CORRECTED-UPDATE 2-Bouygues ups telecoms guidance, signals more investments

(Corrects speaker in last paragraph)

* Q1 better than feared

* Hikes telecom unit guidance, confirms group outlook

* Says has scope to develop other businesses

May 20 (Reuters) – French conglomerate Bouygues posted a smaller than expected first-quarter core loss on Thursday and raised the full-year earnings guidance for its telecoms business, helped by market share gains in mobile and fixed services.

The group, which said its first-quarter results were not indicative of full-year performance due to seasonality, reported a 7% increase in revenues, with gains across its operations.

Its current operating loss and margin were close to 2019 levels, before the pandemic struck.

Chief Financial Officer Pascal Grange pointed to “promising growth prospects” for the construction business as governments roll out stimulus plans for their economies, telling analysts he expected some positive outcomes in the second half of 2021.

Berenberg analysts, however, don’t expect stimulus plans to live up to the political rhetoric, and think the pandemic could continue to weigh on construction activities into next year.

Grange said the focus would be on the roads business at the group’s Colas unit, particularly in Germany, northern Europe and America, as well as on energy and services.

In April, Les Echos reported Bouygues and SPIE were interested in Engie’s energy services unit.

“This is indeed a case file that we are going to study as we want to strengthen our position in energy and services,” Chief Executive Olivier Roussat told journalists.

Bouygues is also doubling down on its fastest-growing telecoms business, with plans to become France’s second-largest mobile operator.

The group now expects Bouygues Telecom’s earnings before interest, tax, depreciation and amortisation after leases to rise about 7% this year, up from 5% previously.

The division, which competes with Orange, Iliad and SFR, has one of the cheapest 5G offerings in France and plans to have nationwide coverage by the end of 2021.

But this comes at a cost, added Bouygues Telecom Chief Financial Officer Christian Lecoq: “Without subsidies, I don’t think that we could have a big 5G effect in France.”

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