Orange doubles net income as cost cutting takes effect

Operator group Orange has seen its consolidated net income after tax almost double year on year for the full year 2013. The group posted a figure of €2.13bn for net income after tax for FY2013, a 93.2 per cent improvement on the €1.10bn figure it posted for FY2012, but still well short of the €3.83bn it generated in 2011. The boost was largely due to fewer goodwill impairment charges in the year and extreme cost cutting measures.

Consolidated revenues, however, fell by 4.5 per cent from €43.52bn in FY2012 to €40.98bn in FY2013. The group claimed that more than 40 per cent of the decline is attributable to the impact of regulatory measures.

The group explained that it had worked collectively to control costs over the year, leading to a total cost reduction of €929m, €798m of which was in France. This offset nearly half of the €7.95bn decline in overall revenue that the firm saw. Direct costs were slashed by 5.4 per cent (€583m) while indirect costs were reduced by 1.9 per cent (€346m).

In the operator’s home market of France, revenues fell by 4.8 per cent, which the firm said was primarily related to pressure on mobile services. Average revenue per user (ARPU) declined by 11.5 per cent in France, or eight per cent excluding the impact of regulatory measures. Orange noted, however, that it began showing signs of recovery in France. Its net sales in of mobile contracts in 4Q13 were the highest of the year and its fibre customer base rose by 17 per cent in the quarter to 319,000.

In Spain, revenues rose by 4.4 per cent year on year for the full year. The group said that this was driven by sales of handsets sold with payment plans and by a strong performance in fixed broadband services. Mobile contract sales grew by 9.6 year on year in the country while the fixed broadband services customer base grew by 21.2 per cent.

In the Middle East and Africa, the group’s mobile customer base increased by 7.9 per cent; it said that it had 88 million customers in the region as of 31st December, 2013. Its mobile money offering, Orange Money, had 8.9 million customers on the same date.

Orange added that it had a total of 236.3 million customers as of 31st December, 2013, a year on year increase of 2.4 per cent, or 5.6 million net additions.

“These results demonstrate the resilience and adaptability of the Group’s employees whose efforts have enabled us to achieve all our financial commitments despite the highly-competitive environment,” said Stéphane Richard, chairman and CEO at Orange.

“In a European market with no shortage of challenges, Orange is determined to remain a leader both in terms of its networks and the creativity of its offers, in fixed as well as mobile. All this combined will enable us to stabilise our EBITDA margin.”

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