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Orange (ORAN) Q4 Revenues Witness Narrower Y/Y Fall - Analyst Blog

Orange ( ORAN ) reported mixed financial results for the fourth quarter of 2014. Although the company's total revenue exhibited another year-over-year decline, the rate of decline has significantly narrowed in the reported quarter.

In the fourth quarter, the company recorded revenues of approximately $12,489 million, down 0.6% year over year. Excluding regulatory measures, revenues remained same year over year.

Adjusted EBITDA dropped 0.7% year over year to approximately $3,497 million, resulting in EBITDA margin of 27.9%, unchanged year over year. In the reported quarter, the company saved approximately $212 million in operating expenditure while capital expenditure stood at around $2,248 million.

Revenues by Key Markets

In the fourth quarter of 2014, revenues in France, the operator's largest market, fell 1.8% year over year to approximately $6,077 million. Excluding the impact of regulatory measures, revenues decreased 1.5%.

Revenues in Spain dropped 1.2% year over year to approximately $1,223 million. Excluding regulatory measures, revenues fell a nominal 0.5%.

Revenues in Poland totaled around $915 million, down 0.8% year over year, while exclusive of regulatory measures, the figure fell 0.1% year over year owing to competitive pressure.

Revenues from Rest of the World increased 1.7% year over year to approximately $2,379 million. Excluding regulatory measures, revenues increased 3.8% year over year. In Africa and the Middle East revenues grew 7.6% while in Europe, total revenue declined 6.7% year over year. Meanwhile, revenues from Other markets rose 26%.

In the Enterprise segment, revenues fell 2.2% year over year on a comparable basis and excluding regulatory measures to approximately $2,042 million. The decline can be attributed to the impact of pricing competition and a sluggish European economy.

Revenues from International Carriers and Shared Services increased 7.4% year over year and excluding regulatory measures to approximately $592 million.

Subscriber Trends

As of Dec 31, 2014, Orange had 244.161 million subscribers across its operating territories, reflecting a 2.9% year-over-year increase. The mobile customer base (excluding MVNOs) climbed 3.9% year over year to 185.327 million. Subscribers of fixed broadband services increased 3.5% to 16.014 million. VoIP customers increased 6.6% to 11.350 million. IPTV and satellite TV customers rose 10.4% to 7.190 million and the IP VPN Access customer base increased a marginal 0.9% to 0.345 million.

Guidance

For 2015, Orange expects EBITDA between €11.9 billion and €12.1 billion.

Our Take

Orange currently carries a Zacks Rank #3 (Hold). The company expects to complete its operational restructuring process in Europe in 2015 itself. Recently, BT Group Plc. ( BT ) entered into a definitive agreement with Orange and Deutsche Telekom AG to acquire 100% stake in U.K.-based wireless operator EE.

Nevertheless, prevailing weakness in domestic economic conditions, persistent fixed access line erosion, labor concerns and unfavorable regulatory measures across the company's key European markets are near-term risks. Intense competition from Telefonica S.A. ( TEF ) and Telecom Italia S.p.A ( TI ) might also restrict the upside potential of the stock.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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