Orange Q1 Revenues Down, Margin Stable, Backs Forecast; Stock Up

(RTTNews) - French telecom major Orange SA (ORAN), previously France Telecom, reported Tuesday a decline in first-quarter revenues and restated EBITDA, a key earnings metric, despite higher number of customers. Restated EBITDA margin, however, remained stable on a comparable basis, and the company confirmed its EBITDA forecast for fiscal 2014. Orange shares are gaining about 4 percent in the morning trading in Paris.

According to Chairman and CEO Stéphane Richard, the company's continued efforts to improve its cost structure helped in stabilizing profit margin and to confirm forecast.

For the first quarter, the company generated consolidated revenues of 9.80 billion euros (about $13.59 billion), down 4.6 percent from last year's 10.28 billion euros. The results reflected the 0.6 percentage points impact of foreign exchange variations, as well as the 0.2 percentage points impact principally due to the disposals of Etrali and of Wirtualna Polska.

On a comparable basis, revenues declined 3.8 percent from last year. Excluding the impact of regulatory measures, the revenues slipped 3 percent.

Revenues in France were 4.81 billion euros, down 5.1 percent on a reported basis and down 5 percent on a comparable basis. All other regions posted lower revenues, except Spain, which posted a 3.2 percent revenue growth excluding the impact of regulatory measures.

The company had 239.4 million customers as of March 31, an increase of 4.2 percent year on year, with 9.6 million net additions. Mobile services customers were 181.7 million, 5.8 percent higher, with 9.9 million net additions. Fixed broadband had a total of 15.6 million customers, 4.1 percent higher than last year, with 608,000 net additions.

For the quarter, restated earnings before interest, tax, depreciation and amortization or EBITDA dropped 3.4 percent to 3.02 billion euros from the prior year's 3.14 billion euros. Restated EBITDA declined 3.8 percent on a comparable basis.

The restated EBITDA margin of 30.8 percent increased 0.4 points from last year's 30.4 percent on a reported basis, but remained stable on a comparable basis. The company noted that cost savings offset 69 percent of the decrease in revenues.

Richard said, "Orange's first quarter 2014 performance was very satisfactory, aided in large part by the continued strong commercial momentum in our core countries. Orange benefits from the efficient segmentation of its offers as well as its investment in very high-speed broadband - fibre and 4G - which enable the Group to differentiate itself from the competition."

Looking forward to full-year 2014, Orange continues to expect restated EBITDA of 12 billion euros to 12.5 billion euros.

The company also confirmed the divident payment for 2014 of 0.60 euros per share. An interim dividend for 2014 of 0.20 euros per share will be paid in December.

In Paris, Orange shares are gaining 0.42 euros or 3.87 percent, and trading at 11.26 euros.