Orange Group

Orange marks return to revenue growth in Q3 results

29 October 2020 | Melanie Mingas

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Orange Group has noted a return to revenue growth in its Q3 financial results, despite witnessing declines in roaming revenue and equipment sales.

The group noted a revenue increase of 0.8% in Q3 (0.5% year to date) totalling  €10.6 billion for the quarter and driven by the momentum in services, in particular wholesale services thanks to the co-financing of the fibre network in France and convergent services, which rose 5.7% and 1.5% respectively. Roaming continued to be adversely impacted by travel restrictions, while Orange said the decline in equipment sales was contained at 1.9%.

France and MEA saw growth of 3.1% and 5.1% (compared to growth of 2.7% and 1.3% in the second quarter) while Europe (including Spain) and the enterprise business unit saw continued pressure, albeit with an improving trend.

Noting the “solid” results, chairman and CEO Stéphane Richard said: “From the beginning of the year the Orange Group has demonstrated its resilience in all its markets in the face of an unprecedented health and economic crisis. Our networks have proven their robustness, our commercial performance has been very positive and we’re in line with all our financial objectives for the year.

“We returned to top-line growth in the third quarter (+0.8%) with EBITDAal on a more favourable trend than in the previous quarter (-0.4%), giving us added confidence in terms of the delivery of our guidance. Finally, after difficult first half for B2B services, the recovery at Orange Business Services (OBS) is well under way, in particular due to the momentum in IT services,” he added.

Meanwhile, the customer base saw a 2.5% growth in mobile customers while a 1.4% decline was noted in fixed line customers. Convergent customers across the group as of 30 September stood at 10.9 million, a 2.1% year on year increase.

Linking the trends to the Covid-19 pandemic, Orange Group reported a “moderate” decline in EBITDA in the first nine months of the year, down 0.6%. The loss was minimised by the co-financing of the fibre network in France yet remained adversely impacted by the decline in roaming and the cost of health measures.

Richard said: “These solid results also reflect co-financing with other operators in our French fibre networks which should continue in the coming years. I see this as a sign the market is transitioning towards fibre and offers us a way to earn a return on our investments.

“With 360,000 net adds, we’ve had a record quarter for fibre in France, where we now have more than four million customers.  Poland has also seen record fiber sales, while the commercial performance in Spain has been very encouraging even if the competitive environment there continues to be tough,” he added.

However, the group reported that growth operations in both France and MEA markets “exceeded the decline in the other segments, which nevertheless showed an improving trend compared to the second quarter.”

“My warm thanks go to all of Orange’s teams who have been fully mobilised throughout the [health] crisis at the service of our clients,” Richard added.

The board approved the return to a dividend per share of 70 cents for the current year and has also increased its dividend payment by 10 cents, totaling €0.40 per share, paid in December.

Engage 2025

In its July financial report, Richard praised the group for demonstrating a “remarkable level of resistance” as the Middle East and Africa outperformed Europe in Q2.

However, the Q2 results painted a mixed picture across the continent as major players counted the cost of Covid in their first full quarter of operations since the pandemic arrived on the continent.

Following the latest results, Richard said the group would be “accelerating” the roll out of its Engage 2025 strategy, including the launch of a European TowerCo and Fiberco.

5G has launched in Romania, Poland and Spain. In France, Orange acquired the broadest range of 5G frequencies in the recent spectrum auction.

Richard said: “We’re pushing ahead with projects that aim to better capitalise on our infrastructure and to develop our networks while also carefully managing our investments. Consistent with this, we’ve launched the necessary processes for the establishment of a European TowerCo that will take in our masts in France and Spain. Similarly, our Fiberco projects in rural areas in France and Poland are moving ahead well."

In September, Orange Group announced its inaugural Sustainability Bond. At €500 million, the issuance – part of the firm’s Engage 2025 strategy – will see 40% of proceeds channelled into digital and social inclusion projects and 60% into energy efficiency and circular economy projects. The bond has a maturity of nine years and an annual coupon of 0.125%.