Poor year for Orange prompts new approach

12 Feb 2013

On the back of a 4.1% drop in revenues for full year 2012, Orange Poland has announced a new medium-term plan to reverse the operator’s declining fortunes. The telco booked revenues of PLN14.15 billion (USD4.56 billion) in the year to end-December 2012 compared to PLN14.76 billion twelve months earlier whilst earnings before interest, tax, depreciation and amortisation (EBITDA) dropped 8.9% to PLN4.85 billion, although this excludes impact from the deconsolidation of Emital and Paytel. Orange attributed the falling income to decreasing mobile termination rates (MTRs) and ‘irresponsible price wars in the mobile post-paid market in particular.’ Indeed, revenues from the mobile sector dipped by 3.0% for the full year, and 6.3% in the final three months of 2012. The telco ended the year with 14.895 million mobile subscribers, having registered net losses of 66,000 post-paid subscribers compared to end-2011 and net gains of 303,000 pre-paid subscribers. Mobile broadband continues to see strong growth however, with the company noting a 33% increase in subscribers using the technology to 985,000, boosted by increasing smartphone penetration: Orange claimed that 3.3 million of its customers were using smartphones.

Orange’s performance in the fixed line market was similarly lacklustre, with fixed broadband subscriptions falling to 2.345 million from 2.346 million a year earlier, although on a quarterly basis the figure increased, following two quarters of decline that had seen the customer base fall to 2.338 million. Fixed telephony has continued its downward trend, falling by 10.4% to 5.104 million active lines in service whilst conversely Orange’s TV subscriber base has continued to see steady growth, claiming 706,000 users at end-2012.

In a bid to reverse the slump, Orange has revealed a medium term plan that will see it review its resource allocation to transform it into a ‘leaner and flexible business.’ The telco will look into outsourcing options and dispose of non-core assets to improve efficiency. Further, Orange will reduce its CAPEX to preserve funds for its investment in 4G spectrum. On an operational basis, the company will focus increasingly on converged services, and aims to provide convergent solutions to 50% of its post-paid subscribers, compared to 1% at end-2012. Whilst still in their infancy, Orange’s multi-play offerings, which bundle TV, broadband and voice-over-internet protocol (VoIP), have seen substantial growth in 2012 increasing from 55,000 users to 248,000.

Poland, Orange Poland