Financial results at 30 September 2018
Continued solid growth in adjusted EBITDA
The first nine months of the year confirm the acceleration in revenues and adjusted EBITDA growth compared to 2017. Adjusted EBITDA growth remained solid (+3%) in the third quarter (1).
- The 1.3% growth in revenues in the first nine months of 2018 exceeded that of the full year 2017 (+1.2%). In the third quarter, revenue growth proved to be resilient, up 0.6% year on year, against a backdrop of increasingly intense competition in our key markets, particularly in France and Spain.
- The 3.2% growth in adjusted EBITDA in the 9-month period confirmed the objective of stronger growth in 2018 compared to that achieved in 2017. The adjusted EBITDA growth of 3.0% in the third quarter is in line with the trend of the previous quarters, with continued efforts to control costs. The adjusted EBITDA margin for the telecom activities improved compared to 2017, up 0.7 points in the first nine months of the year and up 1.0 point in the third quarter.
- CAPEX for the third quarter was 5.141 billion euros, up 6.0% on a comparable basis, in line with the objective of 7.4 billion euros for the full year. These investments positioned Orange yet again as the number one provider in France in terms of the quality of its mobile network in the 2018 ARCEP survey.
Third quarter results also demonstrate a strong commercial performance, particularly:
- In France, where the success of the new offers contributed to the growth of our fixed broadband customer base, including a record for a third quarter in fibre.
- In Spain, where the net change in the fixed broadband customer base returned to growth, thanks to fibre and the success of our content aggregation TV strategy including football.
- In Europe, with an acceleration of growth in mobile contract and fixed broadband customer base, which was driven by the success of the Love convergent offers.
- In Africa & Middle East where we continued to accelerate 4G and reached 15 million of 4G customers at the end of the third quarter, a milestone for the company, representing a 57% increase year on year.
(1) Change refers to data on a comparable basis.
2018 and mid-term outlook
Based on these results, 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 investment capacity.
- Payment of a dividend of 0.70 euros per share for the full year 2018 (if approved at the 2019 Annual General Meeting). 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
For 2019 and 2020, growth in adjusted EBITDA, a reduction in CAPEX and growth in Operating Cash Flow.
Commenting on the publication of the 2018 third quarter results, Stéphane Richard, Chairman and CEO of the Orange Group, said:
“The Group has maintained its strong momentum during this third quarter, with increased revenues of +0.6% despite particularly intense competition in our key markets, while maintaining solid EBITDA growth of +3.0%, an indication of the appropriateness of our strategy.
In France, in spite of the competitive context, we increased our mobile contract base by 82,000 customers and our fibre base by 157,000 customers. This commercial performance was underpinned by our investments in our networks (Orange was recently ranked first by ARCEP for the quality of its mobile network for the 8th successive year) and by a targeted marketing strategy, combining improved pricing focusing on value and the launch of a new broadband double-play offer by Sosh. Revenue growth and successful cost management have enabled Orange France to confirm its continued EBITDA improvement.
A similar strategy has supported Orange Spain’s broadband sales and TV subscriptions performance thanks to investments in fibre and has also enabled it to respond in a targeted way to aggressive moves by our competitors in the mobile business.
In Europe, where growth reached +1.6% thanks to our convergence strategy, I’d like in particular to highlight the important progress made by Orange Poland in the development of its “Orange One” strategy that led to a return to growth during the quarter.
Our African and Middle East activities are maintaining a good level of growth notwithstanding specific operational challenges in the Côte d’Ivoire. I’d like to underline in particular the strong performance in Burkina Faso and the Democratic Republic of the Congo, which also returned to growth this quarter.
Finally, Orange Business Services continues its progress with sustained momentum in the areas of cybersecurity and cloud services.”
The financial data in this press release are unaudited.
In order to make 2017 data comparable with that of 2018, the 2017 results are adjusted to reflect the changes in the scope of consolidation and foreign exchange fluctuations during the period. At the end of September, their impact was respectively, +71 and -194 million euros in revenues, -2 and -37 million euros in adjusted EBITDA, +1 and -26 million euros in CAPEX and -3 and -10 million euros in operating cash flow. The changes in the scope of consolidation primarily resulted from the consolidation of Business & Decision, and foreign exchange fluctuations resulted mainly from the variation in the value of the U.S. dollar, the Egyptian pound, the Jordanian dinar and the Guinean franc against the euro.
More detailed information is available on the Orange website, in the “Investors / Results and Presentations” section.
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Orange is one of the world’s leading telecommunications operators with sales of 41 billion euros in 2017 and 150,000 employees worldwide at 30 September 2018, including 92,000 employees in France. The Group has a total customer base of 261 million customers worldwide at 30 September 2018, including 201 million mobile customers and 20 million fixed broadband customers. The Group is present in 28 countries. Orange is also a leading provider of global IT and telecommunication services to multinational companies, under the brand Orange Business Services. In March 2015, the Group presented its new strategic plan “Essentials2020” which places customer experience at the heart of its strategy with the aim of allowing them to benefit fully from the digital universe and the power of its new generation networks.
Orange is listed on Euronext Paris (symbol ORA) and on the New York Stock Exchange (symbol ORAN).
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