France Telecom said its operating profit in the three months to March fell by 8.1 percent from the figure a year earlier to 3.4 billion euros ($4.5 billion), short of market forecasts for 3.6 billion euros.
Sales dropped 2.7 percent to 10.9 billion euros, slightly better than estimates for 10.8 billion euros, supporting the share price which rose 2.78 percent in morning trade.
The company, which operates under the Orange brand, said it lost 615,000 clients in the first quarter, when rival Free entered the market offering sharply lower tariffs which stirred a near media-frenzy.
In total, Orange France had 2.3 million client cancellations while it gained 1.7 million subscribers in the quarter. In first quarter 2011, the company lost 219,000 clients.
Finance Director Gervais Pellissier said that line access accords with Free offset some of the lost market share, with the arrangement supposed to bring in one billion euros over its six-year duration.
The increase in Free’s business as a result of its cut-price offers meant however that the pay-off would be much faster, likely one billion euros over three years, France Telecom said.
The company said it had 225 million clients globally at end-March, an increase of 10.7 million due mainly to gains in the Middle East and Africa.