EE sale props up $3.5bn profits at Orange

Orange has released financials for the first half of 2016 where the team reported profits of $3.48 billion, largely due to the $12.5 billion sale of EE to BT, which was completed in late January.

Revenues for the first half were reported at just over $22 billion, representing a 0.3% boost for the business, though revenues were relatively stable during Q1 after seeing a 0.6% lift during the first quarter. This is now the fourth consecutive quarter of growth for the business. While the company has witnessed a number of new customers across the board through the first half, the success seems heavily reliant on the deal with BT.

Orange, which owned 50% of EE in a joint venture with Deutsche Telekom, received $4.51 billion in cash and a 4% stake in BT as part of the transaction. Despite a healthy performance in terms of new customers, without the EE sale Orange would not have been in such a healthy position.

Although the team has seen challenging conditions throughout Europe, there have been some success stories in acquiring new customers. Orange’s 4G customer base grew by 90% to 22.7 million, with France up 68% and Spain up 81% and FTTH customer base grew 110%, 64% up in France and 190% up in Spain. The Spanish market proved to be a strong proposition for Orange, with revenues growing 6.2% over the first half, following a slower start of 1.8% in the first quarter.

In terms of Orange’s overall geographical footprint, the first half saw a number of changes throughout the EMEA region. Alongside the EE sale, the team also completed the disposal of Telkom Kenya to Helios Investment Partners, as well as acquiring several business units predominantly in Africa. Across the first half the company closed acquisitions of Cellcom Liberia, Sun Communications in Moldova, Tigo in Democratic Republic of the Congo, Airtel’s subsidiaries in Burkina Faso and Sierra Leone, on top of rebranding in Belgium and Egypt.

The acquisitions supported another healthy performance for the company in Africa, as the team posted a 2.3% year-on-year growth for the first half. The mobile services facet was the winner here accounting for a 4.2% boost to just over $2 billion for the half, though revenues from data services grew by 43%.

From an enterprise perspective, revenues grew to $3.189 billion, a year-on-year increase of 1.2% over H1, with the IT & integration services accounting for just over $1 billion, a 4.7% hike.

While growth is always considered a sign of a healthy company, it can sometimes be misleading. Orange posted a profit of $3.48 billion in the same period where it sold BT for $4.51 billion in cash, which takes the shine off the performance slightly. It would appear this view has also been held by investors, as shares in the former state monopoly were trading 2.8% down at the time of writing.

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