Orange reaffirms its strategy and accelerates in its drive to build solid, sustainable value creation for all stakeholders
07 Dezembro 2017 - 5:00AM
Press release
London, 7 December 2017
2017 Investor Day
Orange reaffirms its strategy and accelerates in
its drive to build solid, sustainable value creation for all
stakeholders
As Orange reaches the halfway point in its
Essentiels2020 plan, and after having restored growth, the Group is
today reaffirming its strategy to differentiate itself through the
quality of its networks and customer experience, and has set itself
new operational performance objectives. The Group's strategy seeks
to leverage targeted investments that aim to reinforce the
excellence of its networks and offer enriched services.
The acceleration of the Group's operational
performance can be illustrated notably through the fact that the
deployment of fibre in France is now ahead of schedule allowing
Orange to plan for 20 million FTTH connectable households in
high-density and medium-density areas by 2021, rather than 2022. In
less-dense areas, covered by public-initiative networks (PIN),
Orange now aims to win contracts for the deployment of
infrastructure for around 30% of the area. In Spain, Orange will
reach 16 million FTTH connectable households in 2020 rather than
the 14 million households that were initially planned and that will
in fact be achieved as soon as 2018.
For a higher level of customer experience for its
"Consumer" customers, Orange will continue to offer the best
content on the basis of an aggregator-distributor model, without
adding to the inflationary trend in the value of rights. Concerning
its Mobile Financial Services activities, following in the footstep
of Orange Money, Orange recently launched a disruptive offer in
France with Orange Bank.
For its "Enterprise" customers, Orange aims to offer a complete
ecosystem of services adapted to the context of digital
transformation for which it is positioning itself as a trusted
partner.
-
In terms of customer
experience, Orange offers optimised customer interactions by
offering access to both Smart Stores and its digital channels: On
the one hand, Orange is developing self-care solutions such as
"Orange et moi" as well as e-commerce solutions. On a Group-level,
over 46% of all customer interactions are now carried-out through
digital channels. On the other hand, the Group also has a network
of modern, digital-oriented stores, the Smart Stores.
-
To reach these ambitious targets, Orange is
continuing its internal transformation by
addressing several challenges: attracting talent and developing new
skills, developing a more agile culture by releasing initiative and
being more customer-oriented. To further involve its employees,
Orange is maintaining its employee-shareholding target that aims to
reach 10% of the Group's voting rights.
-
The Group's mergers and acquisitions strategy is
focused as a priority on the Group's transformation, while the
integration of recent acquisitions is ongoing.
The strategy in place since 2015 has made it
possible to build solid competitive advantages, with renewed growth
in both revenues and adjusted EBITDA, a year ahead of the
Essentiels2020 plan. These competitive advantages have enabled
Orange to return to a particularly solid sales momentum. Combined
with an operational efficiency programme, this momentum has enabled
the Group to improve its margins and enter a cycle of sustainable
value creation.
The operational efficiency plan, Explore 2020, has
enabled Orange to improve its cost and investment structure,
surpassing the 3 billion euros of gross savings originally forecast
for 2015-2018. Orange will continue these efforts over the
2019-2020 period.
-
On the cost front, Orange will primarily use
digitalisation, simplification and resource pooling to achieve
additional gross savings of 1 billion euros over the 2019-2020
period.
-
Investments are one of the cornerstones of
Orange's renewed growth. During this period of technological
transition, the Group aims to reach a peak investment spend of 7.4
billion euros in 2018, before declining from 2019. Orange will use
a lean CAPEX programme to reduce unit costs by 15%, generating
savings of up to 1 billion euros by the end of 2020. These savings
will be partially reinvested, in line with the Group's objectives.
In our convergent European countries, from 2022 onwards, the Group
will return to a ratio of CAPEX to sales of less than 15%.
-
The combination of all these elements will
contribute to the improvement of the "Operating ROCE" of the
Group's telecoms activities in 2017 and 2018. Together with
adjusted EBITDA and Operating Cash Flow (adjusted EBITDA minus
CAPEX), this internal indicator is used to track performance.
Outlook[1]
These factors show a strong dynamic of value
creation that enables Orange to set continuously improving
objectives:
-
Growth in adjusted EBITDA of around 2% in 2017,
followed by an acceleration of the growth rate in 2018 and
continued growth in 2019 and 2020.
-
A return to growth in Operating Cash Flow
(adjusted EBITDA minus CAPEX) in 2017, followed by an acceleration
of the growth rate in 2018 and continued growth in 2019 and
2020.
-
Orange will maintain a net debt to adjusted
EBITDA ratio for its telecoms activities of around 2x in the medium
term in order to preserve the Group's financial strength and
investment capacity.
-
The Group confirms the annual payment of a
dividend of at least 0.65 euros per share for the years 2017 to
2020 (subject to shareholder approval).
Stéphane Richard, Chairman &
Chief Executive Officer of Orange, commented:
"Today we are halfway through our Essentiels2020 strategic plan,
which gives me an opportunity to take stock of some of the
fundamental elements that make up our strategy. Through this plan,
we aim to define ourselves by the excellence of our networks and by
the innovative and enriched services that we provide our customers,
offering them an unmatched customer experience. This strategy is
now bearing fruit: we have seen a return to revenue growth a full
year ahead of plan, and this momentum, combined with our
operational efficiency programme, Explore 2020, has enabled us to
renew growth of our adjusted EBITDA and engage us in a cycle of
sustainable value creation.
On the basis of these strengths, we intend to
capitalize on the success of Essentials2020 in order to accelerate
the growth and transformation of the Group as it evolves into a
multi-service operator armed with sustainable growth in both our
core business and in new activities across every country in which
the Group is present."
Glossary
-
EBITDA: operating income
before depreciation and amortisation, before impacts related to
acquisitions of controlling interests, before reversal of reserves
of liquidated entities, before impairment of goodwill and assets,
and before income from associates. Reported EBITDA is not a
financial aggregate as defined by IFRS standards and may not be
directly comparable to similarly named indicators in other
companies.
-
Adjusted EBITDA: EBITDA
(see above definition), adjusted for the impacts of key disputes,
specific personnel expenses, the review of the portfolio of shares
and operations, the cost of restructuring and consolidation, and,
as applicable, other specific and systematically identified items.
Since the 1st quarter of
2016, adjusted EBITDA excludes all income from the disposal of
shares and operations and the adjusted EBITDA for past periods was
revised accordingly. Adjusted EBITDA is not a financial aggregate
as defined by IFRS standards and may not be directly comparable to
similarly named indicators in other companies. Adjusted EBITDA is
the new name (since the 4th quarter of
2016) for the restated EBITDA aggregate; the definition of this
indicator is unchanged.
-
CAPEX: capital expenditure
on tangible and intangible assets excluding telecommunication
licences and investments through finance leases. CAPEX is not a
financial performance indicator as defined by IFRS standards and
may not be directly comparable to indicators referenced by the same
name in other companies.
-
Operating Cash Flow:
adjusted EBITDA minus CAPEX. The operating cash flow is not a
financial performance indicator as defined by IFRS standards and
may not be directly comparable to indicators referenced by the same
name in other companies.
-
Operating ROCE (Operating
Return On Capital Employed): this indicator measures the
profitability of capital invested in telecoms activities. It
completes and reinforces traditional indicators used to track the
Group's performance. This indicator is computed before corporate
tax and is a ratio between adjusted EBIT of the year N and net
operating assets of the year N-1. The Operating ROCE is not a
financial performance indicator as defined by IFRS standards and
may not be directly comparable to indicators referenced by the same
name in other companies.
-
Adjusted EBIT: this
indicator is calculated starting from the adjusted EBITDA by
averaging over a 3-year period the adjustments made to the EBITDA
excluding gains or losses made from the disposal of assets and
adding net income from associates, the amortisation and
depreciation of assets excluding the impairment of goodwill.
-
Net operating assets: this
corresponds to the sum of tangible and intangible assets, adjusted
by the gross value of goodwill and the net value between current
assets and liabilities, excluding financial elements or tax-related
elements. Net operating assets also include non-current liabilities
related to operations such as reserves for dismantlement,
restructuring costs and employee benefits.
About Orange
Orange is one of the world's leading
telecommunications operators with sales of 40.9 billion euros in
2016 and has 152,000 employees worldwide at 30 September 2017,
including 93,000 employees in France. Present in 29 countries, the
Group served 269 million customers worldwide as of 30 September
2017, including 208 million mobile customers and 19 million
broadband internet customers. Under the Orange Business Services
brand, Orange is also one of the world leaders in providing
telecommunication services to multinational companies. In March
2015, the Group presented its new strategic plan "Essentiels2020",
which put its customer experience at the heart of its strategy so
that customers could fully benefit from the digital world and the
power of its very high-speed broadband networks.
Orange is listed on Euronext Paris (ORA) and on
the New York Stock Exchange (ORAN).
For more information (on the web and on your mobile):
www.orange.com, www.orange-business.com or to follow us on Twitter:
@presseorange.
Orange and any other Orange product or service
cited in this press release are trademarks held by Orange or Orange
Brand Services Limited.
Press contacts: +33 1 44 44 93
93
Tom Wright: tom.wright@orange.com
Olivier Emberger: olivier.emberger@orange.com
[1] These
perspectives do not include the effects of the IFRS 15 and IFRS 16
standards, which will take effect on 1 January 2018 and 1 January
2019 respectively.
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Source: Orange via Globenewswire
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