Orange on Tuesday published full-year financial results that showed signs of stabilisation in Europe, but it still expects 2015 earnings to fall.
Revenue came in at €39.45 billion, down 2.5% on last year; however, the decline was considerably smaller than in 2013, when the French incumbent’s revenue fell 4.5%. Excluding the impact of regulation, revenue was down 1.6% compared to a decline of 2.6% in 2013.
Orange attributed the performance to an improvement in mobile service revenue in F rance, Spain and Belgium, and ongoing growth in Africa and the Middle East. Mobile equipment sales in France and Spain also increased, while a €707 million reduction in operating costs partially offset the decline in revenue.
Restated EBITDA fell 2.5% to €12.19 billion, coming in towards the low end of Orange’s guidance of €12 billion-€12.5 billion; Orange’s EBITDA margin was stable at 30.9%.
"These results bear witness to Orange’s substantial strength and the commitment of our teams. While the competitive pressure remained very high in 2014 in all of our markets, our commercial performance was excellent and we achieved all of our financial targets," said Orange CEO Stephane Richard, in a statement.
Meanwhile, net income fell to €1.22 billion from €2.13 billion, driven by a €762 million fall in operating income, higher corporate tax, and discontinued operations.
Operationally, Orange’s performance was solid.
In its home market, the company’s mobile customer base edged up to 27.1 million as of 31 December 2014 from 26.9 million a year earlier, driven by a 5.8% increase in postpaid subscriptions, which now stand at 22 million. The performance was in line with the telco’s other European operations, which for the most part showed modest increases in subscribers.
Growth was more substantial across Orange’s Africa and Middle East footprint, where mobile customers increased to 97.5 million from 88 million at the end of 2013.
Despite the improving picture in Europe and growth in its overall customer base, Orange still expects EBITDA to decline in 2015, issuing guidance of €11.9 billion-€12.1 billion.
The figures come as Orange draws near to the end of its five-year plan, ‘Conquests 2015’. Unveiled by Richard in July of 2010, it focused on four strategic priorities: employees, customers, networks, and its geo graphic footprint.
Staff well-being was an extremely high priority for Orange in 2010, following a spate of employee suicides – 35 in 2008-2009. To improve morale, Orange bolstered its human resources department, while senior executives pledged to visit managers spread across its global footprint.
In terms of customers, Orange aimed to reach 300 million by 2015, a figure it will be hard-pressed to reach, given it ended 2014 with 244.2 million, up from 237.3 million a year earlier.
This is attributable in part to the fourth focus area of Conquests 2015 – geographic footprint – which saw Orange sell out of markets where it could not realistically hope to become a top two player. This strategy led to Orange’s exit from Switzerland, Austria, the Dominican Republic and Uganda. It is also set to leave the U.K. after finalising a deal to sell its stake in EE to incumbent BT.
Meanwhile, Orange has sought to bolster its position in its core markets by investing in infrastructure and through M&A. In Spain, for instance, it partnered with rival Vodafone to build a fibre-to-the-home(FTTH) network, and is currently in the process of buying fixed-line provider Jazztel in a deal worth €3.4 billion.
"The acquisition of Jazztel will allow us to create the second fixed broadband operator and one of the most dynamic players in mobile," said Richard on Tuesday.
Richard is due to present Orange’s strategy for five years to 2020 on 17 March.
