For its third Unstrung scorecard, Orange (NYSE: FTE)'s mobile business, Orange, earns yet another B-. The mobile operator is still struggling with declining average revenue per user (ARPU) in key European markets, even though overall revenue growth is steady and broadband subscribers are on the rise. (See Carrier Scorecard: Orange and Carrier Scorecard: Orange.)

Orange France is widely understood to have secured an exclusive partnership with Apple Inc. (Nasdaq: AAPL) to distribute the iPhone in France. But it will probably take more than a hot new device to turn around the operator's ARPU fortunes in its home country, which were down 3.5 percent in the first half this year compared to the same period last year. (See Report: Apple Picks Euro iPhone Partners and iPhone Fever Hits Europe.)

Like its parent, France Telecom, emerging markets drive Orange's revenue growth. Orange increased its subscribers in its "rest of world" category by a whopping 36 percent. But Orange's overall ARPU is down 9 percent. (See Emerging Growth Pumps Up FT and FT Reports 2Q07.)Revenues were up 5 percent from €13 billion (US$18 billion) in the first half of 2006 to €14 billion ($19 billion) in the first half of 2007. Operating income was up 3.5 percent from €2.6 billion ($3.6 billion) in the first half of 2006 to €2.7 billion ($3.7 billion) in the first half of 2007. (See Table 1.)

{Table 1}

Orange's broadband subscriber base is growing well. Broadband customers -- which include EDGE and UMTS -- totaled 8.9 million, which is nearly 9 percent of its total customer base, in the first half of this year. That's a big improvement compared to 3 million broadband customers in the first half of last year, which meant just 1 percent of customers had a broadband service.

In France, broadband subscribers make up 22 percent of the total customer base. And data revenues were up by 11 percent with non-messaging data services accounting for more than half of overall data services in the first half of this year.

Data revenues are on the rise in the U.K. as well, increasing by 11 percent in the first half of this year mostly due to non-messaging data services. Data services accounted for 21 percent of U.K. network revenues in the first half of this year, compared to 19 percent in the first half of 2006.

But a closer look at Orange's key European markets -- France, the U.K., and Spain -- shows that ARPUs are still down on a year-on-year comparison. The improvements in its broadband and data services have not yet compensated for declining ARPUs in certain European markets. (See Table 2.)

{Table 2}

Orange recorded particularly strong subscriber growth in Egypt, Romania, Senegal, and Jordan. But subscriber growth was offset by reduced call termination rates in Belgium, Switzerland, and Romania. (See Table 3.)

{Table 3}

— Michelle Donegan, European Editor, Unstrung