Orange set for spending spree following €2.2bn tax refund

Dividends, an employee shareholding scheme and improvements in networks and IT. These are just some of the items on Orange’s shopping list after it received a whopping €2.2 billion tax refund.

In a separate announcement, Orange also shared plans to buy a shiny new boat.

“The group’s priority is to allocate these funds in a fair and balanced manner between the company’s development, its employees and its shareholders, with an enhanced social commitment,” the French telco group said, in a statement this week.

Orange did not detail the exact amounts it will spend on each item on its shopping list, but it looks like the company development section will account for around half of that €2.2 billion. Nearly a quarter will be ploughed into “strengthening its leadership in networks, both in France and internationally,” Orange said, benefiting both customers and improving its ecological performance. Another quarter will go towards supporting the ongoing digital transformation of Orange’s own systems and processes, with the aim of improving agility and performance.

Also falling under group development is a plan to make a voluntary takeover bid for all the shares in Orange Belgium it doesn’t already own, and subsequently delist the company from the Belgian stock exchange. Its proposed offer of €22 per share represents a 49.3 percent premium over the volume-weighted average trading price over the last six months.

“The objective is to strengthen the Orange Group’s position in order to allow Orange Belgium to more efficiently deploy its strategy for long-term value creation and to react more effectively to major transformations in the Belgian market through greater financial flexibility,” Orange explained. “In this context, a delisting of Orange Belgium can be envisaged if the applicable thresholds are met, since the strategic ambitions of the entity can be realised without recourse to the public capital markets.”

Just over 60 million shares in Orange Belgium have been issued, and Orange Group already owns 52.1 percent of them via holding company Atlas Services Belgium (ASB). That means Orange’s bid for the 47.9 percent it doesn’t already own will cost it almost €622 million. The proposed offer will not come with a minimum acceptance threshold.

Shareholders and staff are also set to benefit from Orange’s tax refund.

The telco is drawing up plans for an employee shareholder scheme with the long-term objective that employees own as much as 10 percent of the company. The plan will be submitted to the board for approval with the aim of implementing it next year. In addition, the board is also considering an extraordinary dividend of €0.20 per share for 2020.

Another portion of the refund will be allocated to Orange’s social commitments, which includes achieving carbon neutrality by 2040, and digital inclusion.

“Several projects will be fast-tracked, such as the deployment of Orange Digital Centres and the financing of carbon sinks. The Orange Foundation’s budget for 2021 will be bolstered with by an exceptional grant that will significantly strengthen the support it provides to the most vulnerable population groups,” Orange said.

Anything left over will go towards paying down debt.

And then there is the boat. Not a super-yacht for lavish executive parties, but a new cable ship that will maintain fibre optics, and power cables for offshore wind farms. Ready to sail at 24 hours notice, it will have a hull designed to reduce fuel consumption by 25 percent compared to the average cable ship. It will also be equipped with a remotely-operated vehicle (ROV) that can cut, inspect and bury cables.

“Repair vessels are of strategic importance in maintaining global Internet connectivity, which relies over 80 percent on submarine cables,” said Jean-Luc Vuillemin, chairman of Orange Marine, and Orange EVP in charge of international networks. “This new vessel allows us to be part of a long-term strategy to ensure that our network is well maintained and that Orange Marine continues to have the means to carry out its missions with state-of-the-art tools.”

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