Carrier Scorecard: Orange
The last time Unstrung graded Orange, we gave the French operator a B+ for the second time in a row. Given the data services and subscriber growth momentum in the first quarter this year, it’s time to crunch the numbers again and see if Orange still merits that grade. (See Carrier Scorecard: Orange, Carrier Scorecard: Orange, and Carrier Scorecard: Orange.)
Orange had good mobile data numbers in the first quarter. The operator more than doubled its mobile broadband subscribers, which include EDGE and 3G, compared to a year ago. Out of 111.8 million total customers, 14.8 million subscribe to a mobile broadband service, of which 8.2 million are in France. In the first quarter of 2007, just 7.2 million customers had mobile broadband services. Now, broadband subscribers make up 13.2 percent of the total customer base.
Data services are took a bigger part of the revenue mix at Orange. In France, data services, which include SMS messaging, accounted for 20.3 percent of network revenues in the first quarter, which is an increase of almost 3 percentage points compared to the same quarter last year.
Orange did not indicate to what extent the iPhone contributed to the boost in data revenues. The operator has sold 100,000 as of the end of March and landed a new iPhone deal to take the iconic device to 10 new markets. (See Orange Expands Its iPhone Empire.)
In the U.K. and Poland, data services account for 23.6 percent and 21.7 percent of network revenues, respectively, which are up compared to 21.7 percent and 22.1 percent, respectively, in the first quarter last year. In Spain, data services account for 12.9 percent of network revenues.
Overall, Orange revenues were up 1.9 percent to €7 billion (US$10.8 billion) in the first quarter this year and the customer base grew by 11.7 percent to 111.8 million subscribers. Average revenue per user (ARPU) at a group level was down 8.7 percent, which doesn’t look good, but the APRU figures from a few key European markets show a more positive trend. (See Table 1.)
The operator noted that the first quarter revenue growth was driven by its Western European markets just as much from its emerging markets, which indicates a turnaround in those mature markets.
Orange CEO Didier Lombard was so chuffed with the return to growth in Western European markets that he suggested in a statement that his company was now in a good position to kick off some M&A activity: “Against this background, all the necessary conditions are in place for the Group to take part in the consolidation of the European sector…” (See FT to Buy TeliaSonera?.)
In France, Orange France grew revenues by more than 3 percent and its customer base by more than 4 percent in the first quarter compared to the same quarter last year. Customer churn among monthly contract subscribers was down to 9.7 percent in the first quarter, which is an improvement compared to the 11.7 percent churn rate in the first quarter of 2007.
But ARPU was down 2 percent in its home market, which perhaps shows the cost of customer acquisitions.
In the U.K., Spain, and Poland, ARPU was slightly up in the first quarter compared to the same quarter last year, which is a continuation of a positive trend starting at the end of last year. (See Table 2.)
In the U.K., revenues were actually down 3 percent in the first quarter compared to a year ago, thanks to the negative effect of the exchange rate between the pound and the euro. On a comparable basis, Orange UK revenues were up 9.5 percent year-on-year, mainly from a strong increase in monthly contract customers.
Orange had strong subscriber growth in its emerging markets, particularly in Egypt, Romania, Mali, Ivory Coast, and Madagascar. (See Table 3.)
All in all, given Orange’s strong data services growth and marked improvement in its mature Western European markets, we're upgrading the operator to an A- on this scorecard.
— Michelle Donegan, European Editor, Unstrung