Iliad posts profit growth against tough telecom sector backdrop

By Stephanie Hamel and Victor Goury-Laffont

(Reuters) -French telecom provider Iliad reported a more than 4% rise in half-year core profit on Wednesday, supported by gains across markets and the expansion of its activities in Italy.

The unlisted company, which operates in France, Italy and Poland, posted earnings before interest, taxes, depreciation and amortization and after leases (EBITDAal) of 1.64 billion euros ($1.78 billion) for the first half of 2023, up from 1.58 billion a year earlier.

Iliad’s performance makes it an outlier among industry peers, after French rivals Orange and SFR, part of the Altice group, recorded weaker earnings growth for the half-year period.

In an economic context “full of uncertainties, caution is called for, but Iliad’s development model is proving its robustness”, Chief Executive Thomas Raynaud said in a statement.

Telecommunications companies across Europe have been hit by rising energy prices, infrastructure costs to deploy fibre and 5G coverage, and a slowdown in subscriber growth. This has led all Iliad’s competitors on the French market to increase their rates.

Free Mobile, Iliad’s French service provider and largest branch in terms of revenue, earlier this year set a five-year price cap on its plans, an anti-inflation measure that was criticised as the price of add-ons was nonetheless increased.

Asked about the cost of this measure during a press call, Raynaud described the price cap as an “opportunity to lead the race in terms of market share gains”. He did not comment on the cost.

Regarding Italy’s recent decision to join U.S. fund KKR’s bid for Telecom Italia (BIT:)’s grid, Raynaud said the move underlined a “strong political will” to deploy fibre across the country, to which Iliad contributes, adding the group was waiting for more details.

The group remains on the lookout for potential acquisitions in Italy after its 2022 Vodafone (NASDAQ:) bid was rejected, he said.

($1 = 0.9204 euros)