France Telecom reported a lower-than-expected revenue decline for the first half of the year, as growth in Spain was able to offset some of the decline in its key home market.

The Orange parent’s revenue for H1 2012 came in at EUR21.8 billion, down 3.2 percent from a year ago, but slightly better than the EUR21.7 billion average forecast by analysts in a Bloomberg poll. Net income declined from EUR2.1 billion to EUR1.9 billion.

In France, which accounts for almost half of group sales, revenue was down 4.2 percent to EUR10.8 billion, partly as a consequence of the launch of the disruptive new French operator Free Mobile at the beginning of the year.

But the firm noted that Orange France’s mobile market share had stabilised at 38.1 percent at the end of the period, compared with 38.3 percent at the end of March, and that the Q2 customer net loss (-155,000) was a quarter of that suffered in Q1.

“Against the backdrop of a difficult macro-economic environment, I would like to emphasise the robustness of our first-half results, particularly the resilience of our French mobile operations which showed a marked improvement from the first quarter with a return to growth in the contract customer base in June,” said CEO Stéphane Richard (pictured).

In Spain, Orange’s second-largest market, sales were up 2.3 percent (to EUR2 billion) despite the country’s economic woes. The firm is thought to have won customers from larger rivals Telefonica and Vodafone, with attractive low-cost offerings.  

“We’ve been progressively winning market share in Spain for a few quarters with prices about 15 percent lower than our rivals and a sophisticated marketing strategy,” CFO Gervais Pellissier said on a conference call.

Pellissier also hinted that the firm could be interested in consolidation in Spain, following TeliaSonera’s decision to put its Spanish unit Yoigo up for sale.

Elsewhere, sales were down 11 percent at Orange Poland (to EUR1.7 billion) and down 3.2 percent in the Rest of World (RoW) unit (to EUR4.1 billion).

The group had 224.2 million customers in total at 30 June 2012 (excluding MVNOs), a 3.6 percent increase from a year ago. The mobile customer base was up 6.2 percent to 165.7 million.