Orange fights back competition to hit solid 2014 targets

Feb 18, 2015
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Although Orange is still dealing with an increasingly telco environment, 2014 proved to be a year of return to stability for the group after years of price wars and cutthroat competition kicked-off by the entry of Free Mobile. After falling 0.1 points in 2013, their EBITDA fell in-line with their targets, coming in at 12.190 billion with a stable EBITDA to revenue ration of 30.9%. The EBITDA improvement was largely driven by operating cost reductions as their revenues continued to decline in 2014.

Although revenues continue to decline for the group, the revenue decrease of 2.5% in 2014 was a big improvement over their 4.5% revenue decrease in 2013. Things maybe turning around quite a bit though for them in 2015 as revenues in the 4th quarter of 2014 were stable. The improvement was primarily driven by mobile services in France, Spain and Belgium, an increase in mobile equipment sales, led by France and Spain, and steady growth in  Africa and the Middle East .

Some of the interesting highlights in the French market underlying their strong Q4 performance was +256,000 net mobile contract sales with premium offers Open and Origami representing 61% of the customer base for consumer contracts; fixed broadband, with 95,000 net additions, posted an estimated 35% market share of net additions; and 4G mobile achieved 3.7 million customers and fibre hit 563,000 customers.

Spain also was a very healthy market for them in Q4 with 4G mobile rising sharply with +491,000 net additions, hitting 2.3 million customers and fixed broadband recording 72,000 net additions, including +27,000 fibre customers. Poland was also a bright spot with net mobile contract sales up significantly, and  particularly 4G mobile.  Finally in Africa and the Middle East,  growth of the mobile customer base was particularly strong, with 4.4 million net additions in Q4 and hitting 12.6 million Orange Money customers, a 51% year on year increase.

In speaking about their performance, CEO Stephane Richard adds:

“These results bear witness to Orange’s substantial strength and the commitment of our teams. While the competitive pressure remained very high in 2014 in all of our markets, our commercial performance was excellent and we achieved all of our financial targets. We succeeded in stabilizing our restated EBITDA ratio thanks to our commercial performance coupled with our ongoing cost reduction efforts. Our strategy of differentiation through investment in very high-speed broadband and the quality of our networks and services has paid off, particularly in France, where fibre and 4G attracted many customers”

He continued to underline in his comments that their M&A and partnership efforts, namely the acquisition of Jazztel in Spain and their alliance with Deutsche Telecom in the UK to ‘create the country’s leading mobile operator’ will be big drivers of growth in the future.