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Orange reported a slightly increase in revenue but strong operating income for 2022

Autor: Financial Market
3 min

Orange group revenues totaled 43,471 million euros in 2022, a year-on-year increase of 0.6%. Africa & Middle East was the main contributor to this growth, with revenues rising by 414 million euros (+6.4%), followed by Totem, whose revenues grew by 89 million euros (+14.9%).

Europe saw a return to growth (+0.6%), with a strong recovery underway in Spain and solid performances in Poland (+4.7%) and Belgium (+2.0%).

France recorded a decline of 193 million euros (-1.1%) due to lower revenues from wholesale services and despite a 3.1% increase in retail services excluding STN.

In the fourth quarter of 2022, Orange group revenues rose 1.3% to 11,351 million euros. Growth continued to be driven by retail services, which rose 2.5%, and IT & Integration services, which grew 10.8%, while the decline in wholesale services slowed to -2.9%. Totem confirmed its strong commercial momentum by signing a contract with Iliad.

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Customer base growth at 31 December 2022
There were 11.6 million convergent customers Group-wide, an increase of 0.8% year on year. Mobile services had 241.9 million accesses, an increase of 5.9% year on year, including 94 million contracts, an increase of 8.9% year on year. Fixed services totaled 45.4 million accesses (down 2.6% year on year), including 14.2 million very high-speed broadband accesses, an area still growing strongly (+15.6% year on year). Fixed narrowband accesses decreased 13.8% year on year.

Group EBITDAaL of 12,963 million euros in 2022 was up 2.5%, in line with the target. Africa & Middle East remained the main contributor to this performance with growth of 11.3%, easily offsetting the sharp decline in Enterprise, a priority focus for the Group, which fell 18.8% year on year.

Europe grew 1.6% thanks to the recovery in Spain, where the trend is clearly improving (-4%, compared with -12.7% in 2021). All other segments also contributed to EBITDAaL growth in 2022. IC&SS improved by 141 million euros due to significant cost savings. France, buoyed by growth in retail services and major rationalization efforts, rose 0.4%, while Totem grew 5.4% and Orange Bank improved by 13 million euros.

The fourth quarter saw significant EBITDAaL growth (+8.5%), even excluding the base effect of the employee shareholding plan at the end of 2021 (+2.9%). Cumulative net cost savings achieved from 2019 to 31 December 2022 under the Scale Up operational efficiency program totaled 700 million euros, exceeding the 2022 target (600 million euros).

Excluding additional costs related to inflation, the Group would have achieved the net savings target of 1 billion euros a year ahead of schedule.

These savings result mainly from changes in the workforce due to natural attrition, as well as the French part-time for seniors plans and the Group’s strict wage policy, along with ongoing optimization and rationalization efforts, primarily at headquarters and in support functions. EBITDAaL from telecom activities was 13,080 million euros, up 2.4%.

Operating income
Group operating income was 4,801 million euros, compared with 2,521 million euros on a historical basis in 2021. The 2022 result benefited from the increase in EBITDAaL.

It was also affected by the goodwill impairment in Romania and by an additional provision for the better-than-expected success of the French part-time for seniors plans, whereas 2021 had been adversely affected by goodwill impairment in Spain and the initial provision for the French part-time for seniors plans, and positively affected by the gain on disposal of 50% of the FiberCos in France and Poland.

Net income
Orange consolidated net income at 31 December 2022 totaled 2,617 million euros, compared with 778 million euros in 2021 on a historical basis. The increase was mainly due to growth in operating income.

Organic cash flow
Organic cash flow from Telecom activities at 31 December 2022 amounted to 3,058 million euros, in line with the target of at least 2.9 billion euros. The increase of 657 million euros was mainly due to the improvement in EBITDAaL and the reduction in eCAPEX.

The Shareholders’ Meeting on 23 May 2023 will decide on the payment of a dividend of 0.70 euros per share for fiscal year 2022.

Net financial debt
Net debt stood at 25.3 billion euros at 31 December 2022, an increase of 1 billion euros compared with 2021. This was mainly due to the payment for 5G licenses in Belgium and Romania and 4G licenses in Egypt, and the redemption of a hybrid bond for 426 million pounds sterling in November.