Press
release
Paris, 21 February 2019
Note - this
new version corrects the translation of the 2019 Outlook for the
Operating Cash Flow.
Financial results at 31 December
2018
Accelerated
growth in Revenues, adjusted EBITDA and Operating Cash Flow
|
|
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|
|
|
|
|
|
Q4 2018 |
change |
change |
|
12M 2018 |
change |
change |
|
|
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions
of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
|
Revenues |
10,811 |
1.4 % |
2.4 % |
|
41,381 |
1.3 % |
1.3 % |
Adjusted EBITDA |
3,334 |
1.4 % |
2.0 % |
|
13,005 |
2.7 % |
2.6 % |
Operating Income |
692 |
|
10.0 % |
|
4,829 |
|
1.1 % |
Consolidated net income |
|
|
|
|
2,158 |
|
5.8 % |
CAPEX (excluding licenses) |
2,301 |
(1.8)% |
(1.5)% |
|
7,442 |
3.5 % |
3.2 % |
Operating Cash-Flow |
1,033 |
9.4 % |
10.8 % |
|
5,563 |
1.7 % |
1.7 % |
The annual results confirm that all
the objectives announced for 2018 were achieved*:
-
Group revenues were up 1.3% in 2018, compared to
1.2% in 2017, and were up 1.4% in the fourth quarter, an
improvement on the third quarter (up 0.6%).
-
The 1.5% increase in revenues in Africa &
Middle East accounted for almost half of the Group's growth in
2018, driven by data and mobile financial services. Revenue growth
in Spain (up 2.2%), Europe (up 1.7%) and France (up 0.9%) was
driven by convergence.
-
Adjusted EBITDA was up 2.7% in 2018, compared to
2.1% 2017, supported by the increase in revenues and the pursuit of
our operational efficiency plan, which exceeded its objective
achieving gross savings of 3.5 billion euros over the 2015-2018
period.
-
CAPEX was in line with the 2018 objective of 7.4
billion euros, and the Operating Cash Flow growth also accelerated,
up 1.7% in 2018, compared to 0.5% in 2017.
These strong results are the outcome
of our strategy focused on convergence and very high-speed fixed
and mobile broadband that enabled us to expand our customer base in
a market environment that remains very competitive:
-
Convergent offers reached 10.9 million customers
at 31 December 2018 up 5.5% year on year, enabling Orange to
consolidate its position as the leading convergent operator in
Europe.
-
Fibre continued its strong growth in 2018 with
593,000 net sales in France, compared to 546,000 in 2017, 623,000
in Spain and a record 152,000 in Poland.
-
Orange's mobile customer base is also growing,
with nearly 1.29 million net sales in one year including contracts
and prepaid.
2019 and mid-term
Outlook
Building on these strong results, the
Orange Group will mobilise its ability to adapt to meet new
challenges and pursue its growth trajectory.
The application of IFRS 16 starting
in 2019 prompted us to review our indicators - adjusted EBITDA will
become EBITDAaL ("after lease") and CAPEX will become eCAPEX
(economic CAPEX).
The application of this norm does not
change our commitments, which are in line with the information
provided at the Investor Day in December 2017.
-
2019 EBITDAaL growth will be slightly slower
than that achieved in 2018, on a comparable basis. This can be
explained by a market environment that remains very competitive,
particularly in France and in Spain, and by the end of the positive
impact of ePresse offer and audiobooks.
-
2019 eCAPEX will be lower than that of 2018 on a
comparable basis.
-
Operating Cash Flow in 2019 will be higher than
in 2018, on a comparable basis.
-
The target ratio of net debt* to EBITDAaL for
telecoms activities will be maintained at around 2x in the medium
term.
-
The payment of a dividend of 0.70 euros per
share for the fiscal year 2019 will be proposed, with an interim
dividend of 0.30 euros per share to be paid in December 2019.
Commenting on the 2018 earnings
report, Stéphane Richard, Chairman and CEO of Orange Group,
said:
"With an increase in
revenues of 1.3%, a 2.7% growth in adjusted EBITDA and an excellent
commercial performance across all of our geographies, 2018
confirmed the validity of our strategic focus on fibre, 4G and
convergence, in a market environment that remains highly
competitive. Maintaining our steady pace of deployment, we passed
29 million FTTH-connected households in Europe, confirming our
position as number 1 for the third consecutive year. In France, in
particular, 2018 has been a record year with approaching 600,000
net sales taking us to a total of 2.6 million FTTH clients.
The quality of our mobile networks continues to make the
difference: we were voted best network in France for the 8th
consecutive year and we deployed 4G in 12 countries in the Middle
East and Africa.
Our leadership in
terms of connectivity is the foundation of our well-established
multi-service strategy. In terms of content, we celebrated 10 years
of OCS which now has nearly 3 million clients. In financial
services, Orange Bank has attracted nearly 250,000 clients in
France and Orange Money continued its strong growth to reach 14
million active clients. Finally, the diversification of our
B2B business continues with the structurally important acquisitions
in 2018 of Enovacom, Business & Decision and Basefarm.
Fortified by a
renewed executive team and the flawless commitment of our
employees, we delivered on our stated commitments for the
year. 2019 will be another year of growth and a pivotal one
for the Group, during which we will present our new strategic plan
Vision 2025."
* excluding IFRS 16 lease
Key figures
|
|
|
|
|
|
|
|
|
|
|
2018 |
2017 |
2017 |
|
change |
|
change |
In millions
of euros |
|
comparable basis |
historical basis |
|
comparable
basis |
|
historical basis |
|
|
|
|
|
|
|
|
|
|
Revenues |
41,381 |
40,837 |
40,859 |
|
1.3 % |
|
1.3 % |
Of which : |
|
|
|
|
|
|
|
|
France |
18,211 |
18,048 |
18,046 |
|
0.9 % |
|
0.9
% |
|
Spain |
5,349 |
5,232 |
5,231 |
|
2.2 % |
|
2.3
% |
|
Europe |
5,687 |
5,593 |
5,578 |
|
1.7 % |
|
2.0
% |
|
Africa & Middle East |
5,190 |
4,940 |
5,030 |
|
5.1 % |
|
3.2
% |
|
Enterprise |
7,292 |
7,308 |
7,251 |
|
(0.2)% |
|
0.6
% |
|
International Carriers & Shared
Services |
1,534 |
1,633 |
1,651 |
|
(6.1)% |
|
(7.1)% |
|
Intra-Group eliminations |
(1,882) |
(1,917) |
(1,928) |
|
- |
|
- |
Adjusted EBITDA* |
13,005 |
12,660 |
12,680 |
|
2.7 % |
|
2.6 % |
of which telecom activities |
13,151 |
12,721 |
12,741 |
|
3.4 % |
|
3.2
% |
|
As % of revenues |
31.8 % |
31.2 % |
31.2 % |
|
0.6 pt |
|
0.6 pt |
|
France |
7,076 |
6,879 |
6,878 |
|
2.9 % |
|
2.9
% |
|
Spain |
1,700 |
1,568 |
1,567 |
|
8.4 % |
|
8.5
% |
|
Europe |
1,508 |
1,460 |
1,456 |
|
3.3 % |
|
3.6
% |
|
Africa & Middle East |
1,667 |
1,585 |
1,612 |
|
5.2 % |
|
3.4
% |
|
Enterprise |
1,245 |
1,306 |
1,306 |
|
(4.7)% |
|
(4.6)% |
|
International Carriers & Shared
Services |
(45) |
(77) |
(78) |
|
39.7 % |
|
40.6
% |
of which Orange Bank |
(147) |
(62) |
(62) |
|
(136.3)% |
|
(136.3)% |
Operating Income |
4,829 |
|
4,778 |
|
|
|
1.1 % |
of which telecom activities |
4,997 |
|
4,870 |
|
|
|
2.6 % |
of which Orange Bank |
(169) |
|
(93) |
|
|
|
(80.9)% |
Consolidated net income |
2,158 |
|
2,040 |
|
|
|
5.8 % |
Net income
attributable to equity owners of the Group |
1,954 |
|
1,843 |
|
|
|
6.0 % |
CAPEX (excluding licences) |
7,442 |
7,191 |
7,209 |
|
3.5 % |
|
3.2 % |
of which telecom activities |
7,406 |
7,131 |
7,148 |
|
3.9 % |
|
3.6
% |
|
As % of revenues |
17.9 % |
17.5 % |
17.5 % |
|
0.4 pt |
|
0.4 pt |
of which
Orange Bank |
36 |
60 |
61 |
|
(40.4)% |
|
(40.4)% |
Operating Cash-Flow |
5,563 |
5,469 |
5,471 |
|
1.7 % |
|
1.7 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2018 |
December 31, 2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net financial debt |
25,441 |
23,843 |
|
|
|
|
|
Ratio "net
financial debt / Adjusted EBITDA" for the telecom activities |
1.93x |
1.87x |
|
|
|
|
|
* EBITDA adjustments are described in
appendix 4.
|
|
|
|
|
|
|
|
|
|
|
Q4 2018 |
Q4 2017 |
Q4 2017 |
|
change |
|
change |
|
|
|
|
comparable |
historical |
|
comparable |
|
historical |
In millions
of euros |
|
basis |
basis |
|
basis |
|
basis |
|
|
|
|
|
|
|
|
|
Revenues |
10,811 |
10,663 |
10,563 |
|
1.4 % |
|
2.4 % |
Of which : |
|
|
|
|
|
|
|
|
France |
4,687 |
4,684 |
4,684 |
|
0.1 % |
|
0.1
% |
|
Spain |
1,375 |
1,343 |
1,341 |
|
2.4 % |
|
2.5
% |
|
Europe |
1,502 |
1,461 |
1,469 |
|
2.8 % |
|
2.2
% |
|
Africa & Middle East |
1,355 |
1,288 |
1,274 |
|
5.2 % |
|
6.4
% |
|
Enterprise |
1,977 |
1,955 |
1,860 |
|
1.2 % |
|
6.3
% |
|
International Carriers & Shared
Services |
401 |
413 |
417 |
|
(2.7)% |
|
(3.6)% |
|
Intra-Group eliminations |
(487) |
(481) |
(482) |
|
- |
|
- |
Adjusted EBITDA* |
3,334 |
3,288 |
3,268 |
|
1.4 % |
|
2.0 % |
of which telecom activities |
3,390 |
3,305 |
3,285 |
|
2.6 % |
|
3.2
% |
|
As % of revenues |
31.4 % |
31.0 % |
31.1 % |
|
0.4 pt |
|
0.2 pt |
of which
Orange Bank |
(56) |
(19) |
(19) |
|
197.5
% |
|
197.5
% |
CAPEX (excluding licenses) |
2,301 |
2,344 |
2,336 |
|
(1.8)% |
|
(1.5)% |
of which telecom activities |
2,295 |
2,320 |
2,312 |
|
(1.1)% |
|
(0.7)% |
|
As % of revenues |
21.2 % |
21.8 % |
21.9 % |
|
(0.5)pt |
|
(0.7)pt |
of which
Orange Bank |
6 |
24 |
24 |
|
(75.4)% |
|
(75.4)% |
Operating Cash-Flow |
1,033 |
944 |
932 |
|
9.4 % |
|
10.8 % |
* EBITDA adjustments are described in
appendix 4.
The Orange S.A. Board of Directors met on 20
February 2019 and examined the financial statements of the
Group.
The Group's statutory auditors audited those
financial statements, and the audit reports relative to their
certification are in the process of being issued.
More detailed information is available on the
Orange website in the "Investors / Results and presentation"
section:
www.orange.com
Comments on key Group
figures
Revenues
Orange Group revenues totalled
41.381 billion euros in 2018, an increase of 1.3% (544 million
euros) on a comparable basis[1]. In the
fourth quarter of 2018, Group revenues were up 1.4% on a comparable
basis, more than twice that achieved in the third quarter (0.6%).
Faster growth in the fourth quarter was due to stronger growth in
all of our divisions (except International Carriers & Shared
Services). At Group level, the performance of the principal
services was as follows:
Revenues from
convergence - marketed in all European countries - grew 10% in
2018 and 6% in the fourth quarter. This improvement enabled Orange
to consolidate its position as the leading convergent operator in
Europe.
Revenues from mobile-only services increased
1.3% in 2018, whereas they fell by 1.2% in 2017. This growth is
primarily due to an increase in the mobile customer base, with
nearly 1.29 million net sales in 2018.
Revenues from fixed-only services decreased
3.2% in 2018, compared to -3.4% in 2017, due to the shift to
convergent offers and the slowdown in fixed narrowband
services.
Revenues from IT and integration services were
up 7.2% in 2018, compared to 2.7% in 2017, driven by Cloud and
Cyberdefense revenues in the enterprise market (10% and 12%,
respectively) and by Poland, where revenues from these services
increased 21%.
Wholesale revenues decreased 1.5% in 2018, but
were up 3.4% in the fourth quarter, after a 4.1% dip in the third
quarter. Trends in three of the factors explaining the drop in
Wholesale revenues have evolved positively in the fourth quarter of
2018: the decline in international voice traffic is slowing,
visitor roaming is back on the rise and the fibre co-financing
generated increasing revenues with the surge in RIP
construction.
Revenues from equipment sales were up 1.7% in
2018, compared to 5.9% in 2017. This slowdown has to be evaluated
in light of the 1.3% increase in services revenues in 2018,
compared to 0.9 in 2017; knowing that services revenues is nearly
ten times higher than equipment revenues.
Customer base growth
There were 10.890 million
customers for convergent offers across the
Group at 31 December 2018, up 5.5% year on year on a comparable
basis, driven by very strong growth in Europe (30.3%).
Total mobile customers reached 203.618 million
at 31 December 2018, up 0.6% year on year, thanks to a return to
positive sales growth in the third and fourth quarters, with the
addition of 1.289 million new customers year on year.
There were 20.145 million total fixed broadband
customers across the Group at 31 December 2018, an increase of
3.9% year on year. Very high-speed fixed broadband grew 33.2% year
on year to reach 6.345 million customers.
Adjusted EBITDA
The Group's adjusted EBITDA was 13.005 billion euros in 2018, an
increase of 2.7% on a comparable basis, compared to 2.3% in 2017.
This improvement in adjusted EBITDA is due to the success of our
operational efficiency plan, which, combined with the growth of the
Group's revenues, contributed to a 345-million-euro increase in the
adjusted EBITDA year on year.
Adjusted EBITDA
from telecoms activities was 13.151 billion euros in 2018, up
3.4% on a comparable basis, compared to 2.3% in 2017, and the
margin was 31.8% (up 0.6 points year on year). This growth was
generated primarily by the remarkable performance of France, Spain,
Europe and Africa & Middle East.
Operating income
In 2018, the Group's operating income totalled 4,829 million euros, compared
to 4,778 million euros in 2017 on a historical basis, an increase
of 1.1% or 51 million euros. This improvement can be explained
primarily by:
-
the adjusted EBITDA increase of 325 million
euros;
-
a 438-million-euro increase in specific labour
expenses, compensated by a decrease in significant litigation net
fees of 238 million euros;
-
a rise in depreciation and amortization to 201
million euros;
-
a 105-million-euro decrease in the impairment of
goodwill and fixed assets.
Net income
In 2018, Orange's consolidated net income totalled 2,158 million euros, an increase of
118 million euros compared to the previous year (2,040 million
euros), due to:
-
the 51-million-euro increase in operating
income;
-
an improvement in net finance costs of 353
million euros, resulting mainly from the changes in the stake held
in BT Group of 321 million euros;
-
partially offset by a 257-million-euro hike in
income tax for businesses.
CAPEX
Group CAPEX
was 7.4 billion euros in 2018, up 3.5% on a comparable basis, in
line with the annual CAPEX objective of 7.4 billion euros for 2018.
CAPEX for telecoms activities as a percentage of revenue was 17.9%
(up 0.4 points year on year).
The Group accelerated its fibre deployment: as a result, at 31 December 2018,
32.5 million households had connectivity to very high-speed
broadband[2] (an
increase of 5.9 million or 22.4% year on year), including 13.8
million in Spain, 11.8 million in France, and 6.4 million in
Europe.
Investment in 4G
and 4G+ mobile services was sustained, with an accelerated
deployment of 4G sites in almost every country. In France, the
Group's capital expenditures in mobile networks are clearly
reflected in the results of the 2018 ARCEP annual survey, which
ranked Orange yet again as the number one provider in France for
the quality of its mobile network.
Changes in asset
portfolio
On 14 August 2018, Orange
finalised the acquisition of 100% of the capital of Basefarm
Holding AS, a major player in cloud infrastructure and critical
application services in Europe. The acquisition strengthens the
position of Orange Business Services, which is already the leader
in the market for cloud computing services in France and a
significant player in Europe.
In the second half of 2018, Orange
also completed the acquisition of 88.2% of the share capital of
Business & Decision. Business & Decision's expertise in
Business Intelligence and data science significantly strengthened
Orange Business Services' activities in data governance and
analysis, in France and internationally.
Net financial debt
Orange Group's net financial debt was 25.441 billion euros at 31
December 2018, up 1,598 million euros over 31 December 2017. This
increase results from our strategy to invest in very high-speed
broadband networks and transform our Enterprise services offerings.
The ratio of net financial debt to adjusted EBITDA from telecoms
activities was 1.93x at 31 December 2018, compared to 1.87x at 31
December 2017. This is in line with the Group's medium-term
objective to maintain a net debt to adjusted EBITDA ratio for
telecoms activities of around 2x.
2018 dividend
Confident in the Group's financial
strength, the Board of Directors confirmed the payment of a 0.70
euros per share dividend for the fiscal year 2018*.
*Subject to the approval of the
Annual General Meeting of Shareholders.
Review by operating
segment
France
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
4,687 |
0.1 % |
0.1 % |
|
18,211 |
0.9 % |
0.9 % |
Retail
services |
2,735 |
(0.8)% |
(0.8)% |
|
10,974 |
1.6
% |
1.6
% |
Convergence |
1,136 |
4.6
% |
4.6
% |
|
4,458 |
10.2
% |
10.2
% |
Mobile Only |
577 |
(4.1)% |
(4.1)% |
|
2,348 |
(2.6)% |
(2.6)% |
Fixed Only |
1,022 |
(4.3)% |
(4.3)% |
|
4,168 |
(4.1)% |
(4.1)% |
Fixed Only broadband |
640 |
(0.9)% |
(0.9)% |
|
2,565 |
1.2
% |
1.2
% |
Fixed Only narrowband |
382 |
(9.6)% |
(9.6)% |
|
1,603 |
(11.4)% |
(11.4)% |
Wholesale |
1,372 |
2.8
% |
2.9
% |
|
5,342 |
(0.9)% |
(0.8)% |
Equipment
sales |
451 |
(3.4)% |
(3.4)% |
|
1,410 |
1.7
% |
1.7
% |
Other
revenues |
130 |
1.5 % |
1.5 % |
|
485 |
2.5 % |
2.5 % |
Adjusted EBITDA |
|
|
|
|
7,076 |
2.9 % |
2.9 % |
Adjusted EBITDA / Revenues |
|
|
|
|
38.9 % |
0.7 pt |
0.7 pt |
Operating Income |
|
|
|
|
3,198 |
- |
(5.0)% |
CAPEX |
|
|
|
|
3,656 |
6.0 % |
6.0 % |
CAPEX / Revenues |
|
|
|
|
20.1 % |
1.0 pt |
1.0 pt |
France reported
revenue growth for the second consecutive year, accelerating
between 2017 and 2018, driven by the strong momentum of convergent
offers.
In France revenues continued to improve, increasing 0.9% in 2018
to 18,211 million euros, compared to 0.8% in 2017. Revenues were up
0.1% in the fourth quarter and would have been up 0.5% excluding
the impact of the inclusion of ePresse offers and audiobooks. Their
impact over 12 months became negative in the fourth quarter due to
a base effect, but was positive over the rest of the year.
Revenues from retail services
increased 1.6% in 2018 driven by revenues from convergent offers,
which were up 10.2% year on year. Over the same period, mobile-only
revenues fell 2.6% due to the shift towards convergence and the
increase in the relative weight of Sosh. Broadband Fixed Only
revenues rose 1.2% thanks particularly to the very good commercial
performance of fibre sales.
Mobile reported
a solid fourth quarter with 111,000 contract net sales (excluding
M2M), compared to 82,000 in the third quarter and an almost stable
churn rate at 13.8% (up 0.1 points year on year). Net sales were
positive for both the Orange and the Sosh brands.
Mobile Only ARPO dropped by 18 cents
year on year to 17.1 euros due to the impact of including ePresse
offers and audiobooks, as well as the shift to convergent offers
and the subsequent increase in the relative weight of Sosh in the
Mobile Only customer base.
Fixed Only
Broadband also reported a good fourth quarter in terms of sales
performance, with 71,000 net sales driven mostly by a record
quarter for fibre with 186,000 net sales, and the success of Sosh
Box offers. At 31 December 2018 Orange had 11.8 million connected
households, in line with our ambition to have 12 million connected
households by the end of 2018, and 2.6 million fibre customers.
Fixed Only Broadband ARPO fell to 70
cents year on year due to the impact of including ePresse offers
and audiobooks, as well the shift to convergent offers and the
subsequent increase in the relative weight of Sosh in the Fixed
Only Broadband customer base.
The convergent
customer base grew 2.6% year on year to reach 6.1 million
customers.
Convergent ARPO reached 65.50 euros
per month, up 40 cents year on year, and the churn rate of
convergent customers was 2.8 points lower than the average number
of general public fixed broadband customers.
Adjusted EBITDA
in France grew for the fourth consecutive year to 7,076 million
euros in 2018 (up 2.9% year on year) or a margin of 38.9% (up 0.7%
year on year). Growth in adjusted EBITDA in terms of value and rate
was achieved against a backdrop of increasing aggressive pricing
policies in the market.
CAPEX in France
totalled 3,656 million euros in 2018, up 6% year on year. Growth in
CAPEX supported the accelerated deployment of the Group's fibre
network (added 2.7 million connected households in 2018 compared to
2.2 million added in 2017) and its 4G sites, which today cover
98.6% of the population, a 2.7 points increase year on year.
Spain
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,375 |
2.4 % |
2.5 % |
|
5,349 |
2.2 % |
2.3 % |
Retail
services |
962 |
(0.4)% |
(0.1)% |
|
3,855 |
1.2
% |
1.2
% |
Convergence |
539 |
1.9
% |
1.9
% |
|
2,143 |
3.1
% |
3.1
% |
Mobile Only |
297 |
(2.6)% |
(1.8)% |
|
1,215 |
(1.3)% |
(1.1)% |
Fixed Only |
125 |
(4.4)% |
(4.4)% |
|
496 |
(1.0)% |
(1.0)% |
Wholesale |
228 |
18.2
% |
17.7
% |
|
810 |
7.5
% |
7.4
% |
Equipment
sales |
185 |
0.5 % |
0.5 % |
|
684 |
2.3 % |
2.3 % |
Adjusted EBITDA |
|
|
|
|
1,700 |
8.4 % |
8.5 % |
Adjusted EBITDA / Revenues |
|
|
|
|
31.8 % |
1.8 pt |
1.8 pt |
Operating Income |
|
|
|
|
555 |
- |
0.1 % |
CAPEX |
|
|
|
|
1,120 |
0.4 % |
0.5 % |
CAPEX / Revenues |
|
|
|
|
20.9 % |
-0.4 pt |
-0.4 pt |
Orange Spain
reported consistently strong growth in revenue and adjusted EBITDA.
The increase in the total fixed broadband customer base remains
steady thanks to fibre and TV offerings including football.
Revenues for
Orange Spain were up 2.2% in 2018, reflecting an improvement in the
fourth quarter with revenues growing at 2.4%, compared to 0.5% in
the third quarter.
Revenues from retail services grew 1.2% in 2018, driven by revenues
from convergent offers, which were up 3.1% year on year. Over the
same period, Mobile Only revenues fell 1.3% as a result of a
slowdown in market entry, and Fixed Only revenues decreased by 1.0%
due to a decline in the customer base in the first half of the
year, which the positive growth in the second half was not able to
offset.
Wholesale revenues grew 7.5% in 2018, with a sharp 18.2% increase
in the fourth quarter, due to the growth in international traffic
and visitor roaming.
Revenues from equipment sales grew
2.3% in 2018 and 0.5% in the fourth quarter.
The total mobile
customer base reached 16.2 million customers at the end of 2018,
including 150,000 customers of the operator Republica Movil,
consolidated at 1 November 2018. Excluding changes in the scope,
net contract sales excluding M2M were down by 37,000 in the fourth
quarter, impacted by intense competition in the lower end of the
market.
Mobile Only ARPO remained stable at 12.3 euros.
Total fixed
broadband confirmed a return to growth in its customer base
with 19,000 net sales in the fourth quarter, which was boosted by
offers including football and by remarkable fibre net sales. Over
the full year 2018, the fibre customer base grew 27.6% to nearly
2.9 million customers. The TV customer base grew 14.5% year on year
to 716,000 customers at 31 December 2018.
Fixed Only Broadband ARPO was down 2.1% in the fourth quarter to
31.1 euros.
The convergent
customer base grew 1.1% in 2018, reaching 3.1 million
customers.
Convergent ARPO rose 1.0% year on year to 58.90 euros.
Adjusted EBITDA
growth in Spain remained very strong in 2018, up 8.4% on a
comparable basis, and the adjusted EBITDA margin increased by 1.8
points over the period. This EBITDA growth stemmed from favorable
trends in network costs linked to the shift of ADSL customers to
the fibre network and from the strong performance in retail and
wholesale services.
CAPEX in Spain
remained virtually stable, up 0.4% in 2018 on a comparable basis,
allowing for a strong growth in Operating Cash Flow, up 28.1% over
the same period.
Europe
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,502 |
2.8 % |
2.2 % |
|
5,687 |
1.7 % |
2.0 % |
Retail
services |
900 |
2.7
% |
1.9
% |
|
3,516 |
2.1
% |
2.1
% |
Convergence |
132 |
46.0
% |
44.7
% |
|
467 |
53.5
% |
53.4
% |
Mobile Only |
543 |
(2.9)% |
(3.4)% |
|
2,194 |
(2.6)% |
(2.7)% |
Fixed Only |
170 |
(6.6)% |
(7.8)% |
|
697 |
(7.9)% |
(7.9)% |
IT
& Integration services |
56 |
23.6
% |
22.5
% |
|
158 |
22.2
% |
22.1
% |
Wholesale |
290 |
2.0
% |
1.3
% |
|
1,150 |
1.4
% |
1.5
% |
Equipment
sales |
263 |
0.4
% |
0.9
% |
|
868 |
2.4
% |
3.3
% |
Other
revenues |
48 |
25.7 % |
24.7 % |
|
153 |
(9.4)% |
(3.5)% |
Adjusted EBITDA |
|
|
|
|
1,508 |
3.3 % |
3.6 % |
Adjusted EBITDA / Revenues |
|
|
|
|
26.5 % |
0.4 pt |
0.4 pt |
Operating Income |
|
|
|
|
339 |
- |
41.2 % |
CAPEX |
|
|
|
|
953 |
6.1 % |
6.2 % |
CAPEX / Revenues |
|
|
|
|
16.8 % |
0.7 pt |
0.7 pt |
Europe[3] reported revenue growth in 2018 with an acceleration in the
fourth quarter driven primarily by convergence, which maintained
its rapid progression and favoured net sales of mobile contracts.
Adjusted EBITDA returned to growth after a drop in the first half
of the year.
Revenues in the
Europe segment (which includes Belgium, Luxembourg, Moldova,
Poland, Romania and Slovakia) was up 1.7% in 2018. Revenue growth
trends picked up in the fourth quarter with a 2.8% increase,
compared to 1.6% in the third quarter.
Revenues from retail services
increased 2.1% in 2018 driven by the growth in convergent revenues,
up 53.5% year on year. Over the same period, revenues from Mobile
Only fell 2.6% impacted by a decrease in the prepaid customer
bases, and Fixed Only revenues fell 7.9% due to a sharp slowdown in
fixed narrowband services. Revenues from IT and integration
increased sharply 22.2% in 2018 and 23.6% in the fourth
quarter.
Total mobile
recorded a sharp increase and acceleration in contract net sales
(excluding M2M): added163,000 customers compared to 96,000
customers added in the third quarter. In 2018, the total mobile
contract customer base (excluding M2M) grew 1.4% to over 19 million
customers. Over the same period, prepaid net sales were negative
(down 178,000 customers).
Total fixed
broadband also recorded accelerating net sales, with 87,000
customers in the fourth quarter compared to 70,000 in the third
quarter. The total fixed broadband customer base grew 10.5% in 2018
to nearly 3.3 million customers.
The convergent
customer base recorded 382,000 net sales in 2018, up 30.3% year on
year, to nearly 1.65 million customers.
In the European
segment, Poland reported revenue growth for the second
consecutive quarter, with sales up 2.1% in the fourth quarter,
compared to 1.5% in the third quarter and a 0.8% decrease in the
first half of the year, thanks to mobile-only services, equipment
sales and energy resale (Orange Energia). Revenue growth in Belgium
and Luxembourg also accelerated, up 5.1% in the fourth quarter,
compared to 1.9% in the third quarter, driven by strong growth in
the mobile contract and convergent customer bases. Central European
countries reported revenue growth of 3.2% in 2018, a decrease
compared to 2017 (5.5%), due to a weaker performance in the Mobile
Only and Fixed Only segments, but with a continued strong
performance of convergent services (+78.3%).
Adjusted EBITDA
for Europe increased 3.3% in 2018, with a 9.9% increase in the
second half of the year, compared to a decline of 2.8% in the first
half. This improvement can be explained by better trends in revenue
growth and OPEX, which fell 0.3% in the second half of the year,
especially in Poland, after a 2.7% rise in the first half.
CAPEX increased
6.1% in Europe in 2018. This increase fuelled the continued
deployment of fibre and LTE in Poland and our networks in Central
Europe, notably with an improvement in the coverage rate of the 4G
population in Romania to 96.9%, up 3.6 points, the deployment of
new fibre-connected households, and the improvement of LTE coverage
in Slovakia to 94%, up 4 points.
Africa & Middle East
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,355 |
5.2 % |
6.4 % |
|
5,190 |
5.1 % |
3.2 % |
Retail
services |
1,117 |
7.2
% |
8.3
% |
|
4,265 |
7.5
% |
5.6
% |
Mobile Only |
987 |
6.3
% |
8.4
% |
|
3,809 |
7.6
% |
5.8
% |
Fixed Only |
117 |
4.9
% |
(0.9)% |
|
435 |
3.1
% |
0.8
% |
IT
& Integration services |
13 |
661.4
% |
370.0
% |
|
21 |
238.2
% |
217.0
% |
Wholesale |
204 |
(5.3)% |
(3.9)% |
|
811 |
(7.6)% |
(9.2)% |
Equipment
sales |
27 |
22.8
% |
23.4
% |
|
85 |
31.0
% |
27.7
% |
Other
revenues |
7 |
(13.4)% |
(16.3)% |
|
29 |
(5.5)% |
(7.9)% |
Adjusted EBITDA |
|
|
|
|
1,667 |
5.2 % |
3.4 % |
Adjusted EBITDA / Revenues |
|
|
|
|
32.1 % |
0.0 pt |
0.1 pt |
Operating Income |
|
|
|
|
659 |
- |
26.2 % |
CAPEX |
|
|
|
|
1,008 |
0.9 % |
(1.3)% |
CAPEX / Revenues |
|
|
|
|
19.4 % |
-0.8 pt |
-0.9 pt |
Africa & Middle
East continued on its growth trajectory, with an increase in
revenues driven by the acceleration of retail services, while
maintaining a stable EBITDA margin.
Africa & Middle East reported
revenue growth of 5.1% over the year and 5.2%
in the fourth quarter, compared to 3.7% in the third quarter.
Retail services reported solid growth of 7.5% in 2018, mainly
driven by Orange Money and data services.
Revenues from Mobile
Only services grew 7.6% in 2018 and 6.3% in the fourth quarter,
underpinned by an increase in the mobile customer base, which
exceeded the 120 million threshold. Among other things, revenue
growth was driven by the development of data services, with the 4G
customer base reaching 16.7 million customers, up 50% year on year,
and continued resilience in the voice segment.
Revenues from Fixed
Only services grew by 3.1% in 2018 and by 4.9% in the fourth
quarter, with the number of fixed broadband customers exceeding the
one million threshold (1.020 million at 31 December 2018) and more
than 100,000 net sales in the fourth quarter.
Wholesale
revenues were down 7.6% in 2018 and 5.3% in the fourth quarter, due
notably to a lower level of international transit activity.
The Orange Money
customer base increased 15% in 2018, and during the same period the
percentage of active customers* rose from 35% to 39% between the
fourth quarter of 2017 and the fourth quarter of 2018.
In Africa and the
Middle East, our new operations (including those in the
Democratic Republic of Congo) accounted for a third of revenue
growth, with notable increases in Burkina Faso and the DRC of 14.1%
and 13.5%, respectively, in the fourth quarter of 2018. Egypt and
Morocco grew 8.7% and 4.1%, respectively, year on year. Côte
d'Ivoire returned to growth with revenues up 1.8% in the fourth
quarter.
Adjusted EBITDA
in Africa & Middle East grew 5.2% in 2018, achieving an
adjusted EBITDA margin of 32.1%, stable compared to 2017.
CAPEX remained
almost stable at 1 billion euros in 2018 and was mainly related to
the sequential deployment of 4G mobile networks (new launches in
the DRC and in Mali) and fibre (mainly in Jordan, Morocco and Côte
d'Ivoire).
* customers making at least one
transaction per month
Enterprise
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
1,977 |
1.2 % |
6.3 % |
|
7,292 |
(0.2)% |
0.6 % |
Fixed
Only |
1,008 |
(1.6)% |
(1.4)% |
|
3,997 |
(2.4)% |
(3.7)% |
Voice |
345 |
(4.8)% |
(4.8)% |
|
1,385 |
(4.1)% |
(4.6)% |
Data |
663 |
0.1
% |
0.5
% |
|
2,612 |
(1.5)% |
(3.3)% |
IT &
Integration services |
702 |
4.9
% |
21.8
% |
|
2,312 |
4.8
% |
10.5
% |
Mobile* |
267 |
2.5 % |
2.5 % |
|
983 |
(2.3)% |
(2.3)% |
Adjusted EBITDA |
|
|
|
|
1,245 |
(4.7)% |
(4.6)% |
Adjusted EBITDA / Revenues |
|
|
|
|
17.1 % |
-0.8 pt |
-0.9 pt |
Operating Income |
|
|
|
|
765 |
- |
(13.9)% |
CAPEX |
|
|
|
|
353 |
(8.3)% |
(7.6)% |
CAPEX / Revenues |
|
|
|
|
4.8 % |
-0.4 pt |
-0.4 pt |
Enterprise revenues
grew in the fourth quarter driven by the sustained increase in IT
and integration services.
Enterprise revenues remained
virtually stable in 2018 (down 0.2%) and up 1.2% in the fourth
quarter.
Revenues from IT
and integration services grew 4.8% in 2018 and by 4.9% in the
fourth quarter alone. The steady growth continued to be driven by
Cloud and Orange Cyberdefense revenues, which were up 12% and 10%
year on year.
Mobile revenues
declined 2.3% in 2018 but returned to growth in the fourth quarter
of 2018. Mobile revenues would have increased 0.5% in 2018, by
excluding a one-off sale of mobile equipment, which happened in the
third quarter of 2017 and negatively impacted revenue growth in the
third-quarter of 2018.
Traditional voice
and data services declined 2.4% in 2018. In the fourth quarter
however, data services increased slightly by 0.1%.
In line with our strategy of
diversifying into new services, on 1 February 2019 we announced the
acquisition of Secure Data, marking another step towards achieving
our goal to become a leading player in cybersecurity in Europe.
In the context of our
transformation towards IT and integration services, we continued to
win major contracts in 2018, such as an IoT contract signed with
Veolia and a WAN (wide area network) management and security
contract signed with Enedis. In 2018, we also confirmed our
leadership position in SD WANs (Software Definition Wide Area
Networks) through a major contract concluded with Siemens.
Adjusted
EBITDA for the Enterprise segment declined
4.7% in 2018 due to the increase in new, lower-margin IT services,
while traditional services with higher-margin decreased.
CAPEX in this
segment fell sharply by 8.3% in 2018.
* Mobile revenues include mobile
services and mobile equipment sales invoiced to businesses and
incoming mobile traffic from businesses invoiced to other
carriers.
International Carriers &
Shared Services
|
|
|
|
|
|
|
|
|
Q4 2018 |
change |
change |
|
2018 |
change |
change |
|
|
comparable |
historical |
|
|
comparable |
historical |
In millions of euros |
|
basis |
basis |
|
|
basis |
basis |
|
|
|
|
|
|
|
|
Revenues |
401 |
(2.7)% |
(3.6)% |
|
1,534 |
(6.1)% |
(7.1)% |
Wholesale |
294 |
(5.3)% |
(5.7)% |
|
1,150 |
(9.3)% |
(9.8)% |
Other
revenues |
108 |
4.2 % |
1.8 % |
|
384 |
5.1 % |
2.3 % |
Adjusted EBITDA |
|
|
|
|
(45) |
39.7 % |
40.6 % |
Adjusted EBITDA / Revenues |
|
|
|
|
(3.0)% |
1.7 pt |
1.7 pt |
Operating Income |
|
|
|
|
(519) |
- |
26.2 % |
CAPEX |
|
|
|
|
316 |
11.9 % |
11.9 % |
CAPEX / Revenues |
|
|
|
|
20.5 % |
3.3 pt |
3.5 pt |
Revenues from International
Carriers and Shared Services fell 6.1% in 2018 and by 2.7% in the
fourth quarter, with a decline in services to international
carriers in the voice services market.
Orange Bank
Orange Bank had
248,000 customers at 31 December 2018.
Net banking
income for Orange Bank was 43 million euros in 2018 compared to
73 million euros in 2017, implying a decrease of 41.1%, due mainly
to customer acquisition costs for the new banking and digital
offers launched on 2 November 2017 in metropolitan France.
The Group posted a negative operating income of 169 million euros in 2018 compared
to a loss of 93 million euros in 2017. This increase reflects the
decrease in net banking income and the rise in operating expenses
related to the development of the business.
CAPEX stood at
36 million euros in 2018 on a comparable basis, down 24 million
euros compared to 2017.
Schedule of upcoming events
Contacts
press: +33 1 44 44 93 93
Jean-Bernard Orsoni
jeanbernard.orsoni@orange.com
Tom Wright
tom.wright@orange.com
Olivier Emberger
olivier.emberger@orange.com
|
financial communication: +33 1 44 44 04 32
(analysts and investors)
Patrice Lambert-de Diesbach
p.lambert@orange.com
Isabelle Casado
isabelle.casado@orange.com
Samuel Castelo
samuel.castelo@orange.com
Luca Gaballo
luca.gaballo@orange.com
Didier Kohn
didier.kohn@orange.com
individual shareholders: 0 800 05 10 10 |
Disclaimer
This press release may contain
forward-looking statements about Orange, notably on objectives and
trends related to Orange's financial situation, investments,
results of operations, business and strategy. These forward-looking
statements do not constitute a forecast as defined in EU Commission
Regulation No. 809/2004 and although we believe these
statements are based on reasonable assumptions, they are subject to
numerous risks and uncertainties, including matters not yet known
to us or not currently considered material by us, and there can be
no assurance that anticipated events will occur or that the
objectives set out will actually be achieved. More detailed
information on the potential risks that could affect our financial
results is included in the Registration Document filed on 4 April
2018 with the French Autorité des Marchés Financiers (AMF) and in
the annual report on Form 20-F filed on 4 April 2018 with the U.S.
Securities and Exchange Commission. Other than as required by law,
Orange does not undertake any obligation to update them in light of
new information or future developments.
With the exception of France, where enterprise
solutions and networks are listed under the Enterprise business
segment.
Orange Financial results at 31
December 2018
This
announcement is distributed by West Corporation on behalf of West
Corporation clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Orange via Globenewswire
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