* 2016 current operating profit 1.121 bln euros, up 19 pct
* Says Bouygues Tel good performance confirms strategic
* Bouygues says no talks going on with Orange
* Shares surge higher
(Adds further detail and comments)
By Dominique Vidalon
PARIS, Feb 23 French conglomerate Bouygues
said on Thursday that improved profitability at its
telecoms unit helped deliver a forecast-beating rise in group
operating profits, and predicted a further increase in earnings
The robust performance at the telecoms arm - France's
third-biggest mobile operator, which Bouygues failed to merge
with market leader Orange last year - strengthened the
view that Bouygues Telecom can prosper on its own at a time of
renewed rumours of sector consolidation.
Chief Executive Martin Bouygues said there were no ongoing
talks with Orange over future sector consolidation and that the
good health of Bouygues Telecom was the answer to those rumours.
Its construction business, which makes the bulk of sales,
also contributed to the higher 2016 profits, with fourth quarter
figures in France confirming a recovery and possible pick-up in
the domestic construction market for 2017.
"We are emerging from a difficult period. 2016 demonstrates
our group is well positioned to seize new opportunities and this
is true for all our markets," Bouygues said.
The family-controlled group, which also builds roads and
owns TF1, France's biggest private TV broadcaster,
said group current operating profit reached 1.12 billion euros
($1.2 billion) last year, against 941 million in 2015.
Analysts polled by Inquiry Financial for Reuters had
predicted operating profit of 1.05 billion euros.
The solid result drove Bouygues' shares up by 5 percent
during mid-session trading, with Bouygues the best-performing
stock on Paris' benchmark CAC-40 index.
INVESTING IN TELECOMS ARM
France's telecoms sector, hit by a price war following the
entrance of low-cost player Iliad in 2012, has been the
subject of takeover speculation in recent years.
But Bouygues Telecom has said it can prosper on its own and
has responded with a turnaround plan including job cuts and a
focus on the rollout of its 4G network and fixed-line broadband.
Earlier this month, Bouygues denied new speculation about
merger talks between France's four main telecom operators.
Separately, Orange CEO Stephane Richard said on Thursday
there were no talks going on at the moment for a deal to cut
number of french telecoms operators.
Bouygues Telecom's earnings before interest, tax,
depreciation and amortisation (EBITDA) rose to 916 million euros
in 2016 against 752 million in 2015.
The company stuck to its 2017 EBITDA target for Bouygues
Telecom. It also set a new free cash flow target of 300 million
euros in three years time, along with plans to invest 1.2
billion euros for the Bouygues Telecom business in 2017.
($1 = 0.9473 euros)
(Reporting by Dominique Vidalon; Editing by Sudip Kar-Gupta and