Orange plans spending splurge after tax bonanzaOrange plans spending splurge after tax bonanza
France-based operator considers buying out majority shareholders in Orange Belgium.
December 3, 2020
Orange has no doubt been popping the champagne corks in recent weeks after a favorable decision by France's Conseil d'Etat (Council of State) ended a ten-year tax dispute and returned a whopping €2.2 billion (US$2.66 billion) to the operator's coffers.
The France-based group has now announced it intends to make good use of this somewhat delayed tax rebate after taking receipt of the funds this week.
As you'd expect, Orange plans to invest almost a quarter of the money in its ongoing network expansion, although without providing exact details as to where. The operator is in the process of rolling out both a 5G and fiber-to-the-home (FTTH) network in France, for example, and has already flagged plans to commercially launch its 5G network today.
Another quarter of the amount is earmarked to support "operational transformation," with the aim of improving agility and performance.
Belgium buyout on the cards
Orange is also considering making an offer for all shares in Orange Belgium that it does not already own. The operator is currently in the process of exploring this opportunity and said the offer would be a cash offer at €22 ($26.6) per share. If it manages to obtain 95% of shares with voting rights, it would then aim to squeeze out any remaining shareholders at the same price.
Orange currently owns 52.91% of Orange Belgium via Atlas Services Belgium (ASB). Around 39.02% is in free float, while Boussard & Gavaudan Asset Management owns 3.02% and Polygon Global Partners LLP 5.05%. The Belgian unit is also responsible for Orange's operations in Luxembourg.
Formerly known as Mobistar, the Belgian operation took on the Orange brand in 2016 and has been attempting to build a convergent offering through the resale of fixed cable broadband and TV services. In the third quarter of 2020, Orange Belgium said its Orange Love multiservice packages accounted for 19.1% of its mobile postpaid customer base of 2.6 million subscribers.
The Belgian plan comes hot on the heels of another European buyout: Orange recently agreed to buy a controlling stake in Telekom Romania Communications (TRC) from Deutsche Telekom.
Not forgetting the environment and debt
Other measures under consideration include an employee share scheme, an extraordinary dividend of €0.20 per share, and a contribution towards efforts to achieve carbon neutrality by 2040.
If any money is left, then Orange will use it to reduce debt. Orange Group's net financial debt stood at €26.4 billion ($31.9 billion) at June 30, up €954 million ($1.15 billion) compared with the end of 2019.
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The return of the tax payment certainly comes at an opportune time for Orange, which like many organizations has been counting the cost of the COVID-19 pandemic this year. In its results for the third quarter of 2020, the operator saw its fortunes revive somewhat.
Meanwhile, France is finally entering the 5G era, with three of the market's four mobile network operators launching services this month. As well as Orange's launch today, Bouygues Telecom said its 5G network would launch on December 1, while Altice Europe-owned SFR apparently pipped rivals to the post by offering 5G services in Nice on the Côte d'Azur from November 20.
— Anne Morris, contributing editor, special to Light Reading
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