On the €545 million Covid bill, Orange attributed €292 million to the drop off in roaming revenues, while costs of €253 million were incurred directly relating to the health crisis, including provisions for bad debts.
However, the group achieved its 2020 targets – revised back in July – posting moderate revenue growth of 0.3% despite a slight dip in the fourth quarter. This was driven by wholesale services thanks to the co-financing of the fiber network in France and to convergent services, which posted respective growth rates of 4.4% and 2.1%. Equipment sales fell 9.5% due to store closures.
And there was one decline that brought good news across the board: CO2 emissions dropped 12% across the group.
Organic cash flow from telecoms activities saw a return to growth at €2.5 billion (up €149 million compared to 2019), against a target of more than €2.3 billion.
Split by market, MEA revenues were up 5.2%, "mainly driven by 4G and Orange Money", according to chairman and CEO Stéphane Richard (pictured). France saw growth of 1.6%, however, there were declines in the European market as a whole, which fell by 3.5%. The enterprise segment declined a marginal 1.4%.
Group EBITDAaL amounted to €12.68 billion in 2020, down 1% year on year. EBITDAaL from telecoms activities amounted to €12.84 billion in 2020, down 1%.
eCAPEX fell by €124 million, absorbing the decline in EBITDAaL, despite the accelerated rollout of fixed and mobile broadband networks, thanks to the contributions from co-financing and the discipline shown by the Group, particularly in Europe.
Richard said: “2020 was an extraordinary year, marked by a crisis of unprecedented scale and violence. In this challenging context, with networks showing just how vital they are to society, Orange proved able to adapt and meet the challenges, to continue to offer the very best of our services to our customers.
Orange will propose a 2020 dividend of €0.70 per share plus €0.20 linked to the French Council of State’s favorable decision with respect to a long-standing tax dispute.
Richard added: "Orange succeeded in stabilising its revenues for the year thanks to the quality of its networks. Our actions are paying off as we continue to progress towards the ambitious objectives we set out in our Engage 2025 strategic plan.
"We also opened our first three Orange Digital Centers to promote greater digital inclusivity. Thanks to these solid results, to our carefully managed investments and to greater operational efficiency, we are confirming our objective to generate between €3.5 and €4 billion in Organic Cash Flow in 2023.”
Introducing TOTEM
The results haven't halted the plans to launch a European towerco this year, with further details shared earlier today.
Trading under the name TOTEM, Orange's towerco is a legally independent entity, scheduled to begin operations before the end of this year with"a fully independent and dedicated management team" due to be named over the course of H1.
It will host and deploy new sites for Orange as well as for other network operators and around 25,000 towers will be split across France and Spain, with 17,000 macro sites and 8,000 macro sites in each country respectively.
In France, the sites are expected to be 55% towers and 45% rooftops. Orange reported "strong co-location demand, which has been constant for several years", and in response said the volume of towers provides "clear potential to increase co-location rates".
In Spain – where Orange sold 1,500 towers in 2019 – the sites will be equally split between towers and rooftops. Spanish operations will benefit from the network-sharing agreement between Orange and Vodafone, guaranteeing the future stability of the hosting activity.
Beyond France and Spain, the group will explore the possibility of integrating other passive mobile infrastructure assets from within Orange’s European footprint that could create value for the towerco.
The towerco plans were first announced in January 2020, as part of the group’s wider Engage 2025 strategy. Today, the group confirmed the new business will be called TOTEM and will be run by "a fully independent and dedicated management team", due to be named over the course of H1.
Based on the scope of sites and the terms of the Master Service Agreement (MSA), in 2020 the TowerCo’s revenues would have exceeded €500 million with EBITDAaL of close to €300 million, approximately two thirds of which would have been generated in France.
This represents a margin of about 57%, including maintenance costs of about 5% of TOTEM's revenues.
Richard said: “Passive mobile infrastructure is a core asset for Orange, benefitting from exceptional operational expertise in the areas of deployment, hosting and maintenance. We are determined to keep these strategic assets within the scope of the Group. They represent a long-term industrial view and are an essential asset in guaranteeing Orange’s independence as well as its ability to foster sustainable economic performance. Orange is committed to supporting its TowerCo, which will be named TOTEM, both strategically and financially in order to make it a clear leader in the European market.”
