Orange CEO says targets were hit last year, but expect a dip for 2015
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Stephane Richard, CEO of Orange, has reported that the France-based operator hit its financial targets for 2014 but warned investors to expect a dip in their results this year. This is due to multiple reasons including pricing pressure in its home market, as well as investment and acquisitions in markets such as Spain.
Orange estimates that a restated EBITDA* should be expected this year between €11.9 billion and €12.1 billion. This is down from 2014 where the group managed to hit €12.2 billion, which itself represents a 2.5% drop from 2013's results.
The challenge Orange will face this coming year is attempting to stabilise its margins through a combination of cost-cutting and slowing any declining trends in revenue. Earlier this month, TelecomsTech reported on Orange UK's intention to sell its 50% stake in EE to BT (if the deal reaches approval from regulatory bodies.)
Such a deal would result in an extra £3.4 billion (€4.6 billion) in cash which the company will be able to invest in future revenue drivers such as 4G and fixed broadband in countries where the firm still has a large presence to achieve convergence.
One of these countries is Spain, who is one of the closest to achieving this goal thanks to players such as Jazztel. Orange strategically-acquired Jazztel in September last year for 3.4 billion euros ($4.4 billion) which will help the firm create a dynamic network between broadband and mobile.
The Spanish mobile market has seen a significant drop in service revenue. During Q4, mobile service revenue fell 8.3% to €597 million. This is still a better figure to report than the full-year drop of 13.9% to €2.45 billion as a result of a 2.5% drop in sales to €39.45 billion.
Back in Orange's home market of France, the drop in revenue wasn't quite as pronounced. Full year revenue dropped 8.1% to €7.68 billion, whereas Q4 mobile service revenue dropped just 5.4% to €1.87 billion.
Do you think Orange will be able to stabilise their financials? Let us know in the comments.
* EBITDA is a measure of underlying cash profit.
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