April 26, 2018 / 6:53 AM / 5 months ago

UPDATE 1-French group Orange dials up higher Q1 profits and sales

* Q1 sales and profits grow

* Reiterates full-year targets (Recasts story, adds background, details)

By Mathieu Rosemain and Gwénaëlle Barzic

PARIS, April 26 (Reuters) - French telecoms group Orange said on Thursday that its joint offers in broadband and mobile had driven up quarterly sales and profits over its main markets, underpinning its high investments on networks.

The so-called "convergent offers" jumped by 10.4 percent in the first quarter from a year earlier to 10.5 million customers, 6 million of whom were in France, which generates more than 40 percent of group revenues.

Telecom groups across Europe all face an obligation of high investments as customers' appetite for Internet speed and data keep on surging.

But some, like BT Group and Altice, have also spent billions on sports rights to gain market share, while Orange believes upgrading its networks and adding new services, such as online banking, is the best way to increase revenue.

Orange's sales in France grew by 2.1 percent -- up for the fourth straight quarter, signalling that the former monopoly is coming out of a tough period that had been triggered by the arrival in 2012 of Iliad's low cost mobile services.

Brokerage Jefferies deemed the sales performance in France as "very robust" in a note to clients, as market promotions in the country remain high.

Intense competition with the French landscape has led to several failed attempts to cut the number of telecoms operators from four to three in France.

That scenario surfaced again last week with renewed market speculation that rival Bouygues Telecom could make a bid for Altice -- a move it denied.

"It's a long running story that will come up again regularly," Chief Financial Officer Ramon Fernandez told reporters, when asked about sector consolidation.

"This reflects people's belief that this will come one day or another, because there are many reasons that support this, including future high investment needs," he added.

Orange's results met market expectations, with revenues rising 2 percent on a comparable basis to 10.1 billion euros ($12.30 billion).

Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) rose by 3.8 percent to 2.61 billion euros.

The group also confirmed its full-year targets, including a higher, adjusted EBITDA in 2018 compared to 2017.

$1 = 0.8212 euros Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Sudip Kar-Gupta

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