France Telecom-Orange reached its operating cash flow target of 8 billion euros in 2012 while increasing its investments

Paris, Wednesday, February 20, 2013

Despite heightened competitive pressure, France Telecom-Orange maintains its operating cash flow target of more than 7 billion euros for 2013

  • France made a positive contribution to this target due to the quality of its network, commercial offers and cost control:
    - Orange was ranked the best network by the French regulator ARCEP for the third consecutive year
    - after a difficult first half, the success of the new Sosh, Open and Origami segmented offers helped to stabilise the mobile market share at 37.3% (31 December 2012) and to regain a total mobile base of more than 27 million customers
    - the good performance on indirect expenses and commercial costs partially offset the increase in interconnection costs linked to voice and SMS/MMS traffic.
  • France Telecom-Orange had 230.7 million customers at 31 December 2012, an increase of 3.0% year on year (+6.8 million net additions) (1), reflecting growth in mobile, with the customer base up 4.5%:
    - in France, the mobile customer base rose 0.4% in the year
    - in Europe (excluding France), the mobile customer base grew 0.4%(1) and 4G was launched in six countries. In Spain, Orange was the market leader in mobile number portability in 2012 and mobile contracts rose 6.4%, while the fixed broadband customer base increased 10.3%
    - Africa and the Middle East had 81.6 million mobile customers at 31 December 2012, up 9.4% year on year (7.0 million net additions).
  • Consolidated revenues were 43.515 billion euros, a slight decrease of 0.6% on a comparable basis and excluding the impact of regulatory measures:
    - In France, the decline in mobile services revenues was limited to 0.9%. The national roaming contract signed with the new market entrant partially offset the impact of price decreases
    - in Europe (excluding France), revenues rose 0.9% with a 3.6% increase in Spain led by growth in fixed broadband and the rapid development of mobile Internet browsing
    - in Africa and the Middle East, revenue growth continued to be strong at 5.3%, led by Côte d’Ivoire and Guinea.
  • Restated EBITDA was 13.785 billion euros. The EBITDA margin (31.7%) fell slightly by 1.6 percentage points due to direct cost savings (reduction of commercial expenses), the control of labour expenses, and the stabilisation of other indirect costs with savings achieved as part of the Chrysalid plan. Restated EBITDA for 2012 includes excess payroll costs in France of 40 million euros linked to the employer contribution based on profit sharing (forfait social) and the 122 million euro impact related to the European Commission's decision regarding the method of financing the retirement of civil servants at France Telecom.
  • The Group share of net income was 3.387 billion euros in 2012 on a comparable basis, a 30.7% decrease in relation to the previous year (excluding the impact of the new Part-Time for Seniors agreement of -726 million euros after tax in 2012 and excluding the impairment of goodwill and assets of
    -1.841 billion euros in 2012 and -991 million euros in 2011). On a published basis, it was 820 million euros in 2012 compared to 3.895 billion in 2011.
  • Capital expenditure (5.818 billion euros) rose 1.7% compared to 2011 on a comparable basis, led by investment in very high speed fixed (FTTH) and mobile (4G) broadband, which is accelerating, notably in France. The ratio of CAPEX to revenues was 13.4%.
  • Operating cash flow (restated EBITDA - CAPEX) was 7.967 billion euros, consistent with the Group’s operating cash flow target for 2012 of close to 8.0 billion euros.
  • Net debt was 30.545 billion euros at 31 December 2012. The restated ratio of net debt to EBITDA is 2.17, in line with the objective of returning to a net debt/EBITDA ratio of close to 2 by the end of 2014

Outlook for 2013: the Group confirms its operating cash flow target of more than 7 billion euros.

Several operational goals support this target, including the following priorities:

  • accelerating the transformation of the Group’s cost structure in order to reduce the cost base in 2013, and generate revenue growth in mobile data services of at least 10% for the Group,
  • France: stabilising market share in the mobile segment at a level above 35% and reaching 4G coverage of 30% of the population by the end of 2013. In the fixed segment, doubling the optical fibre customer base and achieve at least 50% of broadband sales with the Livebox Play,
  • Europe: marketing convergent offers in seven countries; launching at least six mutualisation programmes across all countries (of which network sharing, data centre consolidation, network supervision centralization …) ; increasing the Net Promoter Score in all countries,
  • Africa and the Middle East: reaching 8 million Orange Money customers and 12 million active devices with data services (+70%) by the end of the year; reduce the mobile churn rate by 20%,
  • Enterprise: generating more than 30% growth in cloud computing; double digit revenue growth in emerging countries; improving or maintaining customer satisfaction index across the footprint.

the Group’s financial policy

  • objective of returning to a net debt / EBITDA ratio of close to 2 by the end of 2014 in order to preserve the Group’s financial strength and investment capability,
  • in this context, the Group will pursue a policy of selective acquisition, focusing on possible consolidation operations in markets where the Group already operates,
  • payment of a minimum dividend of 0.80 euro per share for 2013. An interim dividend payment for 2013 of 0.30 euros per share will be paid in cash in December,
  • the Group confirms the payment of the balance of the dividend for 2012 of 0.20 euro per share to be paid in cash on 11 June 2013 (2).

Commenting on the publication of the Group’s 2012 results, France Telecom-Orange Chairman and CEO Stéphane Richard said: “During a particularly turbulent 2012, the Group showed its resilience by achieving its financial targets, notably an operational cash flow of 8 billion euros. In addition, the Group continued to capitalise on its networks, with almost 6 billion euros of investments, and in particular it accelerated the rollout of optical fibre and 4G in France. The Group’s customer base surpassed 230 million globally, of which over 80 million are in Africa and the Middle East, an increase of 10% on a year earlier.

However, the economic situation and the continued price war in most European countries necessitated an acceleration in the Group’s transformation programme. The strengthening of our mobile offers will be bolstered by a more marked distinction between low-cost and higher-value models, providing customers with an unparalleled service, especially in the high-speed broadband segment. This will be supported by the Orange network, its coverage, speed and extensive reach throughout the country.

In addition to the national roaming agreement in France, as well as MVNO and network-sharing agreements, the Group will continue its policy of co-operating to improve returns on investment. In tandem, we will simplify our operations to adapt to changes in our French workforce, an effect that will be amplified by the new Part-Time for Seniors programme. All this enables me to confirm our operational cash-flow target of over 7 billion euros for 2013.”

the entire press release is available on PDF file

(1) Excluding the impact of the Swiss disposal.
(2) Subject to approval by the Annual General Meeting of Shareholders.

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About Orange

Orange is one of the world’s leading telecommunications operators with sales of 43.5 billion euros in 2012 and has 166,000 employees worldwide at 30 September 2013, including 102,000 employees in France. Present in 32 countries, the Group has a total customer base of more than 232 million customers at 30 September 2013, including 175 million mobile customers and 15 million fixed broadband customers worldwide. Orange is also a leading provider of global IT and telecommunication services to multinational companies, under the brand Orange Business Services.

Orange is listed on the NYSE Euronext Paris (symbol ORA) and on the New York Stock Exchange (symbol ORAN).
For more information:, and on Twitter: @orange, @presseorange, @orangebusiness.
Orange and any other Orange product or service names included in this material are trade marks of Orange Brand Services Limited.

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