Accelerated growth in 1st-half revenues, adjusted EBITDA and Operating Cash Flow confirms the 2018 objectives.
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 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
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.”
 With the exception of the International Carriers & Shared Services segment.
 These objectives, initially announced on the basis of the financial data presented in IAS18 standard, are maintained with the application of the new accounting standard IFRS15 implemented since January 1, 2018. They do not include the effects of the new IFRS16 standard, which will come into effect on January 1, 2019.