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Orange's Weakness in Spain Is Offset by African Markets, France Remains Stable; Maintaining FVE

Javier Correonero Equity Analyst

Analyst Note

| Javier Correonero |

Once again, no-moat Orange´s first-quarter results were penalized by weak performance in Spain, reflecting the challenging competitive environment this geography faces. Although the overall revenue decline in Spain softened compared with the last quarter, this was mainly explained by higher equipment sales but not from a turnaround in fixed or mobile offerings. Management announced a 12% headcount reduction in the country that we look favorably upon. Not surprisingly, the company took a goodwill impairment of EUR 3.7 billion due to the bleak outlook for the next couple of years. We are adjusting our forecasts for 2021 and 2022 but are maintaining our EUR 13.90 fair value estimate.

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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.

78, rue Olivier de Serres
Paris, 75015, France
T +33 144442105
Sector Communication Services
Industry Telecom Services
Most Recent Earnings Dec 31, 2008
Fiscal Year End Dec 31, 2021
Stock Type
Employees 138,626