(Bloomberg) — Orange SA reported revenues that declined the second quarter, showing ongoing competition in the telecom space in Europe that the company hopes to ease with a merger with Masmovil Ibercom SA in Spain.
The French carrier posted revenue of 10.71 billion euros ($10.9 billion) in the quarter, compared to a Bloomberg estimate of 10.74 billion euros, the company said in a statement on Thursday.
The company confirmed its outlook for the year, forecasting a 2.5% to 3% increase in earnings before interest, taxes, depreciation, amortization and leases. In the quarter, Ebitdaal rose 0.5% to 3.31 billion euros, compared to a 3.36 billion estimate from analysts.
Newly appointed Chief Executive Officer Christel Heydemann plans to announce a new strategic plan for Orange at the beginning of next year.
“This solid performance allows us to confirm our guidance for the current year, a milestone as we move towards the delivery of our 2023 commitments,” Heydemann said in the statement. “It also allows us to prepare for the future with confidence and responsibility as we work on our next strategic plan, which will be unveiled at the beginning of 2023.”
Last week, Orange and Masmovil reached an agreement to combine their Spanish businesses to create a $19 billion market leader, following exclusive merger talks announced in March.
Key Insights
- Orange is reducing its capital spending after an “exceptional effort these past years,” Chief Financial Officer Ramon Fernandez said in a call with reporters.
- Orange kept its projection for free cash flow of at least 2.9 billion euros in 2022.
- In France, its biggest market, the carrier posted 4.44 billion euros in revenue for the quarter, compared to a Bloomberg estimate of 4.47 billion euros. Sales decreased 2.7% in the country because of lower co-financing for its fiber network.
- Spain recorded a 4% decline in revenue, and is still Orange’s slowest growing geographic region.
- Orange has been struggling in Spain, currently one of Europe’s most competitive markets, with scores of different brands engaging into price wars. Regulatory approval could still result in significant remedies to clear the deal, limiting the benefits to merger parties.
- Africa remains Orange fastest-growing market, with a 7.2% growth of its revenue here in the first quarter.
- Orange is set to secure the renewal of its mobile network sharing deal with Iliad SA in France until 2025, the Orange CFO said.
- Enterprise revenues decreased by 1.1% in the second quarter, due to a decline in voice and data services, wage inflation and the war in Ukraine. “A plan will be unrolled in the coming months”, Fernandez said during the call.
Market Context
- Orange fell 3.4% to 9.82 euros in Paris trading at 9:16 a.m. Shares had gained about 8% since the start of the year in Paris through Wednesday. That compares to a 0.7% drop in the Stoxx 600 Telecommunications Index.
Get More
- Big Tech is Forcing Carriers To Invest in Networks: Orange CEO
- Orange-Masmovil M&A a Boon But Remedies May Test Synergy, Repair
- Canal Plus in Talks to Buy Orange’s Film, TV Units: Variety
(Updates with share price)
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