Orange Group

0.3% revenue growth praised by Orange CEO

30 July 2020 | Melanie Mingas

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The chairman and CEO of Orange Group has praised the firm for demonstrating a “remarkable level of resistance” as the Middle East and Africa outperformed Europe in firm’s latest financial results.

Orange Group revenues were €20.8 billion in H1, an increase of 0.3% year-on-year on a comparable basis, with the average muted by a 0.4% decline in Q2. H1 operating income decline 5.8% to €2.25 billion.

Revenues from convergence services in all of the group's European countries were €3.6 billion in H1, up 4.1%. This increase enabled Orange to consolidate its position as “the leading convergent operator in Europe”.

The results are the first half year figures since Orange announced it is to launch fibre and tower co’s, under its Engage 2025 strategy.

Stéphane Richard (pictured), said: “Orange has shown a remarkable level of resistance in the first half of the year, despite the effects of the Covid-19 pandemic, with a 0.3% increase in revenues and a contained decrease in EBITDAaL of 0.8%. These results bear witness to our business’ resilience and its capacity for collective mobilisation in the face of this crisis.

“This crisis has revealed the strategic nature of telecoms networks for our economies and even society as a whole. While impacted, we are comforted in the strategic choices we made with Engage 2025, the roll-out of which we will be accelerating, whether this be through mastering our carbon footprint, the deployment and optimisation of our infrastructures or the development of our growth territories,” he added.

Customer changes

The number of mobile customers increased 1.9% year on year, while fixed service customers were down 2.0% (see table)

Service

Revenue

Change

Mobile

€5.1 billion

down 1.2%

Fixed only

€4.7 billion

declined 2.0%

IT and integration

€1.6 billion

grew 5.1%

Carrier services

€4.1 billion

rose 5.2%

Equipment sales

€1.2 billion

declined 16.9%

 

The Covid-19 pandemic also impacted B2B revenues, with Orange Cyberdefense and Orange Cloud for Business the only divisions to buck the trend. There, H1 revenues grew by 11% and 8% respectively.

MEA

Across the MEA region, revenues grew 3.8% in the first half and EBITDAaL rose by 7.2% in H1 to reach a 32.9% margin rate, driven by mobile data as the group saw a 40% increase in 4G customers year on year. The MEA mobile customer base remained stable with 123.5 million customers.

MEA revenues rose 1.3% in Q2 compared to a 6.2% increase in Q1 driven by retail services despite the impact of Covid-19.

Mobile only revenues grew 3.9% in Q2 with the 4G customer base reaching 27.9 million, a 40.4% increase over 12 months.

Fixed only revenues rose 10.8% in Q2, a decline compared to the 12% increase in Q1. The number of fixed broadband customers grew 31% year on year, and fixed broadband revenue increased 32.9% in Q2.

Revenues from wholesale services were down 16% in Q2, impacted in particular by the decline in international transit business and visitor roaming. Revenues from equipment sales also fell, down 18.3% due to a market slowdown and of course the health crisis that caused the closure of many shops.

Broadband and Orange Money were pivotal in contributing to the figures, which will be “further strengthened by last week’s launch of Orange Bank Africa”, according to Richard.

Orange Money revenues increased 12.5% in Q2, compared with a 22.3% rise in Q1, adversely impacted by both the lockdown and free transactions recommended by the Central Bank of West African States in the context of the health crisis. The active customer base grew 18.9% year on year, and now totals 19.6 million customers.

Europe

In France, revenue growth was driven by wholesale services and the resiliency of retail services.

Revenues were up 2.7% in Q2, driven by the momentum of wholesale services, which increased 11.7% despite the negative effects of the lockdown on roaming and FTTH deployment.

Richard said: “In France, in spite of the restrictions due to the pandemic, our commercial dynamic is good, in particular in fiber. Our customers’ appetite for fiber confirms the validity of our investment strategy and we are continuing our deployment with a view to building as many connection points in 2020 as we did in 2019 notwithstanding the unprecedented health context.”

Financial performance in Spain was impacted by the health crisis and the market shift towards low-cost. Orange Spain's revenues dropped 6.8% in Q2, strongly impacted by the health crisis and “a very intense promotional environment since the end of portability restrictions”.

As a result, revenues from retail services dropped 7.2%, affected by declines in all its components.

Convergent revenues fell 3.1% in Q2, with mobile only revenues down 13.1% and fixed only revenues down 10.8%. Revenues from IT and Integration services jumped 64.4%, fueled by the enterprise market, but remain low in volume terms.

Richard said: “In Spain, where the situation remains challenging given the market’s slide towards low cost, we have adapted our positioning and enlarged the range of our offers: a strategy that is now showing its first results.”

For the rest of Europe revenue from Belgium, Luxembourg, Moldova, Poland, Romania and Slovakia declined 3.6% in Q2, mainly impacted by a sharp slowdown in equipment sales (-16.6%) and energy resales in Poland (a component of "other revenues" which declined 34.2%).

Growth in retail services was sustained and increased 1.6%, although slowed from the previous quarter (+4.3%) due in particular to a lower contribution from international roaming tied to travel restrictions put in place by many countries. 

Providing a silver lining, Poland posted its eighth consecutive quarter of growth, up 2.6% compared to 0.9% in Q1. The news followed the appointment of new CEO Julien Ducarroz. Poland’s performance was driven by good momentum in retail services, which increased 4.5% while other countries in the region posted lower revenues, mainly due to the slight decline in retail services and a more marked decline in equipment sales.

Richard, said: “I’d like to conclude by extending my warm thanks to all of Orange’s teams who have been fully mobilised throughout the crisis to serve our customers.”

There's more on Q2 and H1 financial results in episode 14 of The Digital Digest