Orange (ORAN) is the largest telecommunications group in France, and one of the largest in the world, with more than 232 million customers (a year-on-year increase of 2.1% at the end of September 2013) located in roughly 32 countries. The group's 3rd quarter results were announced on October 23, 2013. These results were less bad than previous quarters, confirming the slow stabilization of the company.
On the Road to Recovery?
Orange gained 1.1 million customers during the 3rd quarter, its revenues dropped by "only" 4% year-on-year (compared to 4.3% during 2nd quarter), and the EBITDA margin remained a healthy 33.1% (only 1.1% below the margin of 3rd quarter 2012). Compared to the record 50.4% EBITDA margin reported by Verizon Wireless in April 2013, this might sound tame, but it compares favorably to the 30% reported at the end of September by giant Vodafone. Revenues of Orange increased in Spain, Africa and the Middle-East. The ARPU --- average revenues per user --- continued its drop, at -12% year-on-year in France, but this was in line with expectations. No surprise here. The group headcount was decreased by 2.8% over 9 months, which helped reduce costs. Additionally, Orange pursued its 4G deployment, with 40% of French population expected to be covered by 4G wireless service before the end of this year. In short, 3rd quarter results were far from stellar, but they confirmed the slow improvement started during the 2nd quarter. That positive trend, and the hope that Orange will benefit from an improvement in the European Union economy, conspired to raise the share price by 32% (at the close of December 18), from its trough of July 2013, as can be seen in the following chart (from Google):
source:www.speekingalpha.com
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