30 April 2019

Financial results at 31 March 2019

Stable revenues with continued growth in EBITDAaL.


Resilient sales performances, underpinned by the success of convergence and fixed and mobile broadband.


Financial results at 31 March 2019
Historical indicators (to 31 December 2018)

Financial results at 31 March 2019 - 2
* Adjustments to the presentation of EBITDAaL and EBITDA are described in Appendix 2.


  • Revenues were stable in the first quarter of 2019 (-0.1% year on year) on a comparable basis, and up 0.4% restated for the impact of the digital reading offers' promotional period.
    Growth in most segments offset the slight downturn in revenues in France (-1.8% and -0.7% excluding the effect of the digital reading offers) in what continues to be a fierce promotional environment. Spain's value positioning led to 0.4% growth, despite greater competition. Europe was up 1.4%, underpinned by convergence and IT services, whilst steady growth of 5.3% continued in Africa & Middle East due to a very solid retail services performance. Enterprise had a second consecutive quarter of growth, rising 0.6%.
  • EBITDAaL grew 0.7% year on year, despite the impact of digital reading offers. Restated for this impact, growth in EBITDAaL would be 2.8%. The EBITDAaL margin from telecoms activities improved by 0.4 points in the 1st quarter.
  • eCapex grew 8.4% to reach €1.6 billion, linked to the acceleration in the 1st quarter of the FTTH rollout in France and continued investment in 4G networks. In line with the objectives, eCapex for 2019 will be slightly lower compared to 2018, excluding the impact of the new network sharing agreement in Spain.
  • In France, net sales were positive for mobile (+19,000) and fixed (+49,000), in what continues to be an intense promotional environment.
  • Fibre's continued success led to an increase in net sales of 168,000 in France, an all-time high for a 1st quarter, and of 114,000 in Spain.
  • In Europe, the growth in mobile contract and fixed broadband accelerated, driven by the success of Love convergent offers.
  • In Africa & Middle East, the rollout of 4G continued, having passed the 17 million-customer mark by the end of the 1st quarter, a 50% increase year on year.


Outlook for 2019

With a view to always offering our customers the best networks and seeking to create value, on 25 April, Orange signed a network-sharing agreement with Vodafone in Spain. This will extend coverage, increase capacity, prepare for the challenges of 5G and generate significant savings on network expenditure. This project will generate gross savings of €800 million over 10 years but involves an initial investment of around €300 million over 4 years (including €100 million in 2019). Overall, the expected return is high with an incremental IRR more than 3 times the WACC* of Orange Spain over 10 years. This project will be outside of the guidance. 

Based on the 1st quarter 2019 results, and excluding the effects of the new network-sharing contract in Spain, Orange is re-affirming its objectives for 2019:

  • EBITDAaL growth in 2019 will be slightly lower on a comparable basis than that achieved in 2018.
  • 2019 eCAPEX will be slightly lower than that of 2018 on a comparable basis.
  • Operating Cash Flow (EBITDAaL – eCAPEX) in 2019 will be higher than in 2018 on a comparable basis.
  • The target ratio of net debt** to EBITDAaL for telecoms activities will be maintained at around 2x in the medium term.
  • The payment of a dividend of 0.70 euros per share for the fiscal year 2019 will be proposed, with an interim dividend of 0.30 euros per share to be paid in December 2019.

*WACC: weighted average cost of capital
** excluding IFRS 16 leases

Commenting on the publication of the 1st quarter 2019 results, Stéphane Richard, Chairman and CEO of the Orange Group, said:

“During the first quarter, the Group succeeded in maintaining its high quality commercial performance in spite of a particularly challenging competitive context notably in our two principal countries of France and Spain. Our strategy is paying off since EBITDAal is continuing to grow while revenues remain stable, allowing us to reaffirm our 2019 objectives. It’s worth noting that while the level of eCapex for this quarter is higher, it should reduce slightly for 2019 as a whole, as predicted, excluding the effect of the network sharing agreement with Vodafone in Spain announced on 25 April.
The validity of our fibre strategy has been confirmed. We’ve accelerated deployment in France, Spain and Poland, reinforcing our European leadership position with 33.7 million connectable households, 12.4 million of which are in France. This progress can also be seen in a very positive commercial performance; in particular, France delivered another record quarter in terms of new fibre subscribers, adding a further 168,000 customers.
We have also reinforced our already strong position in mobile: some 60 million clients worldwide now enjoy our 4G network, and we continue with the deepening of our network in Europe and in Africa.
Convergence continues to be an engine for growth and loyalty for the Group. We are the European leader in this field with over 10 million customers, representing nearly 40% of our consumer revenues for the continent.
I’d also like to highlight the very solid results from our Africa and Middle East operations that once again recorded revenue growth of over 5%. Indeed, with the rapid roll-out of our 4G networks, to the benefit of 17.6 million clients, and the growing availability of affordable smartphones, mobile internet usage is taking off and accounts for two thirds of mobile revenue growth.
Finally, this quarter marks a new milestone in our multi-services operator strategy. In addition to our initiatives in mobile financial services in Africa and Europe, we have launched two new offers in France that will capitalise on our presence in the home: “Home protection” is a remote monitoring service that is already off to a very encouraging start, and “Connected home” brings together our ambitions for IoT in the home.
My warm thanks go to all of the Group’s employees who have, through their commitment, made possible these results in a challenging environment.”


The entire press release is available on PDF file

This press release may contain forward-looking statements about Orange, notably on objectives and trends related to Orange’s financial situation, investments, results of operations, business and strategy. These forward-looking statements do not constitute a forecast as defined in EU Commission Regulation No. 809/2004 and although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. More detailed information on the potential risks that could affect our financial results is included in the Registration Document filed on 21 March 2019 with the French Autorité des Marchés Financiers (AMF) and in the annual report (Form 20-F) filed on 16 April 2019 with the U.S. Securities and Exchange Commission. Other than as required by law, Orange does not undertake any obligation to update them in light of new information or future developments.


30/04/2019 16:16 CEST