Orange sticks to guidance despite COVID-19 squeeze in Q2

French telecoms group reports lower Q2 revenue and earnings due to coronavirus lockdown and a reduction in roaming, but keeps guidance for the full year.

Anne Morris, Contributing Editor, Light Reading

July 30, 2020

3 Min Read
Orange sticks to guidance despite COVID-19 squeeze in Q2

Orange Group, like many of its international peers, found the second quarter to be a challenging period as many markets remained in lockdown for much of April and May.

The France-based operator said revenue and EBITDA after lease (EBITDAal) both fell in Q2 as a consequence of the health crisis, although results were again mixed depending on the region.

Figure 1: Keeping focus: Orange is sticking to its full-year forecast despite the pandemic. (Source: Lola Delabays on Unsplash) Keeping focus: Orange is sticking to its full-year forecast despite the pandemic.
(Source: Lola Delabays on Unsplash)

Orange did at least feel it was now in a better position to provide some sort of update for 2020, confirming that it does not foresee any "significant deviation" from its financial objectives.

Forward motion
The group expects to see a 1% decline in EBITDAal, although it noted that EBITDAal would have been flat excluding the effects of the pandemic.

It also expects economic capital expenditure (Ecapex) to be lower because of deferred investments, and said its commitment to exceed €2.3 billion ($2.7 billion) in organic cash flow from telecoms activities remains unchanged.

Orange also confirmed financial objectives for the 2021-2023 period.

Group revenue in the second quarter fell by 0.4% on a comparable basis to €10.37 billion ($12.2 billion). EBITDAal was 1.8% lower at €3.3 billion ($3.8 billion), attributed to the cost of health measures, the decrease in roaming and a slight increase in provisions for bad debts.

Ecapex fell 15.8% to €1.57 billion ($1.84 billion).

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The group noted that Q2 revenue in France and Africa and the Middle East rose 2.7% and 1.3% respectively year on year, almost completely offsetting the combined decline in other segments – Spain (-6.8%), Europe (-3.6%) and Enterprise (-3.3%).

In the first six months of the year as a whole, revenue actually rose slightly by 0.3% to €20.77 billion ($24.4 billion), although EBITDAal fell 0.8% to €5.9 billion ($6.9 billion).

Net income was 10.7% lower on a historical basis, reaching just over €1 billion ($1.17 billion).

Buoyancy aid
Overall, Orange said its business had proved to be resilient in the face of the pandemic and related lockdown measures.

Stéphane Richard, chairman and CEO of the Orange Group, said Orange had "shown a remarkable level of resistance in the first half of the year," despite the effects of the health crisis.

"These results bear witness to our business' resilience and its capacity for collective mobilisation in the face of this crisis," Richard said, further noting that the crisis "has revealed the strategic nature of telecoms networks for our economies and even society as a whole."

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— Anne Morris, contributing editor, special to Light Reading

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About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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