(Bloomberg) — Orange SA reported revenues in line with estimates for the first quarter, showing slow growth overall and decline in France, in first earnings since new Chief Executive Officer Christel Heydemann took office.
The French carrier posted a revenue of 10.58 billion euros ($11.3 billion), just above a Bloomberg estimate of 10.52 billion euros, with an Ebitda after Leases of 2.62 billion euros, in line with a 2.63 billion estimate.
The new CEO will give a press conference later today, in her first address on the group’s strategy. She is not expected to break with the 11 years legacy of Stephane Richard, who has been putting a focus on European consolidation.
Last month, Orange entered merger talks with Spanish carrier Masmovil, a deal aimed at easing Orange’s situation in a difficult market, that would give the combined company a total enterprise valuation of 19.6 billion euros ($21.3 billion).
Orange’s CFO also commented on a Les Echos article saying Orange started exploring the sale its civil engineering branch to a separate infrastructure company, which could be worth 8 billion euros. “This project only exists in the press”, he said in a call with reporters.
Key Insights
- “As the newly appointed CEO it’s with a sense of determination and responsibility that I approach both our challenges and our many opportunities,” Heydemann said in a statement
- Despite a “difficult environment”, Orange keeps projecting a free cashflow of at least 2.9 billion euros in 2022, CFO Ramon Fernandez said in a call with reporters.
- Orange is aiming for 3.5 billion euros of organic cashflow in 2023.
- In France, its biggest market, the carrier posted a 4.37 billion euros revenue for the quarter, just below a Bloomberg estimate of 4.39 billion euros. Revenue decreased of 0.7% despite retail activity because of a 6.6% slowdown of wholesale services linked to the decline of copper and a drop in call terminations. This compares to revenue of 4.7 billion euros over 4Q.
- Spain recorded a 4.6% slowdown of revenue, and is still Orange’s slowest geographic region, expected to recover with the joint venture with Masmovil.
- Africa is once again Orange fastest growing market, with a 8.7% growth of its revenue here in the first quarter.
- Revenues for the new Totem towerco, disclosed for the first time, were 161 million euros in the quarter.
- Financial services, including Orange Bank, the carrier’s digital bank launched in France and Spain, have 1.8 million customers in Europe. Le Monde reported last week that it could launch in Poland, Belgium and Romania to reach breakeven.
- Orange is still projecting a dividend per share of 0.70 euros
“Overall, we are Sell rated on Orange, highlighting continued wholesale headwinds and overlapping fibre networks in France as a key obstacle to Orange raising growth and returns relative to European peers, from current low levels”
Andrew Lee, Goldman Sachs analysts
Market Context
- Orange shares were down 0.30% in Paris at market opening
- Since the beginning of the year, Orange shares are up 18%
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(Adding 5th paragraph, shares)
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