Orange holds firm, but Spain remains a drain

Orange reported a somewhat mixed bag of results for the first quarter of 2021, although the France-based group was clearly relieved to have been able to maintain a moderate increase in revenue after returning to growth in the third quarter of last year.

Group revenue increased 0.5% year-on-year to €10.3 billion (US$12.4 billion), although EBITDAal fell 0.3% to €2.56 billion ($3 billion). However, a breakdown by market area reveals highly variable development across the board. Africa and the Middle East achieved its best quarterly performance in ten years, rising 7.1%, but revenue in Spain fell markedly by 7.4%.

As well as suffering from the effects of the coronavirus pandemic, Spain is a highly competitive market with a strong convergence play from competitors. Consolidation remains a possibility, with the frequent recurrence of speculation that MasMovil and Vodafone Spain could merge.

France was described as resilient, with revenue falling by 0.2%, while the enterprise segment returned to modest growth of 0.4%. Poland also performed well, with growth of 4.1%.

France remains Orange's largest market, with revenue of over €4.4 billion ($5.3 billion). Here, the 5G network is now said to cover 239 municipalities, and the number of fiber-to-the-home (FTTH) customers stands at 4.9 million.

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Aside from the troubling situation at its Spanish business, Stéphane Richard, chairman and CEO of the Orange group, said the operator had remained resilient "in spite of the effects of the health crisis which remained significant in the first quarter."

Orange is therefore maintaining its financial targets for 2021, including stable but negative EBITDAaL, capex of €7.6 billion-€7.7 billion ($9.1 billion-$9.7 billion) and organic cash flow from telecom activities of over €2.2 billion ($2.6 billion).

5G and fiber diet

The group was also able to ramp up capex again after a pandemic-related slowdown in the first quarter of 2020. In Q1 2021, group capex increased €194 million ($234 million) to €1.8 billion ($2.2 billion), with a focus on France and Africa and the Middle East.

Orange has now launched 5G in five markets (France, Luxembourg, Poland, Romania and Spain) and has also been building an infrastructure strategy across its footprint.

For example, Orange Poland recently formed a partnership with Dutch pension fund APG that aims to speed the rollout and reduce the cost of its FTTH network throughout the country. Orange also plans to spin out its mobile towers into a towerco called Totem and has created the Orange Concessions fiber unit in France.

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— Anne Morris, contributing editor, special to Light Reading

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