Orange reports slight Q1 revenue growth amid COVID-19 uncertainty

Orange Group was still able to report slight revenue growth in the January-March period of 2020, despite the effects of the COVID-19 pandemic at the end of the quarter.

The France-based operator said revenue increased 1% on a comparable basis to €10.4 billion ($11.29 billion) in the first quarter, boosted by a 6.2% increase in revenue in Africa and the Middle East and a 0.5% rise in France. Revenue in Spain, which like France has been in strict lockdown for several weeks, fell by 2.4%.

EBITDA after lease (EBITDAal) was also up year-on-year, rising 0.5% on a comparable basis to €2.6 billion ($2.8 billion). However, the operator cut capex (excluding licenses) by 3.1% to almost €1.6 billion ($1.7 billion). It has already announced plans to reduce the dividend for 2019 from €0.70 to €0.50 ($0.54) per share.

St้phane Richard, CEO of the Orange Group, pointed to the "importance of telecoms in this crisis in ensuring the continued functioning of the economy and of our societies," and said the operator is continuing with its strategy of rolling out high-speed broadband networks. He said the fiber-to-the-home (FTTH) network in Europe now passes 39 million households, and the number of fiber customers reached 7.8 million, a rise of 20%.

"Rarely in greater demand, our networks have withstood the pressure and allowed us to satisfy the even more than usual essential needs of our retail and business customers," Richard said.

Nevertheless, the coming few months will remain challenging as the pandemic continues to affect economies around the world. France, which accounts for €4.43 billion ($4.8 billion) of group revenue in Q1, has already fallen into a technical recession, with a 5.8% drop in GDP in the first quarter of 2020. The country has been in lockdown since March 17, although it plans to start lifting the restrictions from May 11, subject to a continuing reduction in COVID-19 cases.

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Spain, which accounts for almost €1.3 billion ($1.4 billion) of Orange's Q1 revenue, also suffered a 5.2% fall in GDP in the first quarter. The country has been under very strict lockdown since March 14, but has just announced a four-phase plan to begin lifting measures from May 4.

As things stand, Orange does not expect a "significant deviation" from its financial objectives for 2020, but said it will closely monitor developments. "The group will therefore consider an update of its 2020 financial objectives at the publication of its second-quarter results when it has the benefit of greater visibility on the impact of the crisis linked to COVID-19," the operator added.

The operator has already seen a reduction in equipment sales due to the closure of three quarters of its stores in European countries, and a decline in roaming revenues.

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— Anne Morris, contributing editor, special to Light Reading

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