) reported first quarter 2014 revenues of €9.804 billion ($13.4
billion), which decreased 3.8% year over year. Excluding
regulatory measures, revenues dropped 3.0% year over year due to
revenue declines in most of the markets.
Adjusted EBITDA dropped 3.8% year over year to €3.017 billion
($4.13 billion), resulting in EBITDA margin of 30%, flat with the
year-ago quarter. Excluding regulatory measures, EBITDA declined
3.3% year over year and margins fell 10 basis points.
Revenues by Key Markets
In the first quarter, revenues in France, the operator's largest
market, fell 5.0% year over year to €4.810 billion ($6.59
billion). Excluding regulatory measures, revenues decreased 4.9%.
Revenues in Spain slid 1.2% year over year to €977 million
($1,338 million). Excluding regulatory measures, revenues
increased 3.2% driven by growth in fixed broadband and mobile
Revenues in Poland were €716 million ($981 million), down 7.9%
year over year, while exclusive of regulatory measures it fell
5.1% year over year.
In rest of Europe, revenues declined 8.4%, due to price reduction
in Belgium and Slovakia, offsetting revenue growth in Romania.
Revenues from rest of the world dropped 1.2% year over year to
€1,865 million ($2,555 million). Excluding regulatory measures,
revenues increased 0.2% year over year. In Africa and the Middle
East, revenues grew 6.0% driven by Côte d'Ivoire, Mali and
In the Enterprise segment, revenue fall was limited to 2.3% year
over year to €1,565 million ($2,144 million), reflecting the
positive impact from IT and services integration products.
Excluding regulatory measures the revenue decline remained the
Revenues from International Carriers and Shared Services declined
4.3% year over year to €407 million ($557.7 million).
As of Mar 31, Orange had 239.4 million total subscribers across
its operating territories, reflecting a 4.2% year-over-year
increase. The mobile services customer base climbed 5.8% year
over year to 181.7 million. Subscribers from fixed broadband
services continued to grow, with a 4.1% increase at the end of
the first quarter to reach 15.6 million. The French incumbent
added 608,000 broadband subscribers, including 341,000 in Spain,
205,000 in France and 30,000 in Slovakia.
Capital expenditures (CAPEX) at the end of the first quarter
increased 1.6% year over year to €1.161 billion ($1.591 billion).
Orange projects adjusted EBITDA of €12.0 to €12.5 billion
($16.44-$17.13). In addition, it continues to expect year-end net
debt/EBITDA ratio of close to 2 and mid-term ratio of around 2 to
maintain financial strength and investment capacity. The telecom
behemoth also plans to make selective acquisitions in markets,
where they already have a presence.
This year, the company expects to pay a minimum dividend of 60
euro cents per share. In addition, the company will make an
interim dividend payment of 20 euro cents per share on Dec 2014.
Additionally, the company will pay the balance 50 cents per share
dividend for 2013 on Jun 5, 2014.
We believe that the efforts made by Orange toward driving up 4G
expansion to support wireless growth in France and other key
regions has uplifted its market position among European wireless
operators. However, slow recovery 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 Bouygues,
Telecom Italia S.p.A
Vodafone Group Plc
) might also restrict the upside potential of the stock.
Orange holds a Zacks Rank #4 (Sell).
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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