Orange slows full year revenue decline but price war continues to bite

Orange has posted its full year results for 2014 showing slowing in revenue decline. The telco, which has implemented some fairly hefty cost-cutting measures to better margins, said it managed to achieve all of its targets for last year. However, it predicts sales decline will continue in 2015 as the price war in the French market continues to bite.

The operator’s total 2014 revenue came to €39.45 billion, representing a 2.5% year-on-year decrease but showing an improvement from 2013’s 4.5% year-on-year decrease. 2014 total net income came to €1.23 billion, down €908 million compared to 2013, which the firm largely attributed to the impact of items unrelated to operating performance.

In France, the operator reported 256,000 net mobile contract sales in the last quarter of 2014, and said as of December 31st its premium offers Open and Origami represented 61% of all of its consumer subscriptions. The operator claimed its 95,000 fixed broadband net additions in the 4th quarter represented a 35% market share of total broadband net adds in the period. At the end of December it had 3.7 million 4G subscribers and 563,000 million fibre customers in the country.

In Spain, the operator managed to gain 491,000 mobile net adds in the final quarter, and 72,000 net broadband customers of which 27,000 were fibre. Poland saw 107,000 mobile net adds in Q4, and the fast growing Africa and Middle East region gained 4.4 million net mobile additions.

With a total of 12.6 million Orange Money customers at the end of December, the operator reported a 51% year-on-year growth for the service, which is only available in the emerging markets. In the enterprise segment in the last quarter the telco achieved 11% and 37% growth for cloud and security businesses respectively.

“These results bear witness to Orange’s substantial strength and the commitment of our teams,” Orange Group Chairman and CEO, Stéphane Richard said. “While the competitive pressure remained very high in 2014 in all of our markets, our commercial performance was excellent and we achieved all of our financial targets. We succeeded in stabilising our restated EBITDA ratio thanks to our commercial performance coupled with our ongoing cost reduction efforts. Our strategy of differentiation through investment in very high-speed broadband and the quality of our networks and services has paid off, particularly in France, where fibre and 4G attracted many customers. We have also reduced our cost basis by more than €1.7 billion in three years.

“At the same time, we continued to optimise our international footprint as part of a strategy of selective M&A. In Spain, a market which is moving massively towards fixed and mobile convergence, the acquisition of Jazztel will allow us to create the second fixed broadband operator and one of the most dynamic players in mobile. In the United Kingdom, our agreement with BT for the sale of EE values our success in creating the country’s leading mobile operator with Deutsche Telekom.”

However, despite all the positivity the telco’s outlook for 2015 showed the company is expecting revenue declines to continue. It predicted earnings (EBITDA) for 2015 to be between €11.9 billion and €12.1 billion compared to €12.19 billion in 2014. It said it will unveil its strategic plan up to 2020 on March 17.