Bouygues Telecom eyes higher profitability, sales

By Dominique Vidalon

PARIS (Reuters) - Bouygues Telecom, France's third-largest mobile operator, said on Tuesday it aimed to improve its profit margins and sales in the coming years as it seeks to defend its standalone strategy.

In June, Martin Bouygues, the head of parent company Bouygues, rebuffed a 10 billion euro ($11 billion) bid for Bouygues Telecom by Altice, the holding company of tycoon Patrick Drahi, saying the unit had the means to prosper on its own.

Bouygues Telecom notably believes that the quality and strength of its mobile network will help it benefit from a new period of growth in the telecoms market, as subscribers increasingly watch videos and play games on their mobile devices.

When it rebuffed Drahi's offer, Bouygues had said the telecoms unit aimed to return to an 2011 EBITDA (earnings before interest, tax, depreciation and amortization) margin of at least 25 percent of sales by 2017 against 17.98 percent in 2014.

This would be achieved notably by cutting costs and increasing its fixed and mobile subscriber base by 1 million each by 2017.

Bouygues Telecom reiterated these targets in a statement released ahead of its Capital Markets Day on Tuesday, and set a new EBITDA margin target of 35 percent longer-term.

Bouygues Telecom, which has been hit by a price war in the French telecoms market since the arrival of Iliad in 2012, has responded with a turnaround plan including staff cuts and a focus on the rollout of its very-high speed 4G network and on the fixed broadband market.

Bouygues Telecom said on Tuesday it would exceed by 100 million euros its target for 300 million euros of cost savings in 2016 versus the end of 2013.

It also said it aimed to grow network sales by more than 10 percent by 2017 from 3.869 billion euros in 2014 and that it targeted average annual capital expenditures of around 750 million euros in the coming years.

($1 = 0.8942 euros)

(Reporting by Dominique Vidalon; Editing by James Regan and Andrew Callus)