Eurobites: Pain in Spain punches hole in Orange’s Q1

Industry News

Also in today’s EMEA regional results-fest round-up: Telefónica’s Q2 boosted by Virgin Media O2 merger and Telxius deal; BT’s fiscal Q1 dented by corporate and public sector struggles; Cellnex puts in a towering performance in H1.

Orange suffered pain in Spain during the second quarter, as the business environment there forced the group to “book a significant impairment” in the value of its assets, to the tune of €3.70 billion. Spanish troubles aside, revenues as a whole were up 2.6% year-on-year in Q2, to €10.55 billion, though EBITDAaL (earnings before interest, tax, depreciation and amortization, after leasing) was down 0.4%, to €3.27 billion. Africa and the Middle East was a bright spot for the operator, with revenues in that business unit soaring 14.4%. On the back of these numbers, Orange is maintaining its outlook for 2021.

Back closer to home, Orange’s proposed acquisition of Telekom Romania has been given the green light by the European Commission, though it is conditional on the divestiture of Telekom Romania’s minority shareholding in Telekom Romania Mobile Communications (TRMC), which is a direct competitor to Orange. In a statement, the Commission vice president, Margrethe Vestager, said: “Europeans need access to fast and reliable communication services, with sufficient alternatives on the market. With this decision, and the commitments offered by Orange, the Romanian telecommunications market will continue to offer high quality communication services at competitive prices.”

Telefónica posted a record net income of €7.74 billion in Q2, the result, it admits, of capital gains on the merger of O2 and Virgin Media in the UK and the sale of the Telxius towers business. Revenues for the quarter were up 3.4% in ‘organic’ terms, to €9.96 billion, with a return to growth on its Spanish home turf in what the operator termed in its earnings statement “a more rational market”. The outlook for 2021 has been upgraded from ‘stabilisation’ to ‘stable to slight growth’.

Declines in the corporate and public sector segment dented BT’s numbers in the UK operator’s fiscal Q1, with revenues down 3% year-on-year, to £5.07 billion. Reported profit before tax was down 4%, to £536 million, despite higher adjusted EBITDA, primarily due to the prior-year gain on disposal of its domestic Spanish operations. Chief executive Philip Jansen said: “Our results were overall in line with our expectations during the quarter, with good performance in the UK offsetting challenging conditions in Global’s markets.” There was no change to the FY22 or FY23 outlook.

Looking ahead, BT has announced a tie-up with Microsoft that, says the operator hopefully in a release, will “provide users of BT-managed Microsoft business services with outstanding customer experiences by integrating their Microsoft applications with secure and reliable connectivity and cyber security.” The idea seems to be that the partnership will encourage innovation in areas such as enterprise voice, cyber security and other “industry-focused services”.

Spanish towers company Cellnex has had a soaraway first half-year, with revenues rising 47% year-on-year, to €1.06 billion, and EBITDA climbing 53%, to €804 million. During the period, Cellnex completed the integration of CK Hutchison’s assets in Austria, Denmark, Ireland, Italy and Sweden; the integration of Play and Polkomtel Infrastruktura in Poland; and the merger of a tower business in the Netherlands with Deutsche Telekom. Hardly surprisingly, the outlook for 2021 has been updated in an upwardly direction, to revenues of between €2.53 billion and €2.55 billion.

Vodacom Tanzania has launched a service that allows customers to access insurance products through the popular M-Pesa mobile money app. Called VodaBima, the service enables customers to save up for, say, vehicle insurance, and it also sends the customer an alert when the insurance is about to expire. M-Pesa was first introduced to Tanzania 13 years ago and is now the African nation’s largest mobile financial service, with more than 12 million customers.

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