Orange exceeds financial targets
February 16, 2016
French telco Orange reports that 2015 was particularly rich in structurally significant events for the Group, starting with the presentation of the new strategic plan Essentials2020 in March focused on customers’ expectations and the quality of the Orange experience. In Europe, the acquisition of Jazztel led to the creation of the second largest fixed broadband operator in Spain and one of the most dynamic mobile operators in an environment that is rapidly moving towards convergence. In addition, the Group announced the sale of Orange Armenia to the Armenian operator Ucom in August while the sale of the EE joint venture in the UK to BT Group was completed in January 2016. Orange also strengthened its presence in Africa, a strategic priority for the Group, with the increased participation in and consolidation of Médi Telecom in Morocco from July 1st 2015 and the acquisitions currently underway in Burkina Faso, Liberia, Sierra Leone and the Democratic Republic of the Congo.
- Restated EBITDA was €12.426 billion in 2015, ahead of the 2015 target. With a 0.1 per cent increase for the year on a comparable basis, the Group stabilised restated EBITDA a year ahead of the trajectory in the Essentials2020 strategic plan. The ratio of restated EBITDA to revenues (30.9 per cent) also improved 0.1 percentage points compared to 2014. The optimisation of the Group’s cost structure continues with the reduction of indirect costs (€118 million), while direct costs rose (€62 million) in line with the development of the business.
- Revenues were €40.236 billion in 2015, relatively stable in relation to the preceding year on a comparable basis (-0.1 per cent), after declining 2.5 per cent in 2014. Revenues grew for the second consecutive quarter (up 0.1 per cent in the 4th quarter after rising 0.5 per cent in the 3rd quarter), led by the favourable trend in France and the Europe zone, while business in Africa and the Middle East remained strong. Furthermore, the Enterprise segment confirmed the stabilisation observed during the preceding two quarters.
- CAPEX (€6.486 billion in 2015) increased 9.3 per cent on a comparable basis, representing 16.1 per cent of revenues (+1.4 percentage points compared to the preceding year). In line with the Essentiels2020 strategic plan, investment in fibre in Europe rose sharply (+55 per cent compared to 2014), particularly in France. Investment in the mobile networks remained strong with the upgrading of mobile access networks and the continued deployment of 4G.
- The Group’s 4th quarter 2015 commercial activity continued the good results of previous quarters. At 31 December 2015, the Group had nearly 18 million 4G customers in Europe (2.3x in one year) and 1.882 million fibre customers (2.7x in one year).
In France, net mobile contract sales2 remained strong in the 4th quarter (+179,000) and there were 8 million 4G customers at 31 December 2015 (+1.4 million in the 4th quarter); fixed broadband recorded 121,000 net additions in the 4th quarter, led by fibre (+133,000) with a total of 960,000 customers at December 31st 2015.
In Spain, mobile 4G was up sharply with 5.1 million customers at 31 December 2015; there were 809,000 fibre customers at that date, an increase of 246,000 customers in the 4th quarter. In Poland, the 4th quarter had a record number of net additions of mobile contracts (+274,000). Likewise in Belgium, mobile contracts rebounded with 28,000 net additions in the 4th quarter.
In Africa and the Middle East, growth of the mobile customer base continued to be strong with 110.2 million customers at December 31st 2015 (+4.1 per cent on a comparable basis), while Orange Money had 16.4 million customers at that date (+31 per cent year on year on a comparable basis).
- Net income was €2.958 billion in 2015, an increase of €1.733 billion compared to 2014, mainly related to the favourable change in operating results, the reduction of tax expenses and the net income from discontinued operations (EE). Net income attributable to equity holders of the Group almost tripled, reaching €2.652 billion in 2015 versus €925 million in 2014.
- Net debt was €26.552 billion at December 31st , an increase of 462 million euros compared to December 31st 2014. Excluding the impact of acquisitions and disposals carried out in 2015 (principally the acquisition of Jazztel and the increased participation in and consolidation of Médi Telecom), net debt at December 31st 2015 would have declined €851 million compared with December 31st 2014. The restated ratio of net financial debt to EBITDA was 2.01x at December 31st 2015, versus 2.09x at December 31st 2014, in line with the objective of a ratio of around 2x in the medium term.
For 2016, Orange aims for a restated EBITDA higher than in 2015 on a comparable basis. This objective will be supported by continued efforts to reduce the cost structure.
The Group maintains its objective of a ratio of net debt to EBITDA of around 2x in the medium term to preserve Orange’s financial strength and investment capacity. Within this framework, the Group is pursuing a policy of selective acquisitions by concentrating on markets in which it is already present.
The Group confirms the payment of a dividend of €0.60 per share for 2015. An interim dividend for 2015 of €0.20 per share was paid on December 9th 2015 and the balance of €0.40 per share will be paid on June 23rd 2016.
The Group expects to propose a dividend of €0.60 per share for 2016. An interim dividend for 2016 of €0.20 per share should be paid in December.
In addition, the Group confirmed at the start of the year that discussions had resumed with the Bouygues Group with the aim of a business combination with Bouygues Telecom. These discussions are ongoing and require at least several weeks before any decision is taken. Orange will act solely in the interests of its shareholders, employees and customers and will be particularly attentive to the value created by such a project.
Commenting on the 2015 results, Stéphane Richard, Chairman and CEO of the Orange Group, said: “Our good results for 2015 confirm the relevance of our new strategic plan, Essentiels2020, designed to differentiate us in terms of quality of customer experience. For the first time since 2009, and one year ahead of target, restated EBITDA for the year is growing.”
“This growth is the result of a very strong commercial performance, particularly in very high-speed broadband, and our continued efforts to control costs. The number of 4G customers, which reached 18 million, has doubled in a year and we have 1.9 million fibre customers, three times more than at the end of 2014. We also have 110 million mobile customers in Africa and the Middle East, up 4.1 per cent year on year on a comparable basis.”
“This commercial momentum is the reward for our accelerated investment, which increased 9.3 per cent to €6.5 billion, in order to offer our customers the best networks and services, as well as the strong mobilisation of our teams.”
“We also continued to develop our international presence during 2015, in line with our strategy. In Europe, our focus remains on fixed-mobile convergence, as in Spain where the integration of Jazztel has exceeded our objectives and has enabled us to create the most dynamic convergent operator in the market. As for the Africa and Middle East region, this represents a growth area for us and one in which we continue to develop and invest through our new holding company, Orange Middle East & Africa. This can be seen through our increased participation in Médi Telecom in Morocco and our recent acquisition projects in Burkina Faso, Liberia, Sierra Leone and the Democratic Republic of the Congo.”
“Strengthened by our strategy and the commitment of our teams, we intend to continue this good momentum, targeting further growth in restated EBITDA in 2016 on a comparable basis.”