Orange looks to future minus Spain

The relief was palpable during Orange's presentation of its results for the first quarter of 2024 as it is now finally able to move into a post-merger period following the recent creation of the MasOrange joint venture in Spain.

Speaking on Wednesday's earnings call, Orange Group CEO Christel Heydemann proclaimed that the main achievement this quarter was the completion of the transaction with MásMóvil "to form a leading operator in Spain. This is a decisive step forward in our overall vision for a strong and thriving telecoms industry in Europe."

Orange has now fully deconsolidated Spain from group KPIs, although that's not to say the market is no longer relevant for Orange, far from it: Orange and MásMóvil shareholders still each hold a 50% stake in the combined entity with equal governance rights. As of the second quarter of 2024, 50% of the JV will be accounted for as a share of profits or losses of associates and joint ventures.

"This flagship transaction with our 50% ownership of the JV is clearly creating value for Orange, taking into account the synergies and the €4.4 billion [US$4.7 billion] cash upstream received at closing," Heydemann added. She also pointed out that Orange retains a path-to-control right to consolidate the combined entity in the case of an IPO.

To be sure, Heydemann still faced numerous questions about the JV's strategy in terms of network investments, the potential signing of a wholesale agreement with Digi Spain, which currently uses Telefónica's network, and competition on the market in general. 

While explaining that the JV's initial focus will be on creating synergies between the former Orange and MásMóvil, driving network efficiencies, increasing B2B sales and defending the market position of premium consumer brands, she pointedly noted that this will all be a "key focus of the management team in Spain," headed by MasOrange CEO Meinrad Spenger.

She also handed over to Ludovic Pech, former CEO of Orange Spain and now CFO of MasOrange, to handle more detailed observations about any potential deal with Digi, which has until September 2025 to opt for a national roaming deal with MasOrange that would replace its current Telefónica arrangement. 

Overall, it certainly appears that Heydemann is now able to direct more of her time and energy to the remaining group strategy and KPIs. She emphasized that the Q1 results "underpin our confidence in achieving a full-year guidance, which remains unchanged."

Key figures

The first-quarter results already reflect the fact that Spain's results have been shaved off overall group figures, with total quarterly revenue of €9.85 billion ($10.5 billion) compared to €10.6 billion a year previously. On a comparable basis, group revenue increased 2.1% year-on-year, while EBITDAal was 2.3% higher at €2.4 billion ($2.56 billion).

France continues to generate the bulk of Orange's sales, reporting a slight 0.8% increase in revenue to €4.33 billion ($4.62 billion). Africa and the Middle East maintained its traditional strong performance, rising 11.1% to €1.85 billion ($1.97 billion).

Progress is also being made with the recovery plan for Orange Business. Key steps include halving the decrease in EBITDAal this year before an expected return to growth in 2025, more than halving the number of marketed products and services, and implementing the cost-reduction program including voluntary redundancies.

While Orange Business reported a 0.3% dip in revenue, this was due to the 8.7% decline in fixed voice revenues, which Orange said was almost offset by the 7.5% growth in IT and integration services revenue, boosted by the 15.3% rise in Orange Cyberdefense sales.

Orange also started the year with a new brand signature, "Orange is here," which Heydemann noted has already been launched in a dozen countries and has been "positively received for its innovative and critical approach."

"We are more than ever laser focused on executing our 'lead the future' plan and on delivering sustainable value," she concluded.