French conglomerate Bouygues aims to expand its telecoms business to become France's second-largest mobile operator in terms of subscribers by 2026, it said on Friday.
Bouygues, which ranks behind market leader Orange and Altice Europe's SFR in the country's competitive mobile market, sealed the purchase of Euro-Information Telecom (EIT) last year and has also been picking up customers.
The family-run company derives the bulk of its sales from construction, but telecoms is its fastest-growing division. It had 12.3 million mobile subscribers at the end of September, compared with Altice's 14.6 million and Orange's 22.5 million.
Bouygues said it aimed to exceed 7 billion euros ($8.5 billion) in telecoms revenue by 2026, up from 6 billion euros in 2019. It is also targeting core profit, after leases, of 2.5 billion euros, versus 1.4 billion in 2019.
Yet it said the unit's core profit margin, which is expected to be about 31% in 2020, would likely remain around that level until 2023 because of the high investments needed to expand and upgrade its networks and the integration of EIT.
The company said capital expenditure for the telecoms business, a key metric tracked by investors and analysts in the sector, would be around 1.5 billion euros between 2021 and 2025 and of about 1.4 billion in 2026.
The group's shares fell as much as 3% at market open, as some analysts pointed to the high level of investments and a lack of visibility for the division's sales in the near-term.
They soon reversed the losses, however, and were up by 0.1% at 0913 GMT.
($1 = 0.8241 euros)
(Reporting by Sarah White; Editing by Mathieu Rosemain and Pravin Char)
