A four-year price war in the French mobile telecoms market is finally showing signs of easing, SFR said on Tuesday, sending its shares up sharply despite lower quarterly profit.
"We are seeing right now a more normalized competitive environment," Michel Combes, chief executive of France's second biggest telecoms company, said in a call with reporters.
"There's still promotional activity mainly at the low end of the market, while we are more focused on the high end."
SFR shares were up 9.3 percent at 22.875 euros by 1420 GMT, on course for their biggest one-day gain since January, after Combes said he expected the pricing environment to improve in coming months.
SFR, which posted a 6.8 percent decline in second-quarter core operating profit, is betting on big high-speed broadband and mobile investments to attract customers ready to pay more for improved networks.
The domestic industry, in which Orange is the largest player, has been struggling to revive mobile business margins since the 2012 arrival of Iliad's low-cost Free Mobile services.
Orange signalled last month that pricing pressure remained intense in the last quarter.
SFR's parent company Altice was up 13.5 percent in Amsterdam after it separately reported a 2.7 percent increase in quarterly operating profit to 2.27 billion euros, beating analysts' expectations thanks to a resilient performance in the United States and Portugal.
Altice, which is controlled by Franco-Israeli tycoon Patrick Drahi, also confirmed its full-year guidance.
SFR's operating profit decline to 999 million euros ($1.1 billion) in April-June reflected the cut-throat competition and a loss of mobile customers, with revenue down 4.3 percent at 2.78 billion euros.
SFR's plan to cut a third of its workforce over the next three years will create annual savings of about 400 million euros, Combes said in a call with analysts.
Total employee expenses at SFR in 2015 amounted to 1.2 billion euros, Combes said, meaning the expected savings from the announced 5,000 headcount reduction would represent about a third of that figure.
The cost of the redundancy plan, agreed with SFR's two leading unions last week, would amount to around 800 million euros, the CEO added.
SFR offered a redundancy package averaging 2.5 months of salary per year of service, a source told Reuters last week.
($1 = 0.9022 euros).
By: Mathieu Rosemain (Reuters).
Reporting: Mathieu Rosemain.
Editing: Keith Weir.
Photo: Arc Hello.
Review: Emerging Market Formulations & Research Unit, FLAGSHIP RECORDS.
For The #FacebookTeam