Press
release
Paris, 26 July 2018
1st half 2018
financial results
Accelerated growth
in 1st-half
revenues, adjusted EBITDA and Operating Cash Flow confirms the 2018
objectives
|
|
|
|
|
|
|
|
|
1st half
2018 |
|
change |
|
change |
In millions
of euros |
|
|
comparable basis |
|
historical basis |
|
|
|
|
|
|
|
|
Revenues |
20,262 |
|
1.7% |
|
0.9% |
Adjusted EBITDA |
5,984 |
|
3.3% |
|
2.6% |
Operating Income |
2,350 |
|
|
|
2.8% |
Consolidated net
income |
879 |
|
|
|
21.4% |
CAPEX (excluding licences) |
3,369 |
|
3.7% |
|
2.8% |
Operating Cash Flow |
2,615 |
|
2.9% |
|
2.4% |
The 1st half
confirmed the acceleration in revenue and adjusted EBITDA growth
compared to the 1st half of
2017, on a comparable basis.
-
Revenues from all operating segments[1] grew with a
particularly strong contribution from Africa & Middle East,
which rose 5.7%, and France, which increased 1.4%.
-
The 3.3% growth in adjusted EBITDA in the
1st half
confirmed the objective of stronger growth in 2018 compared to that
achieved in 2017 with, in particular, double-digit growth in Spain.
Adjusted EBITDA for the telecom activities rose 3.9% while the
adjusted EBITDA margin improved by 0.6 percentage points.
-
With savings of 486 million euros in the
1st half of
2018, the Explore2020 operating efficiency programme objective to
realize 3 billion euros in gross savings over the 2015-2018 period
was exceeded six-months early.
-
CAPEX in the 1st half was in
line with the objective of 7.4 billion euros in CAPEX for the full
year and reflects the Group's on-going efforts to provide the best
fixed and mobile networks. At 30 June 2018, 4G mobile had more than
50 million customers (up 38% year on year) and over 29 million
households were connected to very high-speed fixed broadband (up
26%).
The Group's strategy, focused on
convergence and very high-speed fixed and mobile broadband, enabled
us to continue to grow our client base in the 2nd
quarter in a very competitive environment:
-
The increase in convergent offers up 9.0% year
on year (10.7 million customers at 30 June 2018) and SIM cards
linked to convergent offers up 12.0% (18.0 million) reconfirmed
Orange's position as the leading convergent operator in
Europe.
-
Growth in fibre was very strong in the
2nd quarter with
119,000 net sales in France (a record for a 2nd
quarter), 135,000 in Spain and a record 39,000 in Poland.
This strategy also enabled Orange to
achieve growth in ARPO for convergence, Mobile Only and Fixed Only
services in France and Spain.
2018 and mid-term
outlook[2]
Orange re-affirms its objectives for
2018:
-
Growth in adjusted EBITDA greater than that
achieved in 2017 on a comparable basis;
-
Increased CAPEX, peaking at 7.4 billion euros in
2018;
-
Growth in Operating Cash Flow greater than in
2017 on a comparable basis;
-
The ratio of net debt to adjusted EBITDA for the
telecom activities to be maintained at about 2x in the medium term
to preserve Orange's financial strength and its investment
capacity.
For 2019 and 2020, growth in adjusted
EBITDA, a reduction in CAPEX and growth in Operating Cash Flow.
Commenting on the publication of the
1st half
results, Stéphane Richard, Chairman and CEO of Orange Group,
said:
"The 1st half results
showed accelerated growth across all the Group's financial metrics.
Revenues grew in all our regions while the strong acceleration in
the Group's adjusted EBITDA, which rose 3.3% during the half,
reinforced our strategy of differentiation on the basis of service
quality and demonstrated our constant focus on operational
efficiency.
Our investment
strategy in fibre and 4G is reflected in the sharp increase in our
very high-speed broadband customer base. Orange now has 50 million
4G customers with 13 million in Africa, twice as many as a year
ago. In fixed very high-speed broadband, the customer base
continued to show particularly strong growth enabling us to reach
5.5 million customers, almost exclusively in fibre.
The success of our
convergent offers was clear yet again. With more than 10 million
convergent customers, Orange confirms its position as the leading
convergent operator in Europe. We are proud to have been a pioneer
on convergence - now an industry standard - which we see as an
excellent lever both for customer loyalty and value
creation.
For this great
performance I would like to thank all the teams across the Group
who work hard every day to serve our customers and ensure Orange's
success."
Key figures
|
|
|
|
|
|
|
|
|
|
|
H1
2018 |
H1 2017 |
H1 2017 |
|
change |
|
change |
In millions
of euros |
|
comparable basis |
historical basis |
|
comparable
basis |
|
historical basis |
|
|
|
|
|
|
|
|
|
|
Revenues |
20,262 |
19,924 |
20,088 |
|
1.7 % |
|
0.9 % |
Of which : |
|
|
|
|
|
|
|
|
France |
8,952 |
8,831 |
8,830 |
|
1.4 % |
|
1.4
% |
|
Spain |
2,634 |
2,557 |
2,557 |
|
3.0 % |
|
3.0
% |
|
Europe |
2,775 |
2,743 |
2,716 |
|
1.2 % |
|
2.2
% |
|
Africa & Middle East |
2,524 |
2,389 |
2,491 |
|
5.7 % |
|
1.3
% |
|
Enterprise |
3,530 |
3,529 |
3,614 |
|
0.0 % |
|
(2.3)% |
|
International Carriers & Shared
Services |
759 |
809 |
819 |
|
(6.2)% |
|
(7.3)% |
|
Intra-Group eliminations |
(912) |
(934) |
(939) |
|
- |
|
- |
Adjusted EBITDA* |
5,984 |
5,792 |
5,832 |
|
3.3 % |
|
2.6 % |
of which telecom activities |
6,043 |
5,819 |
5,859 |
|
3.9 % |
|
3.2
% |
|
As % of revenues |
29.8 % |
29.2 % |
29.2 % |
|
0.6 pt |
|
0.7 pt |
|
France |
3,266 |
3,107 |
3,106 |
|
5.1 % |
|
5.1
% |
|
Spain |
783 |
712 |
712 |
|
10.1 % |
|
10.1
% |
|
Europe |
737 |
758 |
753 |
|
(2.8)% |
|
(2.1)% |
|
Africa & Middle East |
794 |
736 |
764 |
|
7.8 % |
|
3.9
% |
|
Enterprise |
579 |
609 |
627 |
|
(4.9)% |
|
(7.7)% |
|
International Carriers & Shared
Services |
(116) |
(103) |
(103) |
|
(12.0)% |
|
(10.3)% |
of which
Orange Bank |
(60) |
(27) |
(27) |
|
- |
|
- |
Operating Income |
2,350 |
|
2,288 |
|
|
|
2.8 % |
of which
telecom activities |
2,417 |
|
2,316 |
|
|
|
4.4 % |
of which Orange Bank |
(68) |
|
(28) |
|
|
|
- |
Consolidated net income |
879 |
|
724 |
|
|
|
21.4 % |
Net income
attributable to equity owners of the Group |
789 |
|
601 |
|
|
|
31.3 % |
CAPEX (excluding licences) |
3,369 |
3,250 |
3,276 |
|
3.7 % |
|
2.8 % |
of which telecom activities |
3,349 |
3,225 |
3,251 |
|
3.8 % |
|
3.0
% |
|
As % of revenues |
16.5 % |
16.2 % |
16.2 % |
|
0.3 pt |
|
0.3 pt |
of which
Orange Bank |
20 |
25 |
25 |
|
- |
|
- |
Operating Cash-Flow |
2,615 |
2,542 |
2,556 |
|
2.9 % |
|
2.4 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2018 |
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial debt |
25,273 |
23,843 |
|
|
|
|
|
Ratio "net
financial debt / Adjusted EBITDA" for the telecom activities |
1.96x |
1.87x |
|
|
|
|
|
The presentation of segment
information evolved in the 2nd quarter of
2018 in line with the reorganisation of Orange's Executive
Committee, effective since 2 May 2018. It now distinguishes Spain
from other European countries. Historical data, comparable basis
data and customer bases for 2017 have been restated to reflect this
change.
* EBITDA adjustments are described in
appendix 6.
|
|
|
|
|
|
|
|
|
|
|
Q2 2018 |
Q2 2017 |
Q2 2017 |
|
change |
|
change |
|
|
|
|
comparable |
historical |
|
comparable |
|
historical |
In millions
of euros |
|
basis |
basis |
|
basis |
|
basis |
|
|
|
|
|
|
|
|
|
Revenues |
10,180 |
10,039 |
10,110 |
|
1.4 % |
|
0.7 % |
Of which : |
|
|
|
|
|
|
|
|
France |
4,460 |
4,432 |
4,431 |
|
0.6 % |
|
0.6
% |
|
Spain |
1,324 |
1,300 |
1,300 |
|
1.8 % |
|
1.8
% |
|
Europe |
1,388 |
1,383 |
1,378 |
|
0.3 % |
|
0.7
% |
|
Africa & Middle East |
1,279 |
1,216 |
1,252 |
|
5.2 % |
|
2.1
% |
|
Enterprise |
1,804 |
1,781 |
1,819 |
|
1.3 % |
|
(0.8)% |
|
International Carriers & Shared
Services |
383 |
407 |
412 |
|
(5.9)% |
|
(7.0)% |
|
Intra-Group eliminations |
(457) |
(479) |
(482) |
|
- |
|
- |
Adjusted EBITDA* |
3,379 |
3,282 |
3,301 |
|
3.0 % |
|
2.3 % |
of which telecom activities |
3,408 |
3,295 |
3,315 |
|
3.4 % |
|
2.8
% |
|
As % of revenues |
33.5 % |
32.8 % |
32.8 % |
|
0.7 pt |
|
0.7 pt |
of which
Orange Bank |
(30) |
(14) |
(14) |
|
- |
|
- |
CAPEX (excluding licenses) |
1,836 |
1,771 |
1,783 |
|
3.6 % |
|
3.0 % |
of which telecom activities |
1,827 |
1,755 |
1,767 |
|
4.1 % |
|
3.4
% |
|
As % of revenues |
17.9 % |
17.5 % |
17.5 % |
|
0.5 pt |
|
0.5 pt |
of which
Orange Bank |
9 |
16 |
16 |
|
- |
|
- |
Operating Cash-Flow |
1,543 |
1,510 |
1,518 |
|
2.2 % |
|
1.6 % |
* EBITDA adjustments are described in
appendix 6.
More detailed information is
available on the Orange website in the "Investors / Results and
Presentations" section.
www.orange.com
Comments on key Group
figures
Revenues
Orange Group revenues were 20.262 billion euros in
the 1st half of
2018, an increase of 1.7% (338 million euros) on a comparable
basis[3].
In the 2nd quarter of
2018, Group revenues increased 1.4% (up 141 million euros) on a
comparable basis. Excluding equipment sales, which slowed in the
2nd quarter, and
the impact of the inclusion of ePresse and audiobook offers (less
significant than in the 1st quarter),
revenues from services in the 2nd quarter grew
1.3%, up more than 0.5 points compared to the 0.8% increase in the
1st
quarter.
Revenues from convergent offers, sold in all European countries,
continued to grow steadily rising 10.7% in the 2nd
quarter. In the Africa & Middle East segment, growth also
continued with mobile services revenues up 8.5% driven by data
services and Orange Money.
The Group's IT and integration services recovered in the
2nd quarter (up
11.9%). The Cloud and Orange Cyberdefense rose 18% and 14%
respectively in the 1st
half.
Wholesale decreased 1.9% in the 2nd quarter. The
increase in fibre co-financing in France largely offset the decline
in unbundling, services to international carriers and incoming
mobile traffic (with prices for call termination decreasing in some
countries). National roaming was stable overall: the significant
decrease in France was offset by growth of the service in Spain and
in Europe (Poland and Slovakia).
Customer base growth
There were 10.677 million customers for convergent
offers across the Group at 30 June 2018 (up 9.0% year on year),
including 6.097 million in France, 3.133 million in Spain, 1.137
million in Poland, 127,000 in Belgium and Luxembourg and 120,000 in
Romania. The number of SIM cards linked to convergent offers is
growing steadily, reaching 1.56 lines per convergent offer in
France (up 3.1% year on year, 1.87 in Spain (up 1.7%) and 1.92 in
Poland (up 2.8%) at 30 June 2018.
The growth in mobile contract customers remained solid with 77.3
million customers at 30 June 2018, up 8.2% year on year. Excluding
machine-to-machine, there were 64.6 million mobile contract
customers, an increase of 6.5% year on year. The total number of
Group mobile customers was 199.0 million at 30 June 2018, up 1.2%
year on year (2.4 million additional customers) on a comparable
basis.
Orange Money had 38.7 million customers in the Africa & Middle
East segment at 30 June 2018 (up 29% year on year) of which 13.6
million were active customers.
There were 19.687 million fixed broadband customers across the
Group at 30 June 2018, an increase of 3.7% year on year. Very
high-speed fixed broadband grew 37% to reach 5.486 million
customers.
TV services had 9.209 million customers at 30 June 2018, up 6.3%
year on year.
Adjusted EBITDA
The Group's adjusted EBITDA was 5.984 billion
euros in the 1st half of
2018, an increase of 3.3%, or 192 million euros, on a comparable
basis.
The adjusted EBITDA for the telecom activities was 6.043 billion
euros in the 1st half of
2018, up 3.9% on a comparable basis (an increase of 224 million
euros) and the margin was 29.8% (up 0.6 points compared to the
1st half of
2017). This growth was generated by the remarkable performance of
France, Spain, and Africa & Middle East.
In the 2nd quarter of
2018, the adjusted EBITDA for the telecom activities was 3.408
billion euros, an increase of 3.4% on a comparable basis, with a
margin of 33.5% (up 0.7 points).
The optimisation of the cost structure, as a result of the
Explore2020 operational efficiency plan implemented in 2015,
provided the flexibility necessary to support the commercial
performance including the purchase of mobile equipment and the
enrichment of content offerings.
In addition, the average number of full-time equivalent employees
of the Group decreased 2.7% in the 1st half on a
comparable basis. The increase in the Group's labour expenses (up
1.4%) is principally related to the inclusion in the 1st half of the
2018 portion of the programme to allocate free shares to employees
(Orange Vision 2020).
Operating income
Orange Group's operating income was 2.350 billion
euros in the 1st half of
2018, an increase of 2.8% or 62 million euros compared to the
1st half of
2017. It includes 2.417 billion euros of operating income from
telecom activities and a 68 million euro operating loss from Orange
Bank.
The growth in EBITDA of 234 million euros was partially offset by
the 106 million euro increase in depreciation and amortisation,
primarily in France and Spain, and by the recognition in the
1st half of 2018
of an impairment on goodwill of 56 million euros related to
Jordan.
Net income
Orange Group had a consolidated net income of 879
million euros in the 1st half of
2018, compared to 724 million euros in the 1st half
of 2017.
The 155 million euro increase was primarily due to the 116 million
euro improvement in net finance costs and the 62 million euro
increase in operating income, partially offset by a 23 million euro
increase in the corporate tax charge.
CAPEX
Group CAPEX was 3.369 billion euros in the
1st half of
2018, an increase of 3.7% compared to the 1st half
of 2017, on a comparable basis. Given the normal seasonality for
CAPEX, the level of investment in the 1st half is in
line with the objective of 7.4 billion euros in CAPEX for the full
year 2018. The CAPEX rate for the telecom activities, as a
percentage of revenues, was 16.5% in the 1st half of 2018
(up 0.3 points compared to the 1st half of
2017).
The Group accelerated its fibre deployment: the increase in gross
investment was offset by the co-financing received in France and
Spain while Poland continued to deploy its fibre network. At 30
June 2018, the Group had 29.2 million households connected to very
high-speed[4] broadband
(an increase of 6.1 million or 26.1% year on year), including 12.7
million in Spain, 10.3 million in France, 2.9 million in Poland and
2.4 million in Romania (following the network sharing agreement
with Telekom Romania).
Investment in 4G et 4G+ mobile services was sustained with an
acceleration in the deployment of 4G sites in France, Spain and
Africa & Middle East (notably, Côte d'Ivoire, Senegal, Morocco
and Jordan). At 30 June 2018, population coverage for 4G was 98.0%
in France (up 6.0 points year on year), 96.5% in Spain (up 3.6
points year on year), 99.8% in Poland, 99.7% in Belgium, 95.1% in
Romania, 90.5% in Slovakia and 98.0% in Moldavia.
Changes in asset
portfolio
In June 2018, Orange acquired 62.72% of the share
capital of Business & Decision, a specialist in Data and
Digital, Business Intelligence (analysis of structured corporate
data) and Customer Relationship Management. Orange also signed
mutually-binding options for the acquisition of a further 4.88% of
the capital and on 29 June launched a friendly public offer for the
remaining shares. Following the offer, as of 19 July 2018 the Group
held 81.82% of the capital.
On 16 July 2018, Orange announced the signing of a contract to
acquire 100% of the capital of Basefarm Holding AS, a major player
in cloud infrastructure and critical application services in
Europe. The acquisition strengthens the position of Orange Business
Services, which is already the leader in the market for cloud
computing services in France and a significant player in
Europe.
Net financial debt
Net financial debt for Orange
Group's telecom activities was 25.273 billion euros at 30 June 2018
compared to 23.843 billion euros at 31 December 2017, principally
related to the seasonality of certain disbursements[5], and the
increase in investment. The 1st half of 2018
also included the deposit of 346 million euros in connection with
litigation with Digicel[6].
With a ratio of "net financial debt to adjusted EBITDA for the
telecom activities" of 1.96x at 30 June 2018, the Group maintained
a solid balance sheet, enabling it to pursue its investment
strategy in line with its objective of a ratio of net debt to
adjusted EBITDA from telecom activities of about 2x in the medium
term.
Items related to the change in net financial debt and to the ratio
of net debt to adjusted EBITDA from telecom activities are
presented in appendix 4.
Dividends
Confident in the Group's momentum
and financial strength, the Board of Directors will propose at the
2019 Annual General Meeting the payment of a dividend of 0.70 euros
per share for the full year 2018. The dividend increase of 0.05
euros will be included in the interim dividend (0.30 euros per
share), which is expected to be paid on 6 December 2018[7].
Review by operating
segment
France
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
4,460 |
0.6 % |
0.6 % |
|
8,952 |
1.4 % |
1.4 % |
Retail
services |
2,723 |
1.6
% |
1.6
% |
|
5,483 |
2.6
% |
2.6
% |
Convergence |
1,096 |
11.4
% |
11.4
% |
|
2,196 |
13.1
% |
13.1
% |
Mobile Only |
584 |
(2.7)% |
(2.7)% |
|
1,183 |
(1.8)% |
(1.8)% |
Fixed Only |
1,043 |
(4.7)% |
(4.7)% |
|
2,105 |
(4.3)% |
(4.3)% |
Fixed Only broadband |
638 |
0.7
% |
0.7
% |
|
1,281 |
1.3
% |
1.3
% |
Fixed Only narrowband |
405 |
(12.2)% |
(12.2)% |
|
824 |
(11.8)% |
(11.8)% |
Wholesale |
1,322 |
(1.3)% |
(1.3)% |
|
2,615 |
(2.1)% |
(2.0)% |
Equipment
sales |
293 |
(0.9)% |
(0.9)% |
|
611 |
5.3
% |
5.3
% |
Other
revenues |
121 |
3.6 % |
3.6 % |
|
242 |
3.0 % |
3.0 % |
Adjusted EBITDA |
|
|
|
|
3,266 |
5.1 % |
5.1 % |
Adjusted EBITDA / Revenues |
|
|
|
|
36.5 % |
1.3 pt |
1.3 pt |
Operating Income |
|
|
|
|
1,664 |
- |
7.5 % |
CAPEX |
|
|
|
|
1,669 |
3.6 % |
3.6 % |
CAPEX / Revenues |
|
|
|
|
18.6 % |
0.4 pt |
0.4 pt |
In France, revenues grew for the fifth consecutive quarter,
increasing 0.6% in the 2nd quarter.
The 2nd quarter of
2018 benefitted from the favourable impact of the inclusion of
audiobook offers, launched on 17 May. Excluding this impact,
revenues grew 0.2% in the quarter, driven by continued growth in
convergence and fibre.
Retail services revenues increased
1.6% in the 2nd quarter of
2018. Excluding traditional telephony services (fixed-only
narrowband), these revenues increased 4.5%. Equipment sales slowed
in the 2nd quarter 2018
(down 0.9%) due to the lack of major launches in the 2nd quarter
compared to the 2nd quarter of
2017, which was rich in new offerings.
Despite the intense promotional
environment which continued in the 2nd quarter,
particularly in the entry-level segment, Orange France's customer
base continued to grow: up 4.0% year on year for mobile contract
customers (19.040 million customers at 30 June 2018) and up 2.6%
for fixed broadband (11.321 million customers). Fibre, with 2.249
million FTTH[8] customers
at 30 June 2018, increased 33.0% year on year.
Revenues from convergence rose
11.4% in the 2nd quarter of
2018, driven by steady growth in the customer base: the number of
SIM cards for convergent offers reached 9.5 million at 30 June 2018
(up 10.2% year on year), while convergent fixed broadband customers
rose to 6.1 million (up 6.8% year on year). Additionally,
convergent ARPO grew 3.2% in the 2nd quarter
after increasing 5.3% in the 1st quarter.
Excluding revenues from ePresse offers and audiobooks, convergent
ARPO grew 2.3% in the 2nd quarter,
identical to the 1st quarter
increase.
Mobile Only revenues decreased 2.7%
in the 2nd quarter of
2018. The decline in the customer base (down 5.4% year on year),
which principally related to customer migration towards convergent
offers, was partially offset by the 2.3% increase in Mobile Only
ARPO (after rising 2.8% in the 1st quarter),
with a favourable shift in the customer mix with a less significant
decline in contract customers compared to prepaid.
Broadband Fixed Only revenues rose
0.7% in the 2nd quarter of
2018 driven by 2.6% growth in ARPO, while the Fixed Only broadband
customer base fell 1.9% year on year (5.2 million customers at 30
June 2018). Fixed Only narrowband revenues[9] continued
their downward trend, declining 12.2% in the 2nd
quarter of 2018.
Wholesale declined 1.3% in the
2nd quarter of
2018 after a 2.9% decline in the 1st quarter: the
continued decrease in national roaming was partially offset in the
2nd quarter by
the substantial growth in revenues from fixed services connected to
the co-financing of fibre from other operators.
France recorded record growth in
Adjusted EBITDA of 5.1% in the 1st half of 2018
while the adjusted EBITDA margin (36.5%) improved by 1.3 percentage
points compared to the 1st half of
2017. Revenue growth (up 1.4%) was accompanied by a reduction in
operating expenses (down 0.7%), mainly related to savings achieved
in connection with the Explore2020 operational efficiency plan.
CAPEX was up
3.6% in the 1st half of
2018. Investments in the 1st half also
benefited from the co-financing of fibre by other operators. Orange
France had a total of 10.3 million connected households at 30 June
2018 (up 2.4 million households in one year). Investment in 4G also
rose with the rollout of new sites: at 30 June 2018, 4G coverage
reached 98.0% of the population, up from 95.9% at 31 December 2017
(up 2.1 percentage points in the first half).
Spain
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,324 |
1.8 % |
1.8 % |
|
2,634 |
3.0 % |
3.0 % |
Retail
services |
973 |
2.7
% |
2.7
% |
|
1,920 |
2.7
% |
2.7
% |
Convergence |
539 |
3.1
% |
3.1
% |
|
1,065 |
5.0
% |
5.0
% |
Mobile Only |
310 |
2.6
% |
2.6
% |
|
609 |
(0.3)% |
(0.3)% |
Fixed Only |
123 |
0.6
% |
0.6
% |
|
245 |
0.7
% |
0.7
% |
Wholesale |
191 |
(0.6)% |
(0.6)% |
|
371 |
2.4
% |
2.4
% |
Equipment
sales |
160 |
(0.4)% |
(0.4)% |
|
344 |
5.5 % |
5.5 % |
Adjusted EBITDA |
|
|
|
|
783 |
10.1 % |
10.1 % |
Adjusted EBITDA / Revenues |
|
|
|
|
29.7 % |
1.9 pt |
1.9 pt |
Operating Income |
|
|
|
|
206 |
- |
(6.0)% |
CAPEX |
|
|
|
|
578 |
7.3 % |
7.3 % |
CAPEX / Revenues |
|
|
|
|
21.9 % |
0.9 pt |
0.9 pt |
In the 1st half 2018 Orange Spain's
value strategy delivered double-digit growth in adjusted EBITDA (up
10.1%) and in operating cash flow (up 18.5%), confirming Orange's
position as the second-largest operator in the Spanish
market.
Revenues rose 1.8% in the 2nd
quarter of 2018, after a 4.3% increase in the 1st
quarter. The 2nd quarter saw
a slowdown in equipment sales (down 0.4% in the 2nd
quarter, after an 11.3% increase in the 1st quarter)
while retail services grew 2.7% in the 2nd quarter,
matching the growth rate of the 1st
quarter.
Customer base growth was affected by strong competition in the
entry-level segment for mobile and fixed broadband. The number of
mobile contracts[10] (11.5
million customers at 30 June 2018) was stable compared to the end
of March 2018 and rose 1.2% year on year. The erosion of the fixed
broadband customer base continued, down to 4.1 million customers at
30 June 2018, a 1.3% decrease year on year.
In contrast, fibre growth remained very strong, with 135,000 net
sales in the 2nd quarter and
2.563 million customers at 30 June 2018 (up 31.6% year on year).
Fibre represented 62.2% of the fixed broadband customer base at
that date, up 15.6 percentage points year on year. The rollout of
4G continued, with 9.5 million customers at 30 June 2018, up 10.3%
year on year.
Convergence revenues rose 3.1% in the 2nd quarter,
after increasing 7.0% in the 1st quarter of
2018. The customer base reached 3.133 million customers at 30 June
2018, growing 1.3% year on year, and convergent ARPO rose 0.8% in
the 2nd quarter
against a backdrop of intense competition. Convergent customers
represented 85.5% of the consumer fixed broadband customer base at
30 June 2018, up 3.0 percentage points year on year.
Mobile Only revenues rose 2.6% in the 2nd quarter of
2018, after a decline of 3.2% in the 1st quarter.
They benefited from the 4.2% growth in Mobile Only ARPO, after a
1.0% decrease in the 1st quarter,
notably with a favourable change in the customer mix as the decline
in the number of contract customers was significantly less than for
prepaid.
Fixed Only revenues were up 0.6% in
the 2nd quarter of
2018, after rising 0.9% in the 1st quarter. The
growth of targeted offers on the enterprise market offset the
decline in Broadband Only revenues resulting from the reduction in
the customer base (down 9.0% at 30 June 2018 year on year), even as
Broadband Only ARPO increased 3.9% over the quarter.
Wholesale fell 0.6% in the 2nd quarter
2018, after a 5.7% increase in the 1st quarter,
tied to a further decline in international carrier services and
incoming mobile traffic due to the reduction in call termination
prices since mid-February 2018, whereas broadband access (xDSL and
FTTH) continued its fast growth.
Adjusted EBITDA
for Spain was up 10.1% in the 1st half of
2018, while the margin (29.7%) improved 1.9 percentage points from
the 1st half of
2017, driven by improved revenues and stable operating expenses.
Higher commercial expenses (cost of terminals sold and content
purchases) were offset by the drop in interconnection costs.
CAPEX increased
7.3% in the 1st half of
2018, supplemented by co-financing from other operators. These
resources enabled the acceleration of the rollout of fibre and the
4G network to meet growing mobile traffic. At 30 June 2018, Orange
Spain had a total of 12.7 million connected households (an increase
of 2.0 million households in one year), and 4G coverage reached
96.5% of the population (up 3.5 percentage points in one year).
Europe
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,388 |
0.3 % |
0.7 % |
|
2,775 |
1.2 % |
2.2 % |
Retail
services |
874 |
2.0
% |
1.4
% |
|
1,729 |
1.6
% |
2.1
% |
Convergence |
112 |
57.8
% |
56.9
% |
|
213 |
58.9
% |
60.3
% |
Mobile Only |
548 |
(3.6)% |
(4.0)% |
|
1,092 |
(3.2)% |
(2.9)% |
Fixed Only |
177 |
(6.5)% |
(7.4)% |
|
357 |
(8.2)% |
(7.3)% |
IT
& Integration services |
36 |
33.8
% |
32.9
% |
|
67 |
29.4
% |
30.7
% |
Wholesale |
288 |
2.3
% |
1.9
% |
|
574 |
3.0
% |
3.6
% |
Equipment
sales |
190 |
(0.4)% |
(0.1)% |
|
398 |
2.2
% |
3.4
% |
Other
revenues |
36 |
(33.7)% |
(18.1)% |
|
74 |
(21.5)% |
(11.2)% |
Adjusted EBITDA |
|
|
|
|
737 |
(2.8)% |
(2.1)% |
Adjusted EBITDA / Revenues |
|
|
|
|
26.6 % |
-1.1 pt |
-1.2 pt |
Operating Income |
|
|
|
|
152 |
- |
(13.7)% |
CAPEX |
|
|
|
|
389 |
5.1 % |
5.9 % |
CAPEX / Revenues |
|
|
|
|
14.0 % |
0.5 pt |
0.5 pt |
Europe includes Poland, Belgium,
Luxembourg, Romania, Slovakia and Moldova[11]. In the
1st half,
convergence drove the growth of retail services.
Revenues rose 0.3% in the 2nd quarter after
rising 2.0% in the 1st quarter on a
comparable basis. Retail services grew by 2.0% in the 2nd quarter,
after growing 1.1% in the 1st quarter,
while equipment sales slowed in the 2nd
quarter.
Convergence continued to grow quickly, rising 57.8% in the
2nd quarter,
after increasing 60.1% in the 1st quarter.
This increase was driven by the expansion of the convergent
customer base for both mobile, which rose 49.2% year on year with
2.7 million SIM cards at 30 June 2018, and fixed, up 45.0% with
1.447 million fixed broadband accesses at 30 June 2018, mainly in
Poland, Belgium and Romania. Convergence represented 54.8% of
consumer fixed broadband access in Europe at 30 June 2018, versus
42.2% the previous year (up 12.6 percentage points).
Mobile Only revenues declined 3.6% in the 2nd
quarter, after decreasing 2.7% in the 1st quarter,
reflecting a decline in the Mobile Only customer base (down 3.0%
year on year), linked to the success of convergent offers,
particularly in Poland.
Fixed Only revenues, generated mainly by Poland, fell 6.5% in the
2nd quarter
after dropping 9.9% in the 1st quarter,
representing a 3.4 percentage point improvement between the
1st and
2nd
quarter.
IT and integration services continued their strong growth in the
2nd quarter
rising 33.8%, mainly driven by the Polish enterprise market, after
a 24.6% increase in the 1st
quarter.
Wholesale was up 2.3% in the 2nd quarter of
2018 after rising 3.8% in the 1st quarter: the
increase in visitor roaming in Belgium and Romania and national
roaming in Poland and Slovakia was partly offset by the decline in
MVNOs in Belgium.
The trend in adjusted EBITDA in Europe improved to a 2.8% decline in
the 1st half of 2018
compared to a 7.7% decline in full-year 2017, on a comparable
basis. Adjusted EBITDA remains impacted by the loss of MVNO
contracts in Belgium and the lower roaming prices in European
countries that took effect in July 2017.
CAPEX was up
5.1% on a comparable basis, as fibre continued to expand,
particularly in Poland and Romania, and 4G coverage improved in
Central Europe. At 30 June 2018, Europe had a total of 5.9 million
connected households (including 2.9 million in Poland and 2.4
million in Romania) and 4G coverage was at 99.8% of the population
in Poland, 99.7% in Belgium, 95.1% in Romania, 90.5% in Slovakia
and 98.0% in Moldova.
Africa & Middle East
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,279 |
5.2 % |
2.1 % |
|
2,524 |
5.7 % |
1.3 % |
Retail
services |
1,052 |
7.7
% |
4.6
% |
|
2,068 |
8.1
% |
3.7
% |
Mobile Only |
948 |
8.5
% |
5.2
% |
|
1,858 |
9.0
% |
4.3
% |
Fixed Only |
101 |
(1.1)% |
(3.4)% |
|
204 |
0.0
% |
(3.0)% |
IT
& Integration services |
3 |
165.4
% |
232.0
% |
|
6 |
87.3
% |
121.1
% |
Wholesale |
203 |
(6.2)% |
(8.7)% |
|
403 |
(6.6)% |
(10.6)% |
Equipment
sales |
20 |
46.8
% |
49.0
% |
|
40 |
45.2
% |
39.7
% |
Other
revenues |
3 |
(61.5)% |
(65.5)% |
|
13 |
(23.6)% |
(26.6)% |
Adjusted EBITDA |
|
|
|
|
794 |
7.8 % |
3.9 % |
Adjusted EBITDA / Revenues |
|
|
|
|
31.4 % |
0.6 pt |
0.8 pt |
Operating Income |
|
|
|
|
298 |
- |
(9.6)% |
CAPEX |
|
|
|
|
408 |
0.7 % |
(4.8)% |
CAPEX / Revenues |
|
|
|
|
16.1 % |
-0.8 pt |
-1.0 pt |
Africa & Middle East continued
the momentum that began in the 2nd half of 2017
with revenues rising 5.2% in the 2nd quarter of
2018 and 5.7% over the 1st half of
2018.
Mobile Only services grew 8.5% in the 2nd quarter of
2018 on a comparable basis after rising 9.4% in the 1st quarter.
Growth in mobile data services remained very strong and accounted
for more than two-thirds of the growth in Mobile Only services,
driven by 4G[12] with 12.9
million customers at 30 June 2018. In addition, Orange Money
revenues grew 46% in the 1st half, with
38.7 million customers at 30 June 2018, of which 13.6 million were
active customers. Mobile voice services stabilised with the
development of abundance offers in an increasing number of
countries.
The 2nd quarter of
2018 in Côte d'Ivoire was marked by stricter verification criteria
for customers and damage caused by the 30 April 2018 equipment room
fire in Abidjan. These events limited the growth of the Côte
d'Ivoire group to 2.0% in the 2nd quarter
after posting 4.9% growth in the 1st
quarter.
In the Africa & Middle East segment the mobile customer base
reached 117.4 million at 30 June 2018, a year-on-year increase of
0.8%. There was strong growth in the number of contract
customers[13] up 28.0%
year on year to 12.4 million at 30 June 2018, driven principally by
Egypt. The 2nd quarter of
2018 was impacted by the change in the regulatory framework for
indirect distribution in Egypt, resulting in a decrease of 1.5
million net sales over the quarter, and the rationalisation of the
acquisition policy in Mali, resulting in a 3.6 million
decline.
Wholesale dropped 6.2% in the 2nd quarter of
2018 after a 6.9% decline in the 1st quarter on a
comparable basis. The implementation of international corridors and
the development of national abundance offers helped stabilise the
decline in Wholesale.
Adjusted EBITDA
for Africa & Middle East rose 7.8% in the 1st half
of 2018 on a comparable basis, and the margin (31.4%) improved 0.6
percentage points compared to the 1st half of
2017. The growth in revenues and, to a lesser extent, the decrease
in interconnection costs, offset the increase in labour expenses
and technical maintenance costs tied to network expansion.
CAPEX was stable
overall in the 1st half of
2018, up 0.7% on a comparable basis. The increase in investment
related to the expansion of 4G networks, particularly in Jordan,
Morocco, Senegal and Côte d'Ivoire, and to fibre, mainly in Jordan
and Morocco, was offset by a drop in other investments, including
in 3G and property.
Enterprise
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,804 |
1.3 % |
(0.8)% |
|
3,530 |
0.0 % |
(2.3)% |
Fixed
Only |
1,007 |
(2.2)% |
(4.7)% |
|
1,996 |
(2.5)% |
(5.0)% |
Voice |
349 |
(4.6)% |
(5.7)% |
|
698 |
(3.1)% |
(4.1)% |
Data |
658 |
(0.9)% |
(4.2)% |
|
1,299 |
(2.1)% |
(5.5)% |
IT &
Integration services |
555 |
9.7
% |
7.2
% |
|
1,049 |
5.1
% |
2.1
% |
Mobile* |
242 |
(1.3)% |
(1.3)% |
|
484 |
0.2 % |
0.2 % |
Adjusted EBITDA |
|
|
|
|
579 |
(4.9)% |
(7.7)% |
Adjusted EBITDA / Revenues |
|
|
|
|
16.4 % |
-0.8 pt |
-0.9 pt |
Operating Income |
|
|
|
|
383 |
- |
(10.8)% |
CAPEX |
|
|
|
|
168 |
(3.0)% |
(5.7)% |
CAPEX / Revenues |
|
|
|
|
4.8 % |
-0.2 pt |
-0.2 pt |
The trend in revenues improved thanks
to solid growth in IT and integration services.
Revenues from
the Enterprise segment grew 1.3% in the 2nd quarter of
2018 after declining 1.3% in the 1st quarter on a
comparable basis.
IT and integration services posted
9.7% growth in the 2nd quarter of
2018 after rising 0.4% in the 1st quarter.
Excluding equipment sales, which were more important in the
2nd quarter,
revenues from IT and integration services rose 8.0% in the
2nd quarter,
after rising 4.2% in the 1st quarter.
Growth continued to be driven by Cloud services, which were up 18%
in the 1st half, and
security services, which rose 14%. In addition, integration
services benefited from the signing of new contracts in the
2nd quarter.
Voice services were down 4.6% in the
2nd quarter of
2018 after declining 1.6% in the 1st quarter. The
downward trend in traditional fixed-line telephony (a 6.3% decrease
in the 2nd quarter) was
coupled with a slowdown in Voice-over-IP and customer relationship
services (contact number services), following strong growth in the
1st quarter.
Data services posted a decline of
just 0.9% in the 2nd quarter of
2018 thanks to an improvement in revenues from IP-VPN services,
following a 3.4% decrease in the 1st quarter.
IP-VPN services counted 355,000 access operations at 30 June 2018
(a 0.5% increase year on year).
Excluding mobile equipment sales,
which slowed, the trend for Mobile improved in the 2nd quarter of
2018, with a favourable evolution in roaming revenues. The number
of contract customers[14] was 2.834
million at 30 June 2018 (up 4.6% year on year), and the number of
machine-to-machine SIM cards continued to grow strongly (up 15.1%
year on year).
Adjusted EBITDA
for the Enterprise segment in the 1st half of 2018
declined 4.9% on a comparable basis, reflecting margin pressure for
traditional services and the impact of the growing share of
lower-margin IT and integration services on the revenues.
CAPEX for the
Enterprise segment was down 3.0% in the 1st half of 2018
on a comparable basis with the optimisation of expenditure tied to
customer contracts.
International Carriers &
Shared Services
|
|
|
|
|
|
|
|
|
Q2 2018 |
change |
change |
|
H1 2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
383 |
(5.9)% |
(7.0)% |
|
759 |
(6.2)% |
(7.3)% |
Wholesale |
288 |
(8.9)% |
(9.5)% |
|
569 |
(10.0)% |
(10.7)% |
Other
revenues |
95 |
4.8 % |
1.6 % |
|
190 |
7.6 % |
4.5 % |
Adjusted EBITDA |
|
|
|
|
(116) |
(12.0)% |
(10.3)% |
Adjusted EBITDA / Revenues |
|
|
|
|
(15.3)% |
-2.5 pt |
-2.4 pt |
Operating Income |
|
|
|
|
(286) |
- |
26.3 % |
CAPEX |
|
|
|
|
137 |
7.8 % |
7.8 % |
CAPEX / Revenues |
|
|
|
|
18.1 % |
2.3 pt |
2.5 pt |
Revenues from International
Carriers and Shared Services fell 5.9% in the 2nd
quarter of 2018 on a comparable basis, in connection with
Wholesale, with a decline in voice services to international
carriers, particularly to destinations in Africa.
Other revenues increased 4.8%. These relate to the
laying and maintenance of submarine cables, audiovisual content
(OCS and Orange Studio), Sofrecom (consulting) and Viaccess
(secure-TV access), increased by 4.8%.
Adjusted EBITDA was down 13
million euros compared to the 1st half of 2017
on a comparable basis. The decline in revenues and increase in
labour expenses were partially offset by reduced service fees and
interconnection costs.
CAPEX increased 7.8% in the
1st half of 2018
due to the construction of the submarine cable linking French
Guyana, Martinique and Guadeloupe.
Orange Bank
Net banking
income for Orange Bank, which was 26 million euros in the
1st half of
2018, declined 12 million euros compared to the 1st half
of 2017, mainly due to customer acquisition costs for the new
banking and digital offer launched on 2 November 2017 in
metropolitan France.
Operating income
in the 1st half of 2018
was -68 million euros versus -28 million euros in the 1st half of
2017. This change reflects the decrease in net banking income and
increase in operating expenses related to the development of the
business.
CAPEX, which was
20 million euros in the 1st half of
2018, was down 5 million euros compared to the 1st half
of 2017.
Schedule of upcoming events
Contacts
press: +33 1 44 44 93 93
Jean-Bernard Orsoni
jeanbernard.orsoni@orange.com
Tom Wright
tom.wright@orange.com
Olivier Emberger
olivier.emberger@orange.com
|
financial communications: +33 1 44 44 04 32
(analysts and investors)
Patrice Lambert-de Diesbach
p.lambert@orange.com
Isabelle Casado
isabelle.casado@orange.com
Samuel Castelo
samuel.castelo@orange.com
Luca Gaballo
luca.gaballo@orange.com
Didier Kohn
didier.kohn@orange.com
Anna Vanova
anna.vanova@orange.com
|
Disclaimer
This press release contains
forward-looking statements about Orange. Although we believe these
statements are based on reasonable assumptions, they are subject to
numerous risks and uncertainties, including matters not yet known
to us or not currently considered material by us, and there can be
no assurance that anticipated events will occur or that the
objectives set out will actually be achieved. Important factors
that could cause projected results to differ from actual results
include, among others: the inappropriate release or modification of
individual customer data, risks associated with the development of
banking activities and mobile financial services, exposure to
geopolitical risks, macroeconomic factors as well as regulatory or
corruption risks, the risk of not being able to maintain control
over customer relations when facing competition with OTT players,
the success of Orange's strategy of diversification to develop new
steams of growth, network or software failures due to cyberattacks,
fraudulent activity that could target Orange or its customers, its
dependence on a small number of important suppliers, damage to
networks caused by natural disasters or intentional interference,
risks associated with the brand strategy, Orange's ability to
retain the necessary skills given the high level of employee
retirements and changes in its offers, possible adverse health
effects associated with exposure to electromagnetic fields from
telecommunications equipment, various human factors linked to the
safety of people and psycho-social risks, the results of litigation
regarding regulations and competition, the terms of access to
capital markets, interest rate or exchange rate fluctuations,
Orange's credit ratings, changes in the assumptions underlying the
accounting value of certain assets resulting in their impairment,
and credit risks or counterparty risks on financial transactions.
More detailed information on the potential risks that could affect
our financial results is included in the Registration Document
filed on 4 April 2018 with the French Financial Markets Authority
(Autorité des marchés financiers - AMF) and in
the annual report on Form 20-F filed on 4 April 2018 with the U.S.
Securities and Exchange Commission. Other than as required by law,
Orange does not undertake any obligation to update them in light of
new information or future developments.
Orange 1st half 2018 financial
results
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Orange via Globenewswire
Grafico Azioni Orange (EU:ORA)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Orange (EU:ORA)
Storico
Da Apr 2023 a Apr 2024