Orange Group revenues drop 3.4% to EUR9.8bn in 2Q14

29 Jul 2014

International telecoms giant Orange Group has published its financial results for the three months ended 30 June 2014 (2Q14), reporting a 3.4% year-on-year drop in consolidated revenues, on comparable basis, to EUR9.788 billion (USD13.15 billion); the downturn was mainly attributed to the financial performance of its units in France, Belgium, Poland and the Enterprise segment, but partly offset by strong growth in Africa and Middle East. Excluding the impact of regulatory measures, which the group said amounted to EUR120 million in the three months under review, the slump would have been 2.3% on an annualised basis.

In its domestic market, Orange’s sales were down by 4.2% on comparable basis, mainly affected by price reductions related to the updated Origami, Open and Sosh offers, as well as by the growth of SIM-only offers, while operations in Spain also suffered from competitive pressure on pricing, with sales down 8.6% y-o-y on comparable basis to EUR943 million. Meanwhile, Poland saw a 5.4% reduction in revenues to EUR740 million in 2Q14. The ‘Rest of World’ segment, which includes the Group’s operations across Africa, Middle East and selected markets in Europe, saw a marginal 0.2% improvement in revenues, which edged up to EUR1.797 billion.

Further, Orange Group’s restated EBITDA for the period under review slumped 3.1% year-on-year to EUR3.123 billion, down from EUR3.224 billion in 2Q13, as a reduction in operating costs was offset by the decrease in revenues. CAPEX for the second quarter of the year, however, rose by 4.5% to EUR1.340 billion, led by investments in fibre-to-the-home (FTTH) and Long Term Evolution (LTE) infrastructure, with network infrastructure investments representing 58% of the group’s CAPEX; the ratio of CAPEX to revenues was slightly improved, by one percentage point, to 13.7% compared to 2Q13.

In operational terms, Orange Group claimed 236.176 million customers worldwide at the end of June 2014, up from 231.486 million twelve months earlier. Mobile subscribers accounted for 178.701 million of these customer accounts. In its domestic market, Orange reported that its subscriber base reached 26.956 million customers, a marginal 0.9% increase year-on-year (+246,000 net additions), while Africa and the Middle East contributed a total of 111.594 million, an increase of 4.2% y-o-y, mainly due to growth in Guinea, Mali, Guinea-Bissau and Senegal. Elsewhere, Orange reported subscriber growth in the likes of Spain, Poland, Moldova and Egypt, while Belgium, Jordan, Cameroon and Madagascar all saw their customer bases contract. Orange’s consolidated fixed broadband user base climbed to 15.706 million by end-June 2014, a 4.0% improvement on the 15.107 million reported in Q2 2013, with Spain leading the pack in terms of net additions (318,000), followed by France (198,000), Egypt (52,000) and Slovakia (28,000).

Orange Group chairman and CEO Stephane Richard commented: ‘Overall, we had a solid commercial performance, particularly in France, Belgium and Poland, while in Africa and the Middle East we had [our] strongest growth in four years. Meanwhile, we remain focused on lightening Orange’s cost structure, allowing us to stabilise our margin rate in the first half and to confirm our annual targets for 2014. We are continuing our efforts in this area and have increased our target for lowering indirect costs and now aim to achieve a reduction of more than EUR300 million in 2014.’

France, Orange Group