Orange will sell off some key infrastructure and work with RAN-sharing partners while re-focusing on its core home broadband, mobile connectivity, and financial businesses in Europe, Africa, and the Middle East, under a new five-year strategic plan presented by company executives.
In terms of FTTH infrastructure, Orange will continue to invest on its own in order to fulfill its commitments in medium-density areas (AMII) in France, while engaging with partners in other areas. The company will create a subsidiary in France from 2020 – Orange Concessions – which will cover the 4 million Public Initiative Network (RIP) connections belonging to local authorities and for which Orange is the concession holder. In addition, the creation of this subsidiary will enable Orange to seize potential growth or consolidation opportunities in this market. In Spain and Poland, Orange also plans to share future FTTH deployments with other operators via FiberCos, potentially involving third parties. Orange will also continue to optimize its copper network in France.
In terms of 5G mobile infrastructure, Orange will rely on RAN-sharing agreements, whilst maintaining areas of differentiation. This was the impetus for the existing agreements in Poland and Romania and those signed in recent months in Spain and Belgium.
From a financial perspective, Orange aims to move from its current flat EBITDA to a growth rate in the 2% and 3% range on average for the 2021-2023 period. This will require reinventing the business.
The growth will be based on its historic business lines as well as a continued push into financials:
- In France, services revenue will experience moderate growth in the 2020-2023 period, mainly due to increased FTTH penetration and mobile (5G) services, which secures market share and encourages the acquisition of new customers.
- Spain will return to growth in 2021, with increasingly optimized use of its brands in order to capture their value potential, and increased B2B and wholesale opportunities, excluding those with international operators.
- Europe will have growth that is better than the market average in each of its six countries, principally led by strong commercial momentum in convergence thanks to the deployment of ultra-high speed broadband.
In terms of CAPEX objectives, Orange is looking to benefit from RAN-sharing agreements. On a rolling, 12-month basis, eCapex will increase by approximately 50 million euros in 2019 and by around 200 million euros in 2020 due to the RAN-sharing agreements in Spain and Belgium. This will then stabilise in 2021 before starting to decline from 2022, once the bulk of FTTH deployment in France is completed. Excluding RAN-sharing agreements, the objective to reach a peak level of eCAPEX in 2018 will be met. The Group aims to reduce the eCAPEX/sales ratio to around 15% by around the end of 2023 compared to around 17% in 2018.
Stéphane Richard, Chairman and CEO of the Orange Group, comments:
“If I had to summarise Engage 2025, Orange’s new strategic plan, I would use two words: growth and sustainability. The first one is growth. We are going to grow our core business – connectivity – by adding to our competitive edge and by making the most of our network infrastructure. We are also going to foster growth beyond connectivity in Europe thanks to three elements which set us apart from our competitors, namely Africa & the Middle East, B2B IT services and financial services. To support this growth ambition, by 2025 Orange will have to reinvent itself and adapt to a constantly changing world. Artificial intelligence and data will be at the heart of this reinvention, both to improve customer experience and to make our networks smarter and the whole company more agile. Orange must also address the need for new skills while supporting all its employees. The second is sustainability. At Orange, we are convinced that in the years ahead strong economic performance will not be possible without exemplary performance on social and environmental issues.
