Orange claims sustained commercial performance in 3Q21

Orange delivers a sustained commercial performance and confirms all of its 2021 objectives.

• Continued good commercial performances:

• • 11.3 million convergent customers
  • 10.8 million Fiber (FTTH) customers out of 53.8 million connectable households. The FTTH client base rose 25.5% year on year, driven in particular by France and Poland

• Revenues down slightly (-0.4%)¹ in Q3 2021.
• They rose 1.3% excluding co-financing:

• • strong performance in retail services² with an acceleration in revenue growth from convergence (+2.9%), mobile (+5.6%) and fixed broadband (+5.2%)
  • France recorded a 4.1% decline, but was virtually stable excluding co-financing thanks to retail services where growth accelerated (+3.7% excluding PSTN)
  • Europe excluding Spain rose 2.0% with retail services growth accelerating (+5.7%). Spain was down 4.4% despite a slight pick-up in retail services
  • Africa & Middle East: another very strong performance at +12.0%
  • Enterprise declined (-1.4%) due to a decrease in fixed services (-5.2%) which was not offset by the growth in IT & Integration services (+2.1%) and mobile services (+3.5%)
  • International Carriers & Shared Services grew 10.8%
• EBITDAaL decline was limited to 0.7%, impacted by the lower level of co-financing received in France. EBITDAaL grew 4.5% excluding co-financing.
• eCAPEX was down slightly: -1.0% in Q3 2021 after a strong increase in the first half due to investments in Fiber and in Africa & Middle East, in line with the objectives for 2021.

The Group is maintaining its financial objectives for 2021after allocation of the tax refund:

• stable but negative EBITDAaL,
• eCAPEX of 7.6 to 7.7 billion euros,
• organic cash flow from telecoms activities of over 2.2 billion euros
• net debt/EBITDAaL ratio for telecom activities remaining at around 2x in the medium term.

Dividend
Orange will make an interim dividend payment for 2021 of 0.30 euros in cash on December 15, 2021⁴. In respect of the 2021 financial year, a dividend of 0.70 euros per share will be proposed to the 2022 Shareholders’ Meeting.

Commenting on the publication of these results, Stéphane Richard, Chairman and Chief Executive Officer of the Orange group, said:

“Orange’s sustained commercial performance in the third quarter, marked by solid momentum in retail services across all the countries where we are present, allows us to confirm all of our financial commitments. In an economy still showing the effects of the health crisis, including the acceleration of the digital transformation, our customers’ appetite for very high-speed access is evidenced in their take up of fiber and 5G, and of our convergent offers.

In France, the good momentum continued with growth of 1.2 points in retail services. Orange fiber now has 5.6 million customers in France, an increase of 36% year on year. However, as yet our accounts reflect little of this promising trend owing to the decline in co-financing received from other operators on our fiber network in 2021 compared to 2020.

In Spain, while the market remains very fragmented and impacted by the health crisis, the revenue trend in retail services is improving quarter by quarter, further supported by positive commercial results, with customer gains across all segments. The results are therefore encouraging and while much remains to be done, we are fully engaged in the execution of our turnaround strategy.

The other European countries continue to make a positive contribution to the Group’s results, with a 5.7% growth in retail services, due both to our convergence strategy and the enthusiasm seen for fiber, where Orange is the stand-out European leader. The acquisition of TKR in Romania will also strengthen our leadership position in convergence, providing us with a quality fixed network with which to pursue our strategy.

In Africa, the Group’s main growth engine, our revenues rose strongly, up 12%, with all countries contributing, driven in particular by mobile data, which is expanding fast. Orange now has more than 40 million 4G customers, a 33.6% increase compared to last year.”

Comments on Group key figures
Revenues
Orange group revenues were 10.5 billion euros in the third quarter of 2021, down 0.4% year on year on a comparable basis. This slight decline was mainly due to the lower level of co-financing of the Fiber network received in France.

Excluding co-financing, revenues would have risen by 1.3%, driven by retail services⁵, while the growth in equipment sales slowed sharply (+2.1% after +27.5% increase in the second quarter) due to the catch-up effect of the previous quarter.

Customer base growth
There were 11.3 million convergent customers Group-wide at September 30, 2021, up 3.1% year on year.

Mobile services had 221.8 million lines at September 30, 2021, up 4.7% year on year, including 80.1 million contracts, an increase of 5.1% compared to a year ago.

Fixed services had 44.7 million access lines at September 30, 2021 (down 1.0% year on year), of which 11.3 million were very high-speed broadband, which continues to grow strongly (+25.3% year on year with nearly 528,000 net additions during the quarter). Fixed narrowband access lines were down 13.4% year on year.

Mobile financial services had nearly 1.6 million customers in Europe and 0.6 million customers in Africa.
EBITDAaL
Group EBITDAaL was 3.55 billion euros in the third quarter of 2021, down 0.7%. Excluding co-financing, this would have increased by 4.5%, driven by the good commercial performance and decreased costs.

Over the first nine months of the year, the decline in EBITDAaL was limited to -0.5%.

EBITDAaL from telecom activities was 3.58 billion euros in the third quarter, down 0.8%.
eCAPEX
Group eCAPEX was 1.7 billion euros in the third quarter, a slight 1.0% decline compared to the third quarter of 2020. It was nevertheless up by 14.3% over the first nine months of the year, due to the acceleration of investment in the networks, in particular in Fiber in France and in Africa. This remains in line with the Group’s objectives for the full-year 2021.

At September 30, 2021, Orange had 53.8 million households with FTTH connectivity worldwide (up 20.8% year on year). The number of connectable households in France rose 31.4% at 27.4 million.

Changes in asset portfolio
On September 30, 2021, Orange Romania announced that it had completed its acquisition of a 54% controlling stake in the operator Telekom Romania Communications (TKR) for an enterprise value of 497 million euros. TKR, Romania’s second largest fixed telecoms operator, had revenues of 633 million euros in 2020.

On August 31, 2021, Orange Polska and APG Asset Management (APG) completed the creation of their 50-50 joint venture FiberCo in Poland, which represents 2.4 million lines including an additional 1.7 million FTTH lines to be deployed over the next five years.
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