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Orange SA ADR - Stock Quote ORAN

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Morningstar's Orange SA ADR Stock Analysis

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Orange and MasMovil to Merge in Spain; We Remain Cautious Until Regulatory Approval Is Granted

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

No-moat Orange and MasMovil are confirming the recent reports in the Spanish press (Expansion), and announced they've started official discussions to merge their mobile and fixed businesses in Spain. The transaction would be done through a 50:50 joint venture with equal governance rights and a right to trigger an IPO. As we mentioned in our previous note, Orange’s business has been suffering in Spain since 2019 due to pressure from low-cost providers. MasMovil owns many low-cost brands like Yoigo and Pepephone, just the ones that have been harming Orange, so a merger would eliminate a lot of low-cost competition for Orange. It would also consolidate the Spanish market from four mobile network operators, or MNOs, to three, which normally results in more price stability. The deal values Orange’s Spanish business at 7.5 times EBITDA (after leases) and MasMovil at 9.9 times EBITDA, in line with other European peers. We maintain our EUR 13.40 fair value estimate for Orange, as Spain makes up less than 10% of the group’s EBITDA and the deal still needs approval from competition authorities.

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Orange SA ADR's Company Profile

Business Description

Orange is the incumbent telecom operator in France, formerly known as France Telecom. The company operates fixed and wireless businesses in France, where it is the market leader ahead of Iliad, Bouygues and SFR. Orange also has fixed and wireless (convergent) operations in Spain, Poland, Belgium, Luxembourg and Central Europe (Romania, Slovakia, Moldova). Around 15% of revenue comes from emerging African markets, where the company only operates wireless networks and 20% comes from the enterprise segment, which serves companies with more than 50 employees in France and internationally.

111 Guai du President Roosevelt
Paris, 92130, France
T +33 144442105
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Dec 31, 2008
Fiscal Year End Dec 31, 2022
Stock Type
Employees 139,698

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