Orange Earnings: Meets 2023 Financial Expectations; MasMovil Deal Loses Attractiveness

Orange delivered on its financial outlook for 2023, and has set targets for the next two years after the deconsolidation of the Spanish business and merger with MasMovil is complete. Revenue increased 1.8% organically to reach EUR 44.1 billion, driven by growth in service revenue, partially offset by an expected decline in wholesale service revenue. EBITDA after leases reached EUR 13 billion, in line with Orange’s ambition of low-single-digit growth, mainly supported by its Europe and Africa and Middle East divisions. The proposed dividend is EUR 0.72 per share, which Orange intends to raise to EUR 0.75 next year, a target we believe is achievable. Despite its tough position in Spain, we believe Orange is faring well, making modest increases to its dividend, reducing capital intensity, and keeping financial leverage in check. Orange’s midterm target is for net debt/EBITDAal of 2 times, lower than the average for European telecom businesses.