Solid first-half growth in revenue and adjusted EBITDA with clear acceleration in the 2nd quarter and improved adjusted EBITDA margin

• Revenue growth accelerated in the 2nd quarter of 2017, rising 1.4% (+138 million euros) after rising 0.8% in the 1st quarter (+85 million euros), on a comparable basis. Revenues were 20.276 billion euros in the first half of 2017, an increase of 1.1% (+222 million euros) following an increase of 0.9% in the 2nd half of 2016 (+188 million euros).
  The improved trend in the 2nd quarter was principally tied to the recovery in the Africa & Middle East segment, a continued strong performance in Spain and the return to growth in France for the first time since 2009.
• Commercial momentum remained very strong in the 2nd quarter of 2017, with the continued development in convergence and very high-speed broadband in Europe, and with the recovery in mobile in the Africa & Middle East segment. Growth in consumer convergent offers remained strong in France and the Europe segment, with 9.8 million customers at 30 June 2017 (+11.5% year on year).
  Growth was sustained in the Group’s fixed broadband services, led by fibre which had 308,000 net additions in the 2nd quarter of 2017. The Group’s fixed broadband base had 19.1 million customers at 30 June 2017 (+5.4% year on year on a comparable basis).
  Mobile contracts1 customers in France and in the Europe segment had 350,000 net additions in the 2nd quarter of 2017, with the customer base up 3.3% at 30 June 2017 year on year. 4G in France and in the Europe segment continued its rapid development, rising 39% year on year with 31.6 million customers at 30 June 2017.
  In the Africa & Middle East segment, mobile net additions improved significantly for the second consecutive quarter, with 3.9 million net additions in the 2nd quarter of 2017 following 2.7 million in the 1st quarter.
• Growth in the Group’s adjusted EBITDA strengthened in the 2nd quarter of 2017, rising 2.4% after an increase of 2.0% in the 1st quarter, on a comparable basis. In the 1st half of 2017, the Group’s adjusted EBITDA was 5.978 billion euros, an increase of 2.2% (+130 million euros).
  Adjusted EBITDA from the telecom activities rose 2.5% in the 2nd quarter of 2017, and was 0.3 percentage points higher than that of the 1st quarter (+2.2%). The adjusted EBITDA margin of the telecom activities also improved, reaching 33.2% in the 2nd quarter of 2017 compared to 25.9% in the 1st quarter (29.6% for the 1st half of 2017, +0.4 percentage points compared with the 1st half of 2016). The adjusted EBITDA margin for France rose 1.0 percentage point in the 1st half of 2017.
• The Group had operating income of 2.434 billion euros in the 1st half of 2017, an increase of 293 million euros compared with the 1st half of 2016. Operating income from the telecom activities was 2.462 billion euros, an increase of 321 million euros.
• Net income was 830 million euros in the 1st half of 2017, compared with 3.323 billion euros in the first 1st half of 2016. The decrease of 2.493 billion euros between the two periods was mainly linked to the impact of the sale of EE in January 20162 (2.249 billion euros).
  Net income from continuing operations declined 244 million euros. Excluding the impact of a charge related to the shareholding held in the BT Group (-349 million euros), net income from continuing operations improved 105 million euros.
  Net income attributable to equity owners of the Group was 682 million euros in the 1st half of 2017, compared with 3.168 billion euros in the 1st half of 2016.
• The Group’s CAPEX (3.276 billion euros in the 1st half of 2017) increased 3.0% on a comparable basis. CAPEX on the telecom activities (3.251 billion euros) rose 2.2% while the ratio of CAPEX to revenues for the telecom activities was 16.0% (+0.2 percentage points compared with the 1st half of 2016). Investments in fibre and in very high-speed mobile (4G and 4G+) rose 16.5% compared with the 1st half of 2016, in line with the objectives of the Essentiels2020 strategic plan.
• Net debt3 was 24.555 billion euros at 30 June 2017, an increase of 111 million euros compared to 31 December 2016. The ratio of “net financial debt to adjusted EBITDA for the telecom activities” was 1.92x at 30 June 2017, following 1.93x at 31 December 2016, in line with the objective of a ratio of around 2x in the medium term.

2017 outlook

For the 2017 financial year, Orange confirms adjusted EBITDA of more than that achieved in 2016 on a comparable basis, buoyed by strong commercial momentum supported by investment and continuing efforts on the transformation of the cost structure.

The Group also confirms the objective of a ratio of net debt to adjusted EBITDA for the telecom activities of around 2x in the medium term in order to preserve Orange’s financial strength and investment capacity. Within this framework, the Group is maintaining a policy of selective, value-creating acquisitions by concentrating on markets in which it is already present.

As announced during the presentation of the 2016 results, the Board of Directors will propose to the Annual General Meeting of Shareholders of 2018 the payment of a dividend of 0.65 euros per share for 2017. An interim dividend for 2017 of 0.25 euros per share will be paid on 7 December 20174.

Commenting on the publication of the first-half results, Stéphane Richard, Chairman and CEO of the Orange Group, said:

“The acceleration seen in the Group’s growth was confirmed by the first-half results, and in particular the performance in the second quarter, driven by France, Europe and Africa and the Middle East.
In France, we returned to growth for the first time since 2009. The performance in Spain, and more generally across Europe, was excellent, with strong revenue growth underpinned by a significant rise in very high-speed broadband customers.
The strategy that we have been following for several quarters, which centred on giving customers an unbeatable experience through convergence around the home and a quality network, is now yielding results.
We have converted more than half of our revenue increase into EBITDA, demonstrating a good balance of growth and profitability. This has enabled us to reaffirm our objective of delivering growth in adjusted EBITDA for the full year 2017.
Finally, we strengthened our content offering in the first half of the year through the creation of Orange Content and the signing of a number of agreements with prestigious partners such as Canal+, our historic partner, and HBO. We remain convinced that content is an effective tool for improving our offering and keeping our customers loyal while protecting value.
I would like to thank all the teams across the Group for this performance and for working hard every day to seize the opportunities available to Orange in this digital revolution.”

The Board of Directors of Orange SA met on 26 July 2017 and examined the Group’s financial statements.

The Group’s statutory auditors audited those financial statements, and the audit reports relative to their certification are in the process of being issued.

1 Excluding machine-to-machine.
2 The net income from discontinued operations related to EE (2.249 billion euros) corresponds to the income from the sale of EE for 2.076 billion euros and dividends received from EE in January 2016 (prior to its sale) of 173 million euros.
3 Net financial debt as defined and used by Orange does not include Orange Bank, to which this concept is not relevant.
4 The ex-dividend date is set as 5 December 2017 and the record date as 6 December 2017.

About Orange

Orange is one of the world’s leading telecommunications operators with sales of 40,9 billion euros in 2016 and 154,000 employees worldwide at 31 March 2017, including 95,000 employees in France. Present in 29 countries, the Group has a total customer base of 265 million customers worldwide at 31 March 2017, including 203 million mobile customers and 19 million fixed broadband customers. Orange is also a leading provider of global IT and telecommunication services to multinational companies, under the brand Orange Business Services. In March 2015, the Group presented its new strategic plan “Essentials2020” which places customer experience at the heart of its strategy with the aim of allowing them to benefit fully from the digital universe and the power of its new generation networks.

Orange is listed on Euronext Paris (symbol ORA) and on the New York Stock Exchange (symbol ORAN).

Orange and any other Orange product or service names included in this material are trademarks of Orange or Orange Brand Services Limited.