Telecomunicazioni
Orange : Financial results at 30 September 2018
Paris, 25 October 2018
Financial results at 30 September 2018
Third quarter results also demonstrate a strong commercial performance, particularly:
Based on these results, Orange re-affirms its objectives for 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 financial data in this press release are unaudited.
, 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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Key figures
* EBITDA adjustments are described in Appendix 2.
Orange Group revenues were 10.307 billion euros in the third quarter of 2018, an increase of 0.6% (+58 million euros) on a comparable basis. In the first nine months, revenues increased 1.3% (+0.9% excluding the positive impact from ePresse and audiobook offers). This slowdown can be explained by the increasingly competitive landscape and by a decline in wholesale and equipment sales revenues. At Group level, the performance of the principal services was as follows:
sold in all European countries, continued to grow rising 9.5% in the third quarter and 11.4% in the first nine months of 2018.
rose 1.3% in the third quarter and 1.5% in the first nine months of 2018, driven by the steady growth of prepaid in Africa & Middle-East.
decreased 3.1% in the third quarter and 3.3% in the 9-month period, due to the shift towards convergent offers and the slowdown in fixed narrowband services.
were up 7.9% in the third quarter and 6.9% in the first nine months of 2018, driven by revenues from the Cloud and Orange Cyberdefense, which rose 10% and 16% respectively.
were down 4.1% in the third quarter (-3.1% in the 9-month period), affected by the decrease in fibre co-financing in France compared to the previous quarter and by the decrease in international carrier services.
decreased 2.1% in the third quarter and were up 2.9% in the 9-month period.
There were 10.778 million across the Group at 30 September 2018, up 7.2% year on year on a comparable basis, including 6.119 million customers in France, 3.123 million in Spain and 1.536 million in Europe.
reached 200.922 million as of 30 September 2018, up 0.9% year on year, driven by a return to positive sales in the third quarter, with 1.917 million new customers. The growth in mobile contract customers (+2.2% year on year) exceeded that in prepaid customers (+0.1%).
There were 19.866 million customers across the Group at 30 September 2018, an increase of 3.6% year on year. Very high-speed fixed broadband grew 36% year on year to reach 5.890 million customers.
had 9.374 million customers at 30 September 2018, a 5.7% year-on-year increase.
The Group's was 3.687 billion euros in the third quarter of 2018, an increase of 3.0% on a comparable basis, in line with previous quarters. In the first nine months of 2018, adjusted EBITDA grew 3.2%, up 1.9% excluding the positive impact from ePresse and audiobook offers. Compared to the second quarter, the decline in revenue growth, mainly from low-margin activities such as equipment sales and IT, was offset by lower commercial expenses.
was 3.718 billion euros in the third quarter, up 3.3% on a comparable basis and the margin was 36.1% (up 1.0 point year on year). In the first nine months, adjusted EBITDA from the telecom activities was up 3.7%. This growth was generated primarily by the remarkable performance of France, Spain and Africa & Middle East.
totalled 5.141 billion euros in the first nine months of the year, up 6% on a comparable basis. This increase is due to the different timing in CAPEX this year, which led to comparatively larger expenses in the third quarter, in line with the objective of 7.4 billion euros in CAPEX for the full year 2018. CAPEX for the telecom activities, as a percentage of revenues, was 16.7% (up 0.8 points over one year).
The Group accelerated its as a result, at 30 September 2018, 30.8 million households had connectivity to very high-speed broadband (an increase of 6.2 million or 25.1% year on year), including 13.3 million in Spain, 10.9 million in France, 3.2 million in Poland and 2.3 million in Romania (following the network sharing agreement with Telekom Romania).
was sustained with an acceleration in the deployment of 4G sites in France, Spain and Africa & Middle East (notably Mali, Morocco, Senegal and Côte d'Ivoire). In France, the Group's capital expenditure efforts in mobile networks are clearly reflected in the results of the 2018 ARCEP annual survey, which ranked Orange yet again as the number one provider in France for the quality of its mobile network.
On 14 August 2018, Orange finalised the acquisition of 100% of the capital of Basefarm Holding AS, a major player in cloud infrastructure and critical application services in Europe. The acquisition strengthens the position of Orange Business Services, which is already the leader in the market for cloud computing services in France and a significant player in Europe.
, rose 0.9% year on year on a comparable basis in the third quarter of 2018, following an increase of 0.6% in the second quarter. As in the three previous quarters, this third quarter benefited from the favourable impact of the inclusion ePresse offers and audiobooks. Excluding this effect, revenues were quasi stable year on year (-0.1%).
In an intense promotional market environment in the third quarter, Orange's continued to grow, driven by strong net sales up 2.6% year on year for (19.123 million customers at 30 September 2018) and up 2.2% year on year for (11.389 million customers). Fibre continued to increase steadily (+31.1%), achieving the best ever third quarter results for fibre.
rose 10.7%, convergent ARPO was up 4% in the third quarter, following an increase of 3.2% in the second quarter. The convergent customer base continued to grow: convergent fixed broadband customers increased 4.6% year on year (6.119 million customers at 30 September 2018), while the number of SIM cards for convergent offers increased 7.4% year on year (9.620 million customers).
decreased of 2.5% year on year. Mobile Only ARPO was up 2.7% thanks to a favourable shift in the mix of mobile offers.
were up 3.1% in the third quarter of 2018, after rising 0.7% in the second quarter. Broadband Fixed Only ARPO rose 3% in the third quarter after a 2.6% increase in the second quarter. Fixed Only narrowband revenues continued their downward trend, declining 12.2% in the third quarter of 2018.
were down 2.2% in the third quarter of 2018, after declining 1.3% in the second quarter. Unbundling revenues continued to decline as a result of the deployment of fibre and continue to be negatively impacted in the 9-month period by the decrease of the regulated unbundling tariffs as set on 1 January 2018.
rose 0.5% in the third quarter of 2018, after growing 1.8% in the second quarter. This slow growth is due to decreasing prices for mobile termination (+1.4% excluding this impact), easing equipment sales (down 2.1% in the third quarter after a decline of 0.4% in the second quarter) and a slowdown in retail services (down 0.2%). Wholesale revenues showed a significant increase.
growth was positive despite strong competition in the entry-level segment for mobile and fixed broadband. The excluding machine-to-machine, grew 7% year on year (11.5 million customers). continues to increase, with 13,000 additional net sales (4.14 million customers at 30 September 2018) driven by the success of fibre: 158,000 net sales in the third quarter and 2.721 million customers (up 30.6% year on year). Fibre now represents 65.8% of the fixed broadband customer base, up 16 points year on year. The increased, with 46,000 net sales in the third quarter, totalling 685,000 customers, representing 17% of the fixed broadband customer base, up 2 points year on year. This performance reflects the success of both Orange Spain's open and premium content aggregation strategy. The residential was up 1.2% year on year (3.123 million customers).
rose 0.8% in the third quarter of 2018, after increasing 3.1% in the second quarter. Convergent ARPO decreased slightly in the third quarter (-0.3%) against a backdrop of intense competition. Convergent customers represented 85.1% of the consumer fixed broadband customer base at 31 March 2018, up 2.3 points year on year.
were down 1.9% in the third quarter, after rising 2.6% in the second quarter, notably with a customer mix still marked by a weaker decline in the number of contract customers compared to prepaid. Mobile Only ARPO remained stable in the third quarter at 12.6 euros.
were down 0.9% in the third quarter of 2018, after rising 0.6% in the second quarter. Broadband Only ARPO was up 1.7% in the third quarter, after rising 3.9% in the second quarter.
increased 6.4% in the third quarter of 2018, after decreasing 0.6% in the second quarter of 2018, driven by good momentum in services to international carriers.
in the Europe segment (which includes Poland, Belgium, Romania, Luxembourg, Slovakia and Moldavia), grew 1.6% in the third quarter of 2018 on a comparable basis, after rising 0.3% in the second quarter. Retail services growth also improved, reaching 2.6% growth in the third quarter, after rising 2.0% in the second quarter. Equipment sales grew 5.6%, after a slight decrease of 0.4% in the second quarter.
The (18.873 million, excluding machine-to-machine) grew 1.1% year on year in the third quarter after rising 1.2% in the second quarter, with an overall improvement across all countries. The (3.173 million) grew 11.8% in the third quarter, after rising 12.9% in the second quarter. Very high-speed fixed broadband reached 698,000 customers at 30 September 2018.
revenues continued to grow quickly, up 52.9% in the third quarter, after increasing 57.8% in the second quarter. The convergent customer base (1.536 million at 30 September 2018) was up 38.0% year on year in the third quarter, mainly in Poland, Romania and Belgium.
revenues declined 1.1% in the third quarter of 2018, after decreasing 3.6% in the second quarter, mainly due to the shift towards convergent offers.
revenues, generated mainly by Poland, fell 8.4% in the third quarter of 2018, after a decline of 6.5% in the second quarter.
Similarly, the growth in in the third quarter (up 8.8%, after increasing 33.8% in the second quarter) was mainly driven by Poland.
was down 2.1% in the third quarter of 2018, after rising 2.3% in the second quarter, due to a smaller contribution from mobile services to carriers.
Africa & Middle East were up 3.7% on a comparable basis in the third quarter of 2018, after rising 5.2% in the second quarter. Retail services revenues remained strong, up 6.7% in the third quarter, after rising 7.7% in the second quarter, driven by Orange Money, up 34% year on year in the third quarter, and data services. Five countries posted double-digit growth, including Burkina Faso (+14.6%), Egypt (+11.0%) and the Democratic Republic of Congo (+10.7%).
The in Africa & Middle East was stable over one year (118.25 million at 30 September 2018, despite the impact of change in regulation. 4G customers grew 57% year on year to reach the 15 million customers milestone in the third quarter 2018.
grew 6.5% in the third quarter after rising 8.5% in the second quarter, driven by the increase in data services and a continuous development of voice.
grew 7.3% year on year in the third quarter of 2018, after increasing 1.1% in the second quarter. The number of fixed broadband customers increased 18.5% in the third quarter (917,000 at 30 September 2018).
were down 11.7% in the third quarter, after declining 6.2% in the second quarter, taking the low level of international traffic into account.
Revenues from the Enterprise segment were down 2.2% in the third quarter of 2018 on a comparable basis, the decrease would be limited to -0.5% by excluding the one-off mobile equipment sale, which took place in the third quarter of 2017.
posted 4.0% growth in the third quarter of 2018, after rising 9.7% in the second quarter. The steady growth continued to be driven by the Cloud and Orange Cyberdefense revenues, which were up 10% and 16% respectively year on year.
declined 1.9% in the third quarter, after a 0.9% decline in the second quarter.
were down 5.1% in the third quarter of 2018, after declining 4.6% in the second quarter.
was down 11.8% in the third quarter of 2018 (stable excluding the impact from the one-off sale of mobile equipment mentioned above).
from International Carriers and Shared Services were down 9.2% in the third quarter on a comparable basis, after a decline of 5.9% in the second quarter, with a decline in voice services to international carriers.
Growth in other revenues remained positive, up 1.1% in the third quarter, after rising 4.8% in the second quarter. Other revenues relate to the laying and maintenance of submarine cables, audiovisual content (OCS and Orange Studio), consulting (Sofrecom) and secure-TV access (Viaccess).
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Disclaimer
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 4 April 2018 with the French Financial Markets Authority (Autorité des marchés financiers - AMF) and in the annual report on Form 20-F filed on 4 April 2018 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.
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