Orange Group reports slower revenue decline in 3Q14

23 Oct 2014

International telecoms giant Orange Group has published its financial results for the quarter ended 30 September 2014, claiming to have achieved what it termed ‘excellent commercial performance, particularly in France’ in the period under review. In the third quarter of 2014 the France-based company generated a total turnover of EUR9.805 billion (USD13.0 billion), representing a year-on-year decline of 2.3%, though Orange Group pointed to a gradual improvement in the revenue trend since the start of 2014; excluding the impact of regulatory measures it said revenues fell by 1.4% y-o-y in 3Q14, compared to declines of 2.3% in the previous quarter and 3.0% in 1Q14. Further, the company said that the improvement in revenue declines in both the third quarter and the first nine months of the year was ‘related primarily to France, Belgium and the Enterprise segment, while the Africa and the Middle East segment continued its steady growth’.

Restated EBITDA for 3Q 2014 stood at EUR3.245 billion, down marginally from EUR3.322 billion in the year-earlier period, with a margin of 33.1% (unchanged year-on-year). Operating costs were reportedly reduced by EUR660 million on a comparable basis, offsetting 69% of the decline in revenues, while the company’s direct costs declined by 4.3% (EUR328 million) and indirect costs were 2.5% (EUR333 million) lower. As such, Orange Group noted that its target of reducing indirect costs by at least EUR300 million by the end of 2014 has already been achieved. Capital expenditures in the third quarter totalled EUR1.307 billion, up from EUR1.277 billion a year earlier, while in the first nine months of the year investment stood at EUR3.808 billion (up 2.9% y-o-y). The latter figure, Orange Group noted, was in line with its objective of a stable level of CAPEX for the full year. Network CAPEX increased 6.5% y-o-y, meanwhile, with ‘a large share’ said to have been spent on 4G and fibre-optic deployments in Europe, particularly in France.

In operational terms, at the end of September 2014 Orange Group reported a total customer base of 239.507 million, up from 232.503 million a year earlier, of which the bulk – 182.055 million, compared to 174.677 million at end-September 2013 – were mobile accesses. The group’s total fixed broadband subscriber base, meanwhile, stood at 15.832 million at end-September 2014, representing a 3.5% increase from 15.297 million twelve months previously. Of particular note, the number of fibre-to-the-home (FTTH) accesses increased significantly, rising by 72.5% y-o-y to 576,000, from 334,000 at end-September 2013.

Commenting on the results, Orange chairman and CEO Stephane Richard was cited as saying: ‘Orange’s commercial momentum remained high in the third quarter of 2014 across all our operations, fuelled by our ongoing investment efforts, particularly in very high speed fixed and mobile broadband … The improved revenue trend, combined with achieving our indirect cost reduction objective more than three months ahead of schedule, allowed us to once again stabilise our margin, as we did in the first half of the year.’

France, Orange Group