Orange writes down $4.4 billion on weaker Spanish prospects

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FILE PHOTO: A woman walks past the logo of French telecom operator Orange at the company headquarters in Issy-les-Moulineaux near Paris, France, June 3, 2021. REUTERS/Gonzalo Fuentes

July 29, 2021

By Mathieu Rosemain

PARIS (Reuters) – Orange, France’s biggest telecom firm, on Thursday announced a 3.70 billion-euro ($4.39 billion) impairment on the value of its Spanish activities reflecting competition that has hurt sales and profits in its second-largest market.

The group was forced to join a race to low-cost offers in Spain where six telecoms operators compete.

The potential acquisition of Euskaltel by Spanish operator Masmovil could alleviate some pressure on prices but it still has to go through.

“The situation remains difficult,” Chief Financial Officer Ramon Fernandez said, referring to Spain. Its first-half core operating profits in Spain plummeted by more than 16%.

The group now sees a return to growth in profits next year. It has announced 485 layoffs in the country, following a reshuffle of its offerings and the nomination of a new boss.

The impact of competition in Spain in the second-quarter was less than what analysts expected.

Orange’s quarterly earnings before interest, tax, depreciation and amortisation after leases (EBITDAaL) fell by 0.4% to 3.27 billion euros ($3.88 billion).

That edged the 3.26 billion euros expected by 17 analysts in a company-compiled poll.

Quarterly revenue rose 2.6% to 10.6 billion euros and beat market expectations, thanks to a good performance in Africa and Middle East.

Orange confirmed its full-year targets, including a slight decline in core operating profit and an underlying cash flow from telecom activities of over 2.2 billion euros.

It also confirmed its targets for 2023, which include underlying cash flow from telecom activities of between 3.5 billion euros and 4 billion euros. ($1 = 0.8435 euros)

(Reporting by Mathieu Rosemain; editing by Vinay Dwivedi and Jason Neely)





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