Orange Reiterates Guidance in Third Quarter; Hedged From Energy Price Increases Until 2023

Orange's third-quarter results did not bring any big surprises. Management reiterated its guidance for the full year, where it expects EBITDA after leases (EBITDAaL) growth of 2.5% to 3.0%. Although EBITDAaL has only grown 0.5% year to date, the 2.5% to 3.0% growth target seems realistic to us. Management expects the reversal of some cost effects in the last part of the year, which should bring a 5% EBITDAaL growth in the fourth quarter. On the energy side, we have seen some European telecommunication firms like Telia being hurt from rising costs. It seems like Orange will be unaffected for now, as management assured it is fully hedged from energy price changes for the remainder of 2022 and 90% hedged for 2023. This will provide more certainty on guidance and EBITDAaL growth ambitions going forward. We are maintaining our EUR 13.40 fair value estimate.