) reported 2013 earnings per share of 71 euro cents
(approximately 94 cents), missing the Zacks Consensus Estimate of
$1.27. The company's earnings grew from 31 euro cents
(approximately 39 cents) earned a year ago driven by the growing
numbers of mobile customers and 4G mobile broadband
customers in France.
The company reported 2013 revenues of €40.981 billion
(approximately $54.4 billion), which decreased 4.5% year over
year. Excluding regulatory measures, revenues dropped 2.6% year
over year due to the decline in mobile services revenues in
France, Poland and lower Enterprise segment revenues.
Adjusted EBITDA dropped 7.5% year over year to €12.649 billion
(approximately $16.8 billion), resulting in EBITDA margin of
30.9%, down 100 basis points from the prior year. Excluding
regulatory measures, EBITDA declined 5.5% year over year and
margins fell 90 basis points.
Revenues by Key Markets
In 2013, revenues in France, the operator's largest market,
fell 6.6% year over year to €20.018 billion (approximately $26.5
billion). Excluding regulatory measures, revenues decreased
Revenues in Spain grew 0.6% year over year to €4,052 million
(approximately $5,381 million). Excluding regulatory measures,
revenues grew 4.4% driven by growth in fixed broadband and sale
of mobile handsets under plans with payment by instalment.
Revenues in Poland were €3,079 million (approximately $4,089
million), down 8.6% year over year, while exclusive of regulatory
measures, it fell 3.9% year over year due to competitive
Revenues from rest of the world dropped 0.5% year over year to
€7,792 million (approximately $10,348 million). Excluding
regulatory measures, revenues increased 1.3% year over year. In
Africa and the Middle East, revenues grew 4.7% driven by Côte
d'Ivoire, Mali, Guinea and Senegal, while in Europe revenues fell
2.8% given the drop in revenues from Belgium and Slovakia.
In the Enterprise segment, revenues fell 5.3% year over year
on a comparable basis and excluding regulatory measures to €6,513
million (approximately $8,650 million). The decline was due to
the impact of pricing competition and a sluggish European
Revenues from International Carriers and Shared Services grew
5.2% year over year to €1,702 million ($2,260.4 million).
As of Dec 31, Orange had 236.3 million total subscribers
across its operating territories, reflecting a 2.4%
year-over-year increase. The mobile customer base (excluding
MVNOs) climbed 3.5% year over year to 178.5 million. Subscribers
from fixed broadband services continued to grow, with a 3.7%
increase at the end of the year to 15.5 million.
Capital expenditures (CAPEX) at the end of the was €5.631
billion, representing 13.7% of revenues and year-over-year growth
of 0.4%. The company generated operating cash flow (restated
EBITDA less CAPEX) of €7.019 billion in 2013, in line with its
For 2014, the company projects net debt/EBITDA ratio of
approximately 2x. This year, the company expects to pay a minimum
dividend of 80 euro cents per share. In addition, the company
will pay 60 cents per share in dividends in 2014. It will pay an
interim dividend of 20 euro cents per share in Dec 2014. Further,
the remainder of cash dividend of 50 cents for 2013 will be paid
on Jun 5, 2014.
We believe Orange is progressing well on its Conquests 2015
plan that will reinvigorate growth and restore profitability into
the business. Strengthening of the domestic footprint and
expansion into emerging markets are fueling the company's growth
story. Further, a strong balance sheet and healthy dividend
payout bode well for growth.
Nevertheless, lingering weakness in domestic economic
conditions, sustained fixed access line erosion, labor concerns,
lower mobile termination rates and unfavorable regulatory
measures across the company's key European markets are risks to
its performance. Intense competition from
Telecom Italia S.p.A
Vodafone Group plc
) might also restrict the upside potential of the stock.
Orange holds a Zacks Rank #3 (Hold).
ORANGE-ADR (ORAN): Free Stock Analysis Report
TELEFONICA S.A. (TEF): Free Stock Analysis
TELECOM ITA-ADR (TI): Free Stock Analysis
VODAFONE GP PLC (VOD): Free Stock Analysis
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