Yahoo Finance Orange Revenue Hits Target as Price Hikes Taken in Stride
(Bloomberg) -- Orange SA reported sales in line with its 2023 targets and just below analyst estimates in the first quarter, as a price increase to counter inflation led to a slight increase in the number of mobile customers who left the French carrier.
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Revenue was €10.62 billion ($11.66 billion) in the period, up 1.3% from a year earlier, the Paris-based company said in a statement Wednesday. That compares with an average €10.65 billion estimate by analysts surveyed by Bloomberg.
Shares rose 1.2% to €11.576 at 9:34 a.m. in Paris.
Orange increased prices in the first quarter in various countries including France, its biggest market. The results are the first indication of how the move impacted the company’s number of subscriptions, with the mobile churn rate 12% in the period, up 0.8 percentage points from the previous year. The price hikes will be fully effective in the second quarter.
What Bloomberg Intelligence Says:
Orange’s worse-than-expected 1.8% top line contraction in France (42% of sales) vs. the 1.3% drop consensus called for — as a result of elevated churn from price increases — casts a shadow over a decent 1Q performance with better-than-expected 1.3% sales growth thanks to a Spanish turnaround. The soft domestic performance may be more of a blip, however, with a price-hike boost and normalizing operational performance in coming quarters helping to narrow the full-year contraction.
— Erhan Gurses, BI telecoms analyst
Chief Executive Officer Christel Heydemann, who took over last April, has announced a strategy focused on consolidation in Europe and expansion in Africa. She also initiated a strategic review of Orange’s digital banking arm, a business that has over 2 million customers in France and Spain but has failed to make money since it was started in 2017.
“Our performance is once again driven by the remarkable growth in Africa and the Middle East and our strong value-driven growth in Europe,” Heydemann said in a statement. “This quarter our retail services returned to growth in Spain.”
Earnings before interest, taxes, depreciation, and amortization after leases rose 0.5% to €2.59 billion for the quarter, in line with estimates.
The search for a partner for Orange Bank is continuing, interim Chief Financial Officer Jean-Michel Thibaud said in a call with reporters. US-based investment firm Ripplewood Advisors LLC and Cerberus Capital Management are considering bids, people familiar with the talks told Bloomberg this month.
In Spain, the carrier’s second-biggest market, the European Union is investigating Orange’s planned tie up with rival Masmovil Ibercom SA. In Belgium, where the EU in March approved its bid to buy local telecom operator Voo SA, Orange previously said that it has no plans to make a tender offer on Orange Belgium SA.
(Updates with shares in third paragraph.)
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