Orange's Cable Network Saves Second Quarter
Leading French telecom Orange (ORAN) - Get Report reported second-quarter Ebitda of €3.34 billion ($3.68 billion), meeting analysts' expectations as sales of high-speed cable connections and Spanish mobile contracts offset a decline in its French mobile unit.
Paris-based Orange said its Ebitda for the second quarter on a comparable basis was up 0.1% on the same period in 2015 and reiterated its target to increase Ebitda in the current year. Sales were unchanged quarter-on-quarter at €10.07 billion.
"The key takeaway...is an ongoing improvement in French fixed line, coupled with a strong beat in Spain," noted Goldman Sachs analysts. "With ongoing cost control, underlying group Ebitda growth is accelerating." Goldman rates Orange a buy with a 12-month price target of €20.30.
Orange shares traded Tuesday morning at €14.00, down €0.36, or 2.5%, on their Monday close.
The decline in Orange's revenue from French mobile contracts has become a long-term trend in France where a four-way battle for market share has undercut prices. Orange earlier this year attempted to buy one of its rivals, Bouygues Telecom,but failed to agree on terms. Revenue from French mobile customers has also suffered as a result of European Union regulation that has reduced so-called roaming charges in Europe.
Orange is having more joy in its domestic cable operations where it added a net 93,000 domestic fixed broadband customers in the second quarter, including 106,000 customers who signed up to its new fiber network.
"Business was driven by the very high-speed fixed and mobile activities," Orange CEO Stephane Richards said in a statement. "In one year we have doubled both our fiber customer base to 2.5 million customers as well as our 4G customer base, with nearly 23 million customers."
In Spain, Orange added a further 197,000 clients to its fiber network, while the number of Spaniards using its 4G mobile network has climbed to 6.4 million by the end of June, up 180% year-on-year. Revenue in Spain, Orange's second-largest market, rose to €1.23 billion, from €1.16 billion in the same quarter last year.