Orange forecast a return to core operating growth in 2022 after reporting a decline in 2021 on the back of ongoing difficulties in the Spanish market and reduced payments from rivals for the use of its network.

Discussing its earnings, outgoing CEO and chairman Stephane Richard observed the group had broadly met its targets in 2021 following an overall solid performance.

“Orange has delivered on its commitments and is confirming all its objectives for 2023, including organic cashflow of between €3.5 billion and €4 billion,” Richard stated.

The CEO highlighted a strong commercial performance in the group’s main market of France along with 11 per cent revenue growth in Africa and the Middle East.

He also pointed to progress in new growth areas such as cybersecurity and banking.

“With revenues of €800 million, cybersecurity has delivered a 14 per cent growth in 2021 while Orange Bank now has 1.7 million clients in Europe,” Richard stated.

The France-based group expects earnings before interest, tax, depreciation and amortisation after leases (EBITDAal) to increase by 2.5 per cent to 3 per cent in 2022, after remaining broadly flat at €12.6 billion in 2021.

It also forecast organic cash flow from telecoms activities of at least €2.9 billion this year and anticipates that capex will be no higher than €7.4 billion.

Weight
The highly-competitive market of Spain continued to drag on Europe, which reported year-on-year revenue growth of 2.6 per cent in 2021, excluding the southern European market.

Orange was forced to recognise a goodwill impairment for Spain amounting to €3.7 billion in the first half of the year.

Reuters reported during Orange’s earnings call, Richard commented it is “actively working on being involved in the possible market consolidation in Spain”, without providing any further details.

Group revenue was flat €42.5 billion, with operating income down 54.5 per cent at €2.5 billion, primarily owing to the Spanish impairment charge.

Net income fell to €778 million from €5.1 billion in 2020, which Orange blamed on the lower operating income as well as €2.2 billion in tax income recognised at the end of 2020.

In France, revenue fell 1.6 per cent to €18 billion, blamed in part on lower co-financing payments, the sums Orange receives from rivals in exchange for the right to use its network.

Je regrette…
Richard has also just presented his last set of annual results for a group he has served for over a decade.

Orange selected Christel Heydemann (pictured) as the permanent successor, with the new boss set to take the helm from 4 April.

Richard will remain non-executive chairman until a replacement is selected, a move expected to happen by Orange’s AGM on 19 May.

During the earnings call, Richard reportedly said his biggest regret during his time at Orange was a failed attempt to buy rival Bouygues Telecom in 2016, a move which would have reduced the number of operators in France from four to three.