The logo of French telecom operator Orange is seen at the regional company headquarters in Nantes, France, January 24, 2022.
The logo of French telecom operator Orange is seen at the regional company headquarters in Nantes, France, January 24, 2022. Reuters / STEPHANE MAHE

Orange, France's biggest telecoms operator, said high growth in its Africa and Middle East operations offset declines in revenue in its home market and Spain in the first quarter.

Chief Executive Christel Heydemann, who succeeded Stephane Richard on April 4, is taking over the former monopoly as it struggles to drive up revenue amid pressure to upgrade networks and stay competitive in Europe's fragmented telecoms market.

Spain, Orange's second-biggest market in Europe after France, will be a top priority as a poor sales and revenue performance there weighed on the group last year.

Orange recorded a 4.6% slide in sales in Spain in the first quarter, as the group has entered exclusive merger talks with MasMovil, its rival in the country.

This contrasts with the 8.7% revenue rise in the first quarter in Africa and Middle East operations, which helped the group generate a 0.7% growth in sales over the period.

Heydemann said she would update markets about her vision and strategic priorities before the end of 2022, speaking at the start of a call with analysts that was mainly conducted by Chief Financial Officer Ramon Fernandez.

Asked about inflation driven up by booming energy and commodity prices, Fernandez said: "It would be surprising if the telecom sector would be the only sector ... totally unable to pass through some of the increases in price."

Orange hiked prices in Belgium and Slovakia in the first quarter.

Orange's quarterly core operating profit grew 1% to 2.62 billion euros ($2.81 billion) in line with the average of analyst estimates.

Orange maintained its full-year targets for 2022, including growth in core operating profits of 2.5% to 3%. Fernandez said Africa and Middle East would be a key driver of this growth.

It also confirmed a key target of organic cash flow from telecom activities of at least 3.5 billion euros next year and repeated that Spain would resume yielding a growth in organic free cash flow by the end of the year.

($1 = 0.9325 euros)