Orange Reports Operating Profit Decline in First Half 2012

The Tip Desk · June 30, 2011 · 2 min read

The telecommunications provider saw group revenue fall 3.2% in historical data due to regulatory price cuts and divestments.

The telecommunications provider reported a group operating result of 3,488 million euros for the first half of 2012, a 16.4% decrease in historical data compared to the first half of 2011. The company said this decline was driven by a 474 million euros organic drop in operating results on a comparable basis, alongside a 210 million euros negative impact from perimeter changes and other variations.

Group revenue fell 3.2% in historical data to 21,843 million euros. The company attributed this 726 million euros decrease to the divestment of Orange Suisse, which had a 303 million euros impact, and a 432 million euros organic decline on a comparable basis. This organic drop was primarily caused by a 403 million euros reduction in regulated tariffs, which affected operations in France, Spain, Poland, and Belgium.

Performance varied across operational sectors. In France, revenue fell 4.2% in historical data, a decrease of 479 million euros. The company said this was due to a 506 million euros organic decline on a comparable basis, which was partially offset by a 27 million euros positive effect from the integration of Compagnie Européenne de Téléphonie and Générale de Téléphone.

In contrast, the Spanish sector saw revenue grow 2.3% in historical data, an increase of 45 million euros. The company said this growth was driven by commercial success in personal and residential communication services.

Other segments faced headwinds. The Entreprises sector reported a 1.7% historical revenue decline of 59 million euros. The company attributed a 93 million euros organic decrease on a comparable basis to a slowdown in service growth and an accelerated decline in historical corporate networks.

Financial stability indicators showed a rise in net financial debt to 31,177 million euros as of June 30, 2012, up 287 million euros from December 31, 2011. The adjusted net financial debt to EBITDA ratio stood at 2.11 as of June 30, 2012.

Orange confirmed its 2012 target to reach an adjusted EBITDA minus CAPEX indicator close to 8 billion euros, which now includes a 120 million euros impact related to civil servant pensions. The company said it intends to return to an adjusted net financial debt to EBITDA ratio of 2 in the medium term.