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Orange enters into losses after provisioning 3,700 million for the deterioration of its business in Spain

2021-07-29T13:48:06.809Z

The operator will offer all football again next season with fiber and mobile packages starting at 95 euros per month



Orange recorded global net losses of 2,605 million euros in the first half of this year after making a provision of 3,702 million for the write-down of the value of assets in Spain, specifically, due to “the impairment of goodwill that it reflects the downward revision of the short-term outlook, ”the group noted in a note.

The operator, controlled by the French State, also attributes the drop in its gross operating profit to the poor performance of the business in Spain, compared to the other European countries where it operates.

In this sense, it indicates that the downward revision of the business plan reflects the increase in competition in the Spanish market, marked by the fall in revenue per customer, together with the expected delay in economic recovery due to uncertainties about continuation of the health crisis.

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However, he has defended the strategy of the new management in Spain, led by the CEO, Jean-François Fallacher, to reposition its commercial policy so that it returns to the growth of gross profit in 2023. Precisely, Fallacer indicated that although This is an accounting note, he admitted that it reflects the difficult moment that a "hypercompetitive" market such as Spain is going through with multiple low

cost offers,

the effect of the pandemic in sectors such as tourism and in SMEs and small businesses

The fact is that the Spanish subsidiary once again suffered a drop in income and profitability in its accounts for the first half of the year, due to its poor positioning in a market that is moving towards low cost, where competitors such as MásMóvil or Digi are sweeping away, at the same time than

low cost

brands such

as O2 or Lowi launched by Telefónica and Vodafone, respectively.

The subsidiary of the French operator recorded total revenues of 2,368 million euros from January to June 2021, which represents 5.1% less than in the same period of the previous year.

The decrease in the second quarter was 2.7% to 1,180 million, a figure that the company interprets as a commercial improvement given that the fall in revenue in the first quarter was 7.4%.

The drop in billing was generalized in all retail segments, except for the sale of handsets (+ 21.5%).

Mobile service revenues decreased 12.9%);

those of fixed telephony fell 5.4% and those of convergent packages (packages with fiber, mobile and television), 8.5%.

However, the most worrying thing is the drop in wholesale income (-1.4%), that is, those obtained by renting its networks to other competitors such as MásMóvil or Euskaltel, a segment in which the operator had traditionally been strong .

Gross operating profit (Ebitda) was 610 million euros, a decrease of 16.2% and the Ebitda margin fell 3.4 points to 25.8.

As of June 30, 2021, the Orange subsidiary in Spain had 20 million customers, of which 16 million are from mobile services (+ 1.3% less than a year ago) and 4 million from fixed broadband (+ 1.5%).

As for Orange TV, the Orange platform reached 681,000 subscribers at the end of the semester, 1.3% more.

Agreement with Telefónica to give football

The operator announced this Thursday that it will again offer the next season, which begins in mid-August, the main football competitions, both national (First and Second Division) and European (Champions and Europa League) after reaching an agreement with Telefónica, owner of the television rights to these events. To enjoy football, it will be necessary to be subscribed to an Orange (Love) fiber and mobile package starting at 95 euros per month, 5 euros more per month than last year.

Source: elparis

All business articles on 2021-07-29

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