most analysts feared.
Orange managed to add new broadband and mobile customers in Spain over the period via cheaper contracts, but at a slower pace than the previous two quarters.
“The low-end market has been more aggressive in the first quarter,” Orange’s new head of Spanish operations Jean-François Fallacher told analysts on a call, adding that Orange would refrain for making further price cuts .
“As a strong number two of the market the last thing we want is to fuel any further price war,” Fallacher said. Chief Financial Officer Ramon Fernandez confirmed the group didn’t see a return to positive profit trends in Spain before 2022.
Orange reported a 0.3% drop in core operating profit on a comparable basis from a year earlier to 2.57 billion euros ($3.1 billion), reflecting the prolonged financial hit caused by the reduction of lucrative roaming fees.
These plummeted by 31% over the first three months of year as would-be travellers stayed at home, Orange said.
Group revenues edged up by 0.5% on a comparable basis to 10.3 billion euros, thanks to equipment sales and Orange’s IT business.
Orange group confirmed its full-year targets, including a slightly lower full-year core operating profit compared to 2020 and an organic free cash flow from telecoms activities above 2.2 billion euros. ($1 = 0.8313 euros) (Reporting by Mathieu Rosemain; Editing by Shailesh Kuber and Keith Weir)