Orange’s profit hampered by lower returns on co-investment

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The logo of the French telecommunications operator Orange is seen on the construction site of the new headquarters of the telecommunications company Orange in Issy-les-Moulineaux near Paris, France, on February 16, 2021. REUTERS / Gonzalo Fuentes

  • Third quarter basic profit down 0.7%
  • Adds customers in Spain and France
  • Reiterates annual objectives

PARIS, October 26 (Reuters) – The quarterly profit of French telecommunications operator Orange (ORAN.PA) was affected by lower yields from co-financing agreements for network deployment, he announced on Tuesday.

Like other European operators, the former state monopoly is struggling to maintain a strong dynamic of rising revenues, caught between the need to modernize networks and fierce competition in France and Spain, its main markets.

Third-quarter profit before interest, taxes, depreciation and amortization after leases (EBITDAaL) fell 0.7% from a year ago to 3.55 billion euros ($ 4.13 billion) despite the increase in the number of customers in France and Spain.

Orange has signed agreements with French competitors such as Bouygues Telecom (BOUY.PA) and Iliad Free to help it deploy high-speed fiber networks, adding revenue to the group’s regular sales of mobile and broadband contracts. .

Under these co-financing agreements, Orange receives payments from competitors in exchange for the right to use the networks.

The drop in yields from these deals explains a 4.1% drop in Orange sales in France, CFO Ramon Fernandez told reporters.

Over the period from July to September, Orange succeeded in adding 121,000 customers for its mobile activity in France, to which are added 80,000 new broadband customers.

He also added new customers for both businesses in Spain, where it took a € 3.7 billion write-down in the second quarter to reflect the decline in market value.

Orange reiterated its annual objectives, including a slight decrease in core operating income and underlying cash flow from telecoms activities of more than 2.2 billion euros, compared to 2.5 billion euros in 2020.

He also reiterated his targets for 2023, which include underlying cash flows from telecoms activities of € 3.5 billion to € 4 billion.

Orange CEO Stéphane Richard told French weekly JDD that he would be ready to remain chairman of the group when his third four-year term as CEO ends in May 2022.

($ 1 = € 0.8593)

Report by Mathieu Rosemain Editing by Sudip Kar-Gupta & Shri Navaratnam

Our standards: Thomson Reuters Trust Principles.

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