Orange CEO hails solid Q3, reiterates full year earnings targets

Orange chairman and CEO Stéphane Richard (copyright David Morganti/SIPA)

Stéphane Richard, chairman and CEO of the Orange Group, said the operator is on track to achieve its full year earnings goals following a solid third quarter.

The company announced that restated EBITDA grew 1.6 per cent year-on-year to €3.59 billion ($3.92 billion) during the third quarter, and that revenues were up 0.8 per cent at €10.32 billion. While the revenue growth is still below the 1 per cent level, Orange noted that it is higher than the 0.3 per cent year-on-year increase generated through the first half of 2016.

Orange’s restated EBITDA margin increased by 0.3 percentage points during the third quarter to 34.9 per cent.

Richard said the operator achieved a “strong commercial performance” during the third quarter, pointing to the “accelerated growth of our revenues and restated EBITDA”. The third quarter results also highlight “the success of Essentials 2020 -- our strategy of differentiation through investment in high-speed broadband networks and the reinvention of our customer relationships,” he added.

Orange confirmed that its 2016 restated EBITDA will be higher than it achieved in 2015 on a comparable basis, and its target of a restated ratio of net debt to EBITDA of around two-times in the medium term.

The operator said revenue growth during the third quarter was fuelled by its convergence play in France, a strong performance in Spain and the return to growth of its Belgian business, where it is beginning to reap the benefits of a convergence strategy.

Mobile data revenues in Middle East and Africa were boosted by growing smartphone adoption and progress in the integration of newly acquired businesses in Sierra Leone, Burkina Faso, Liberia and the Democratic Republic of Congo.

Orange’s enterprise business also turned in a solid performance, generating its third consecutive quarter of revenue growth in the three months to end-September.

Analysts at Jefferies International said in an emailed statement that Orange’s third quarter revenues and EBITDA each beat consensus estimates by 0.3 per cent.

Mobile service revenues in France during the third quarter were 3.8 per cent lower than in the same period of 2015, smaller than the 6.4 per cent decline Jefferies predicted in a previous research note and less than the 5.2 per cent year-on-year decline Orange registered through the second quarter.

The analysts said mobile service revenues in Spain were up 9.8 per cent year-on-year during the third quarter, beating their prediction of an 8.4 per cent rise.