France Telecom-Orange announced mixed results for the first quarter of 2013, as the company faced tough competition and other challenges both in its home market and overseas.
In a statement, Stephane Richard, chairman and CEO of the group, said that an accelerated reduction in its operating expenses had made it possible to limit its margin erosion.
The company said that reported EBITDA was €3.15 billion, down 2.5 percent from EUR3.23 billion, on revenue of €10.28 billion, down 4.1 per cent from €10.72 billion. The revenue drop was 1.8 per cent excluding the impact of regulatory changes.
France Telecom-Orange does not report net income on a quarterly basis, like many other French companies.
Earlier this week, agency Standard & Poor’s lowered its long-term credit rating for France Telecom-Orange, stating its belief that its “overall EBITDA will decline more in 2013 than we previously expected, due to mounting competitive and price pressures since late last year in the French mobile market and slowdowns in the group’s key European markets since second-half 2012, especially in Poland”.
It ended the quarter with 229.8 million customers, up 2.6 per cent year-on-year, of which 171.8 million were mobile customers, a year-on-year increase of 4 per cent. The figures were impacted by the sale of Orange Austria (with 781,000 mobile customers) and the acquisition of Simyo in Spain (398,000 mobile customers).
In its home market, the company said it maintained its mobile market share at 37 per cent, noting “very strong growth” of its Sosh and Open proposition. Its mobile customer base grew by 1.3 per cent to 26.8 million customers, of which 19.8 million were contract customers.
However, mobile service revenue declined by 8.1 per cent to €2.16 billion (down 2.9 per cent excluding regulatory impact), as a result of issues including price cuts and the development of SIM-only plans, alongside falling ARPU. It said that “growth of internet browsing and national roaming partially offset price reductions”.
In Spain, mobile service revenue fell by 2.3 per cent to €741 million (up 0.8 per cent excluding regulatory impact), with a 4.7 per cent growth in the customer base to 12.18 million (including customers gained through the Simyo buy).
Annual ARPU in this market fell to €255 from €269 year-on-year, although the company said that growth in mobile internet had offset the decline in revenue from voice and SMS.
In Poland, mobile service revenue fell by 9.7 per cent year-on-year (down 2.2 per cent excluding regulatory impact) to €369 million. The company had 14.89 million mobile customers, a 1.9 per cent increase, with the growth led by prepaid gains.
For the “rest of world” segment, which includes the company’s Middle East and Africa business alongside some smaller European holdings, mobile service revenue declined by 1.8 per cent to €1.51 billion. The company’s mobile customer base in the Middle East and Africa grew by 8.2 per cent to 81.98 million, with strong gains noted in Mali, Senegal, Cameroon and Guinea.
Capital expenditure during the period was €1.15 billion, a 6.5 per cent increase on a comparable basis. The company is rolling out its LTE network in France, with 50 towns already covered; has “mobile network transformation” programmes under way in Spain, and is ramping up a mobile network sharing programme in Poland.
In a statement, the company said it will “pursue a policy of selective acquisition” moving forward, “concentrating on possible consolidation opportunities in the markets in which it operates”.