Orange CEO gets thumbs up despite fraud trial

The Orange Board of Directors has approved the renewal of Stéphane Richard’s mandate for an additional four years, despite the fact he is being tried alongside five other suspects for complicity in fraud and embezzlement charges.

Richard denies the charges which date back to his days in the French Ministry and it would appear the other board members believe him. This announcement is a confirmation Ricard will serve on the board for an additional four years, the next stage of the process will be renewing his position as chairman of the board. Shareholders will vote at the Annual General Meeting on 4th May, though the signs are looking very positive. French Finance Minister Bruno Le Maire has already backed Richard, a good start considering the French government controls 30% of Orange shares as the largest stakeholder.

In a statement, Orange said:

“The Board was convinced by the solid results achieved by Stéphane Richard during the eight years he has spent as head of Orange. During this time, he has succeeded in restoring a positive working environment within the company and has overseen improved financial results despite strong competition in France and abroad. They also examined the development prospects as set-out by Orange’s management team, and in particular the strategic choices proposed by Stéphane Richard in terms of international development, the diversification of the Group’s activities, as well as the ongoing innovation and investment programmes both in very high-speed broadband networks and digital services. The Board members consider that these elements fully justify this renewed mark of confidence.”

Over the last couple of years, Richard has overseen the deployment of an extensive fibre network throughout Spain and France, as well as diversification into alternative markets such as IoT and banking. More may still be to come as the team experiment in smart security and energy services.

As you can see from the table below, under the leadership of Richard Orange has been heading in the right direction over the last few years:

Annual Revenues Annual Net Income CAPEX Share Price (end of year)
2017 N/A N/A N/A 17.19
2016 €40.918 billion €3.263 billion €6.971 billion 15.14
2015 €40.236 billion €2.958 billion €6.486 billion 16.63
2014 €39.445 billion €1.225 billion €5.636 billion 17.64

2017 full year results not available

The next couple of years will be an interesting period for Orange as the rewards of laying a comprehensive fibre network through France and Spain will be sought. Richard has seemingly weathered the vast expenditure of fibre and the telco is in a good place compared to others in Europe, but perhaps confidence in the CEO is coming from his commitment to continue investment in the network as opposed to content. Investment in positive customer experience over the bells and whistles of content is an approach few other telcos are taking, but the signs are promising. Perhaps the boring route of creating an exceptional experience on the network will prove to be more rewarding than the flamboyant content game.

All looks good for Richard. The only thing which could hold him back is if he ends up in prison for alleged dodgy payments of €405 million to Bernard Tapie in 2008. Trading champagne and caviar for bathtub wine and corned beef hash would not be ideal.

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