This report contains forward-looking statements about Orange. By nature, achievement of these targets is subject to numerous risks and uncertainties that could cause actual results to differ materially from the targets announced. The most significant risks are detailed in Section 2.1. Risk factors of the 2020 Universal Registration Document.
The following comments are based on the Consolidated Financial Statements prepared in accordance with IFRS (International Financial Reporting Standards, see Note 2 to the Consolidated Financial Statements). The Statutory Auditors conducted a limited review of these financial statements. The Group has applied IFRS 16 "Leases" since January 1, 2019. In this context, the decision of the IFRS IC (IFRS Interpretations Committee) published in December 2019 and relating to the enforceable lease term was implemented by the Group on December 31, 2020 for all leases falling within the scope of the final decision of the Interpretations Committee, with retroactive effect from January 1, 2019. Data on a historical basis and data on a comparable basis for the first half of 2020 were restated to reflect this change. The impact of the application of this decision on the Consolidated income statement and on the Consolidated statement of cash flows of the Group is not significant (see Note 2.3 to the Consolidated Financial Statements).
Data on a comparable basis, EBITDA after Leases (referred to as "EBITDAaL"), economic CAPEX (referred to as "eCAPEX" or "Economic CAPEX"), the "EBITDAaL - eCAPEX" indicator, organic cash flow from telecom activities, net financial debt, and the ratio of net financial debt to EBITDAaL from telecom activities, are financial indicators not defined by IFRS. For further information on the calculation of these indicators and the reasons why the Orange group uses them and considers them useful for readers, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
Data on a historical basis (see Section 1.6.4 Financial glossary) relates to data for prior periods as reported in the Consolidated Financial Statements for the current period. The transition from data on a historical basis to data on a comparable basis for the first half of 2020 is set out in Section 1.5.1 Data on a comparable basis.
The segment information (see Note 1 to the Consolidated Financial Statements) that is presented in the following sections is understood, unless stated otherwise, before eliminations for transactions with other segments.
Unless stated otherwise, data in the tables is presented in millions of euros, without a decimal point. This presentation may, in some cases, lead to negligible differences in the totals and sub-totals in the tables. Furthermore, the changes presented are calculated on the basis of data in thousands of euros.
1.1 Overview
1.1.1 Financial data and workforce information
Operating data
|
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue (2)
|
20,867
|
20,553
|
20,769
|
1.5%
|
0.5%
|
|
EBITDAaL (1)
|
5,837
|
5,859
|
5,914
|
(0.4)%
|
(1.3)%
|
|
|
Telecom activities
|
5,893
|
5,933
|
5,985
|
(0.7)%
|
(1.5)%
|
|
|
EBITDAaL/Revenue from telecom activities
|
28.2%
|
28.9%
|
28.8%
|
(0.6 pt)
|
(0.6 pt)
|
|
|
Mobile Finance Services
|
(56)
|
(75)
|
(72)
|
24.8%
|
21.7%
|
|
Operating income
|
(1,752)
|
2,220
|
2,250
|
N/A
|
N/A
|
|
|
Telecom activities
|
(1,676)
|
2,309
|
2,337
|
N/A
|
N/A
|
|
|
Mobile Finance Services
|
(77)
|
(90)
|
(87)
|
14.8%
|
11.9%
|
|
eCAPEX (1)
|
3,845
|
3,131
|
3,156
|
22.8%
|
21.9%
|
|
|
Telecom activities
|
3,832
|
3,115
|
3,142
|
23.0%
|
22.0%
|
|
|
eCAPEX/Revenue from telecom activities
|
18.4%
|
15.2%
|
15.1%
|
3.2 pt
|
3.2 pt
|
|
|
Mobile Finance Services
|
13
|
16
|
14
|
(18.5)%
|
(8.9)%
|
|
EBITDAaL - eCAPEX (1)
|
1,992
|
2,727
|
2,758
|
(27.0)%
|
(27.8)%
|
|
|
Telecom activities
|
2,060
|
2,817
|
2,843
|
(26.9)%
|
(27.5)%
|
|
|
Mobile Finance Services
|
(69)
|
(91)
|
(86)
|
23.7%
|
19.7%
|
|
Telecommunication licenses
|
293
|
42
|
42
|
N/A
|
N/A
|
|
Average number of employees (full-time equivalents) (3)
|
132,153
|
134,085
|
134,085
|
(1.4)%
|
(1.4)%
|
|
Number of employees (active employees at end of period) (3)
|
138,626
|
142,969
|
142,969
|
(3.0)%
|
(3.0)%
|
(1) See Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
(2) Revenue from telecom activities. The Net Banking Income (NBI) of Mobile Finance Services is recognized in other operating income (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
(3) See Section 1.6.4 Financial glossary.
Net income
|
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Operating income
|
(1,752)
|
2,250
|
|
Finance costs, net
|
(436)
|
(744)
|
|
Income taxes
|
(417)
|
(491)
|
|
Consolidated net income
|
(2,605)
|
1,015
|
|
Net income attributable to owners of the parent company
|
(2,769)
|
927
|
|
Net income attributable to non-controlling interests
|
165
|
88
|
Organic cash flow from telecom activities
|
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Organic cash flow from telecom activities (1)
|
840
|
255
|
(1) See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary, and Note 1.7 to the consolidated financial statements.
Net financial debt
|
|
June 30, 2021
|
December 31, 2020
|
|
(in millions of euros)
|
|
data on a historical basis
|
|
Net financial debt (1)
|
25,344
|
23,489
|
(1) See Section 1.5 Financial indicators not defined by IFRS, Section 1.6.4 Financial glossary, and Note 8.3 to the consolidated financial statements. Net financial debt as defined and used by Orange does not include the activities of Mobile Finance Services, for which this concept is not relevant.
For further information on the risks relating to the Orange group’s financial debt, see Section 2.1.3 Financial risks of the 2020 Universal Registration Document.
1.1.2 Summary of results for the first half of 2021
The Group achieved a very good commercial performance during the first half of 2021. Revenue was up over the half-year and EBITDAaL was down slightly, largely due to lower co-financing received from third-party operators compared to the first half of 2020. The net income was strongly impacted by the recognition of an asset impairment in Spain (see below).
Revenue totaled 20,867 million euros in the first half of 2021, up 0.5% on a historical basis and 1.5% on a comparable basis compared with the first half of 2020. On a comparable basis, this growth was driven by the Africa & Middle East countries, and to a lesser extent by Business Services and the European countries, with the exception of Spain. This increase was mainly driven by equipment sales, following the sharp decline in the first half of 2020, mobile only services, and IT and integration services, driven in particular by the cloud and Enterprise cybersecurity, while wholesale services were down over the half-year, due in particular to the structural decrease in unbundling and less co-financing received from other operators in France.
Commercial activity performed extremely well in a very competitive environment and despite the continuing effects of the health crisis. This performance is the result of the Group’s strategy, which is based on several growth drivers that are now fully functional and have begun to bear fruit. On a comparable basis, mobile access grew by 5.0% year-on-year, largely driven by the Africa & Middle East countries, which, as of June 30, 2021, had 38.2 million 4G customers (up 36.6% year-on-year) and 22.6 million active Orange Money customers (up 15.4% year-on-year). The Group’s fixed broadband accesses also increased, with growth of 5.4% year-on-year. This change was particularly marked in the Africa & Middle East countries, which posted a record 1.9 million fixed broadband accesses as of June 30, 2021, up 29.6% year-on-year. In fiber, Orange recorded 10.3 million fiber accesses as of June 30, 2021, up 27.8% year-on-year. Lastly, as of June 30, 2021, Mobile Finance Services had a total of almost 1.6 million customers in Europe and 0.6 million customers in Africa.
EBITDAaL amounted to 5,837 million euros in the first half of 2021, down by 1.3% on a historical basis and by 0.4% on a comparable basis compared to the first half of 2020. EBITDAaL benefited from the excellent results in the Africa & Middle East countries (up 17.0%) and in the Other European countries (up 4.7%) but remained affected by the sharp decline in Spain (down 16.2%) and the slight fall in France (down 2.2%), mainly due to lower co-financing received. Regarding telecom activities, EBITDAaL amounted to 5,893 million euros, down 0.7% on a comparable basis, and the ratio of EBITDAaL from telecom activities to revenue stood at 28.2% in the first half of 2021, down 0.6 points on a comparable basis compared to the first half of 2020.
The operating profit amounted to a loss of 1,752 million euros in the first half of 2021, down by 4,002 million euros on a historical basis and 3,972 million euros on a comparable basis compared to the first half of 2020. This decrease is mainly due to the recognition of a goodwill impairment in Spain of 3,702 million euros, following the update by the Group of its strategic plan, which resulted in the review of key operating assumptions and the establishment of new business plans across all Group operating activities. The downward revision of the business plan in Spain reflects an increasingly competitive environment marked by the decline in average revenue per user and the expected lag in economic recovery due to uncertainties regarding the continuation of the health crisis (see Note 6 to the Consolidated Financial Statements).
Consolidated net income amounted to a loss of 2,605 million euros in the first half of 2021, compared with profit of 1,015 million euros in the first half of 2020, a decrease of 3,620 million euros. This change mainly reflects the decrease in operating income.
Economic CAPEX amounted to 3,845 million euros in the first half of 2021, up 21.9% on a historical basis and 22.8% on a comparable basis compared with the first half of 2020. This increase is mainly due to (i) the strong growth in investments in very high-speed fixed and mobile broadband networks (FTTH and 4G/5G), mainly in France, and to a lesser extent, in Africa & Middle East and Europe, and (ii) the decrease in disposals of fixed assets, due to the counter-effect of the significant disposals made in the first half of 2020 (mainly in Spain and France). At June 30, 2021, the Group thus had 52.8 million households connectable to very high-speed broadband (including 51.8 million FTTH connectable households), up 21.5% year-on-year.
Net financial debt totaled 25,344 million euros at June 30, 2021, up by 1,855 million euros compared with December 31, 2020. The change in net financial debt in the first half of 2021 is mainly attributable to the seasonality of activity, the payment of the balance of the dividend for the financial year 2020 and the increase in the Group’s stake in Orange Belgium (see Section 1.1.3 Significant events). The ratio of net financial debt to EBITDAaL from telecom activities stood at 1.99 at June 30, 2021, in line with the objective of a Group ratio of about 2x in the medium term.
Organic cash flow from telecom activities stood at 840 million euros in the first half of 2021, compared with 255 million euros in the first half of 2020, despite the increase in economic CAPEX. This change is mainly due to the sharp variation in working capital requirements between the two periods, which in the first half of 2020 was marked in particular by the support measures undertaken by the Group with regard to its partners in France, while the first half of 2021 saw a gradual return towards normal levels.
For dividends, see Section 1.1.4 Information on trends and the main risks and uncertainties.
1.1.3 Significant events
Infrastructure optimization, development and enhancement (FiberCos - TowerCos)
Orange Concessions (FiberCo in France)
In France, Orange signed a final agreement in March 2021 with a consortium of long-term investors comprising La Banque des Territoires (Caisse des Dépôts), CNP Assurances and EDF Invest for the disposal of 50% of the capital and joint-control of Orange Concessions. With 23 public initiative networks (PIN) representing nearly 4.5 million FTTH connections created or to be created, Orange Concessions will be the leading operator in France for Fiber To The Home (FTTH), deployed and operated on behalf of local authorities. This agreement values Orange Concessions at 2.675 billion euros. It will allow Orange to continue the rollout of fiber in rural areas of France while sharing the investment effort, in line with the ambitions of the Engage 2025 strategic plan. Orange will have a future call option enabling it to take control of and consolidate Orange Concessions.
The transaction has not yet received final approval from the relevant competition and regulatory authorities. As the criteria laid down by IFRS 5 were met at June 30, 2021, the assets and liabilities to be contributed to Orange Concessions are recognized in the statement of financial position under two specific items in assets and liabilities, entitled "Assets held for sale" and "Liabilities related to assets held for sale" respectively. Subject to obtaining this approval and approval of all stakeholders, the closing of this transaction should be completed in the second half of 2021. As a result of Orange’s loss of exclusive control over Orange Concessions, the latter will then be accounted for under associates and joint ventures in the Orange group Consolidated Financial Statements (see Note 3.2 to the Consolidated Financial Statements).
Światlowód Inwestycje (FiberCo in Poland)
In Poland, Orange Polska signed a preliminary agreement with APG Group in April 2021 for the disposal of a 50% interest in its Światlowód Inwestycje subsidiary. Owned at 50% by Orange Polska and at 50% by APG Group, the FiberCo will bring fiber to areas where demand is not met and competitors have no significant footprint. Orange will mainly be responsible for the construction and maintenance of existing lines as well as the additional 1.7 million FTTH connections that will be built over the next five years. Orange holds an option to acquire approximately an additional 1% interest by 2027-2029. This agreement values Światlowód Inwestycje at around 600 million euros, with the FiberCo ultimately representing around 2.4 million lines. In July 2021, FiberCo was granted a 3.1 billion Polish zloty credit facility to fund its fiber roll out plan.
The transaction is subject to the approval by the relevant competition authorities as well as the approval by the competent authorities of the operations to contribute the fiber assets of Orange Polska to Światlowód Inwestycje. The transaction is expected to close in the second half of 2021. When the transaction takes effect, Orange Polska’s 50% interest in Światlowód Inwestycje’s share capital and joint control with APG Group will result in this company being accounted under associates and joint ventures in the Orange group Consolidated Financial Statements (see Note 3.2 to the Consolidated Financial Statements).
Totem (European TowerCo)
In terms of plans to upgrade its European mobile network, in February 2021 Orange announced the creation of Totem, a European TowerCo intended to become a value-creating entity by (i) capitalizing on first-class passive mobile infrastructure assets, (ii) focusing on revenue growth and optimizing operational efficiency, and (iii) promoting both organic and inorganic growth.
Totem will bring together assets with proven operational excellence. It will be equipped with all the skills and functions necessary to create sustainable value, positioning the TowerCo as a leader in the growing European telecommunication tower market. Initially, it will operate a portfolio of premium towers comprising around 25,500 sites in France and Spain, the two largest countries where Orange is present. 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. Based on this scope of sites and the terms of the Master Service Agreement (MSA) signed with Orange, in 2020 Totem would have generated revenue in excess of 500 million euros and EBITDAaL of close to 300 million euros, approximately two thirds of which from assets in France.
Organic growth will be the core focus of Totem’s management. The TowerCo will benefit from significant opportunities to develop its hosting activities across its entire portfolio. In addition, the TowerCo will host and roll out new sites for Orange and other network operators.
Totem also intends to seize opportunities for external growth in Europe. To support this growth ambition, Orange will be able to use the flexibility of the new entity’s entire capital structure, whether for issuing new shares or debt financing. Orange wishes to retain control of the TowerCo to benefit from the important source of sustainable value creation it provides for the Group.
Totem will be run by a fully independent and dedicated management team and will launch operations by the end of 2021 (see Note 1.8 to the Consolidated Financial Statements).
Investments in networks
Fixed access networks
During the first half of 2021, Orange continued to roll out its fiber optic network at a sustained pace. Despite the health crisis linked to the Covid-19 pandemic, the Group connected an additional 9.4 million households to FTTH year-on-year. At June 30, 2021, Orange thus had 51.8 million FTTH connectable households worldwide (and a total of 52.8 million households connectable to very high-speed broadband), up 22.4% year-on-year. This included 26.1 million in France, 15.3 million in Spain and 8.5 million in Other European countries. Whether through its own infrastructure or the use of third-party networks, in late 2019 Orange announced its ambition to be able to offer its FTTH packages to more than 65 million households in Europe by 2023, to assert its leadership position in Europe in fiber.
Despite the decline in the number of customers who switch to the fiber network every day, Orange also allocates significant resources to maintaining its copper network. In order to provide its customers with the best experience, in May 2021 Orange announced the launch of an action plan aimed at improving the quality of the entire fixed network. As a result, copper network maintenance budgets increased, with an expected 500 million euros in 2021. Orange is also committed to maintaining in its catalog, until 2023, the offers that were provided as part of universal services until the end of 2020.
Mobile access networks
Licenses and 5G networks
In July 2021, as part of the assignment process for the spectrum intended for 5G in Spain, Orange obtained a total of 10 MHz spectrum at the reserve price, i.e. 350 million euros (see Note 14 to the Consolidated Financial Statements).
During the first half of 2021, Orange continued to roll out its French and international 5G network. In France, Orange rolled out the 5G network in Paris and Le Havre from March 2021. At the beginning of July 2021, the Group had 520 municipalities covered by its 5G network in France. Internationally, Orange also launched the roll out of the 5G network in Slovakia during the first half of 2021, following the acquisition of the required spectrum in 2020. As of June 30, 2021, Orange had nearly one million customers with a handset and a 5G contract in six countries.
To enable economic players to exploit the opportunities provided by 5G, in February 2021 Orange also announced the opening of nine Orange 5G Labs, seven of which are in France and two abroad. They will be able to test their current solutions and think about new uses while benefiting from Orange’s technical expertise and an ecosystem in which to innovate.
Other mobile networks
In June 2021, Orange announced the extension of the roaming agreement with the operator P4 in Poland, which was initially due to end in June 2021. Accordingly, Orange has secured at least 300 million Polish zlotys in additional revenue over the next four years.
Mobile financial services
In January 2021 Orange Bank announced the acquisition of Anytime, a neobank dedicated to independent professionals and businesses. This acquisition allows Orange to offer its millions of business customers financial support and digital management tools. In addition, in order to offer its loans to as many people as possible, Orange Bank signed a partnership with Younited in June 2021 to accelerate its development in the field of consumer credit. This agreement allows Orange Bank to benefit from the full experience of a recognized player and will improve the customer experience as well as the monitoring of loans. The new platform will enable Orange Bank to propose its personal loan offer to a wider clientele and will make application procedures faster and simplified for customers. At June 30, 2021, Orange Bank had nearly 1.6 million customers in France and Spain (this number includes customers of all offers marketed by Orange Bank: accounts, loans and mobile insurance).
Digital transformation of business customers
In May 2021, Orange and Capgemini announced their intention to create a joint venture called Bleu, which will provide a "Cloud de Confiance" service that meets sovereignty requirements of the French State. This company will offer cloud services to meet the specific needs of public administrations and companies with critical infrastructures subject to specific requirements in terms of confidentiality, security and resilience.
Furthermore, in May 2021 Orange was selected by the European Commission together with other digital players to study the design of the future European quantum communication network, as part of the EuroQCI initiative. This initiative aims to integrate quantum technologies into terrestrial fiber optic and satellite communication networks that will ultimately secure encryption systems and critical infrastructure within the European Union against current and future cyber threats.
Exemplary social and environmental conduct
In February 2021, Orange announced that it had partnered with Engie, the leading developer of solar and wind power in France, to deliver a global renewable energy supply solution in France. This will involve creating new solar energy production capacities, managing the production of all renewable electricity capacities contracted by Orange with other producers and supplying additional volumes to cater to Orange's actual consumption. The 15-year Corporate Power Purchase Agreement signed by Orange and Engie covers the development of two new solar projects totaling 51 Megawatt-peak (MWp). In March 2021, Orange also signed a Corporate Power Purchase Agreement with Total for the supply of 100 Gigawatt hours per year, renewable over a 20-year period. To meet this demand, Total will develop around ten solar power plants across France by 2024. These new contracts underline Orange’s ambition to be Net Zero Carbon by 2040 and to meet 50% of its electricity needs with renewable sources by 2025.
Moreover, in May 2021 Orange announced that it was the leader in terms of number of solar panels deployed in five countries in Africa and the Middle East. Across the entire region, many sites are not connected to the electricity grid or the quality of the grid is not sufficient and sometimes requires the use of oil-fired generators. To date, Orange has installed solar panels at 5,400 of its telecom sites, saving 55 million liters of fuel each year.
Lastly, in May 2021 Orange announced the launch of Orange Ventures Impact, a 30 million euros new investment vehicle dedicated to funding start-ups. Orange Ventures Impact is fully in line with the Engage 2025 strategic plan, with these start-ups being required to help the emergence of new responsible models with a positive impact on the environment, inclusion or CareTech.
Changes in asset portfolio
Orange Concessions (FiberCo France), Światlowód Inwestycje (FiberCo Poland) and Totem (TowerCo Europe)
As regards Orange Concessions (FiberCo in France), Światlowód Inwestycje (FiberCo in Poland) and Totem (European TowerCo), see Infrastructure optimization, development and enhancement (FiberCos - TowerCos) above.
Conditional voluntary public tender offer on shares of Orange Belgium
In the second quarter of 2021, Orange launched a conditional voluntary public tender offer on 46.97% of the capital of Orange Belgium, corresponding to the balance of the shares currently not held, directly or indirectly. Following the offer, Orange SA acquired a 23.94% interest in Orange Belgium and held, directly and indirectly, 76.97% of Orange Belgium's share capital. The total acquisition cost of these shares amounted to 316 million euros. This share purchase offer did not alter the Orange group’s p-existing control over Orange Belgium, its subsidiaries and its holdings (see Note 3.2 to the Consolidated Financial Statements).
This transaction provides the Group with the means to improve the financial flexibility of Orange Belgium, to roll out its long-term value creation strategy more effectively and to enable it to better address major transformations in the Belgian market.
1.1.4 Information on trends and the main risks and uncertainties
The Group is maintaining its financial targets for 2021 as announced on February 18, 2021, namely:
− "Stable but negative" EBITDAaL (see Section 1.5.2 EBITDAaL);
− economic CAPEX (see Section 1.5.3 eCAPEX) of between 7.6 billion euros and 7.7 billion euros;
− organic cash flow from telecom activities (see Section 1.5.5 Organic cash flow from telecom activities) of more than 2.2 billion euros; and
− a ratio of net financial debt to EBITDAaL from telecom activities (see Section 1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities) maintained at around 2x in the medium term.
As a reminder, these objectives take into account the allocation of the 2.2 billion-euro tax refund received at the end of 2020 following the settlement of the tax dispute in France in respect of fiscal years 2005-2006, which is intended to generate added value for the Group in the long term but has an impact on short-term objectives.
Orange will make an interim dividend cash payment for 2021 of 0.30 euros on December 15, 2021. In respect of the 2021 fiscal year, a dividend of 0.70 euros per share will be proposed to the 2022 Shareholders’ Meeting.
By nature, achievement of these targets is subject to numerous risks and uncertainties that could cause actual results to differ materially from the targets announced. The most significant risks are described in Section 2.1 Risk factors of the 2020 Universal Registration Document. As of the date of publication of this report, this description remains valid and makes it possible to assess the main risks and uncertainties for the remaining six months of the 2021 fiscal year.
1.2 Analysis of the Group’s results and capital expenditure
1.2.1 Group revenue
1.2.1.1 Revenue
|
Revenue by segment (2)
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
France
|
8,950
|
8,992
|
9,024
|
(0.5)%
|
(0.8)%
|
|
Europe
|
5,164
|
5,181
|
5,229
|
(0.3)%
|
(1.2)%
|
|
|
Spain
|
2,368
|
2,495
|
2,503
|
(5.1)%
|
(5.4)%
|
|
|
Other European countries
|
2,800
|
2,689
|
2,729
|
4.1%
|
2.6%
|
|
|
Eliminations
|
(4)
|
(4)
|
(4)
|
6.9%
|
6.2%
|
|
Africa & Middle-East
|
3,043
|
2,748
|
2,845
|
10.7%
|
6.9%
|
|
Enterprise
|
3,840
|
3,789
|
3,859
|
1.3%
|
(0.5)%
|
|
International Carriers & Shared Services
|
743
|
729
|
728
|
2.0%
|
2.0%
|
|
Eliminations
|
(873)
|
(885)
|
(916)
|
|
|
|
Group total
|
20,867
|
20,553
|
20,769
|
1.5%
|
0.5%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Revenue from telecom activities (see Note 1.1 to the Consolidated Financial Statements). The Net Banking Income (NBI) of Mobile Finance Services is recognized in other operating income (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
|
Revenue by offer (2)
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Convergent services
|
3,654
|
3,639
|
3,645
|
0.4%
|
0.3%
|
|
Mobile only services
|
5,189
|
5,021
|
5,122
|
3.3%
|
1.3%
|
|
Fixed only services
|
4,533
|
4,629
|
4,673
|
(2.1)%
|
(3.0)%
|
|
IT & integration services
|
1,644
|
1,521
|
1,555
|
8.1%
|
5.8%
|
|
Wholesale services
|
3,906
|
4,042
|
4,062
|
(3.4)%
|
(3.9)%
|
|
Equipment sales
|
1,391
|
1,176
|
1,184
|
18.4%
|
17.5%
|
|
Other revenue
|
549
|
526
|
529
|
4.4%
|
3.7%
|
|
Group total
|
20,867
|
20,553
|
20,769
|
1.5%
|
0.5%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Revenue from telecom activities (see Note 1.1 to the Consolidated Financial Statements). The Net Banking Income (NBI) of Mobile Finance Services is recognized in other operating income (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
The revenue of the Orange group totaled 20,867 million euros in the first half of 2021, up 0.5% on a historical basis and 1.5% on a comparable basis, compared with the first half of 2020.
Change in data on a historical basis
On a historical basis, the 0.5% or 97 million euro increase in Group revenue between the first half of 2020 and the first half of 2021 includes:
− the negative impact of foreign exchange fluctuations, which amounted to 198 million euros, mainly as a result of movements in the US dollar, the Polish zloty, the Egyptian pound and the Guinean franc against the euro;
− the adverse impact from changes in the scope of consolidation and other changes, which amounted to 18 million euros; and
− the organic change on a comparable basis, representing a 314 million euro increase in revenue.
Change in data on a comparable basis
On a comparable basis, the 1.5% or 314 million euro increase in Group revenue between the first half of 2020 and the first half of 2021 was attributable primarily to:
− the 216 million euro rise (an increase of 18.4%) in equipment sales, following the 16.9% decline recorded in the first half of 2020 in the context of the Covid-19 health crisis. Between the two periods, this increase was mainly driven by (i) mobile equipment sales in all European countries (and more particularly in France and Romania) as well for business services, and (ii) fixed telephony and Internet equipment sales (excluding network equipment) in Spain;
− the 168 million euro rise (an increase of 3.3%) in mobile only services in connection with (i) the strong growth in prepaid mobile services in all Africa & Middle East countries (with the exception of the Central African Republic (CAR), which was affected by a data center fire in the first half of 2021), (ii) partially offset by the decline in mobile only services in Europe, mainly in Spain due to the polarization of offers and an overall shift in the market to low-cost offers;
− the 124 million euro rise (an increase of 8.1%) in IT & integration services, mainly for business services (primarily security and cloud services), and to a lesser extent, in Poland; and
− to a lesser extent, (i) the 23 million euro growth (an increase of 4.4%) in other revenue, both in services to International Carriers & Shared Services (upturn in Orange Marine's installation and survey activities) and in Poland (recovery of the energy resale activity), and (ii) the 15 million euro rise (an increase of 0.4%) in convergent services, up across all European countries with the exception of Spain.
These favorable changes were partially offset by:
− the 136 million euro fall (a decrease of 3.4%) in wholesale services, mainly in France, and to a lesser extent in Europe and the Africa & Middle East countries. In France, the decline in wholesale services was mainly due (i) for the fixed line and other business, to the structural decrease in unbundling, which was only partially offset by the increase in construction, marketing and operation and maintenance of fiber optic networks (with, in particular, a decrease in co-financing of FTTH lines received from other operators between the two periods), and (ii) for the mobile business, to the declining trend in national roaming and the decrease in mobile call termination; and
− the 96 million euro fall (a decrease of 2.1%) in fixed only services, mainly due to:
- the downward trend in fixed only narrowband services (conventional telephony) in France and Poland; and
- the decline in fixed only services for business services, in connection with (i) the drop in voice services (with the downward trend in conventional fixed-line telephony and the counter-effect of the massive use of audioconferencing services in the first half of 2020 during the lockdown periods), and (ii) the reduction in data services (with, in particular, the decline in satellite television broadcasting services, which continued to be affected by the Covid-19 health crisis);
- partially offset by the growth of fixed only broadband services in France and countries in the Africa and Middle East countries, due to the increase in fiber optic offers.
The review of the change in revenue by segment is detailed in Section 1.3. Review by operating segment.
1.2.1.2 Number of customers
|
Number of customers
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in thousands, at the end of the period)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Convergent services
|
|
|
|
|
|
|
Number of convergent customers
|
11,185
|
10,814
|
10,814
|
3.4%
|
3.4%
|
|
Mobile services
|
|
|
|
|
|
|
Number of mobile accesses (2)
|
218,401
|
207,956
|
207,956
|
5.0%
|
5.0%
|
|
Incl. Mobile accesses of convergent customers
|
20,160
|
19,233
|
19,233
|
4.8%
|
4.8%
|
|
|
Mobile only accesses
|
198,241
|
188,722
|
188,722
|
5.0%
|
5.0%
|
|
Incl. Contract customers
|
78,800
|
75,094
|
75,094
|
4.9%
|
4.9%
|
|
|
Prepaid customers
|
139,601
|
132,862
|
132,862
|
5.1%
|
5.1%
|
|
Fixed services
|
|
|
|
|
|
|
Number of fixed accesses
|
44,770
|
45,120
|
45,120
|
(0.8)%
|
(0.8)%
|
|
Number of fixed Retail accesses
|
29,316
|
29,322
|
29,322
|
(0.0)%
|
(0.0)%
|
|
Incl. Number of fixed broadband accesses
|
22,095
|
20,971
|
20,971
|
5.4%
|
5.4%
|
|
|
Incl. Very high-speed broadband accesses
|
10,742
|
8,421
|
8,421
|
27.6%
|
27.6%
|
|
|
Incl. Fixed accesses of convergent customers
|
11,185
|
10,814
|
10,814
|
3.4%
|
3.4 %
|
|
|
|
Fixed only accesses
|
10,910
|
10,158
|
10,158
|
7.4%
|
7.4%
|
|
|
Number of fixed narrowband accesses
|
7,222
|
8,351
|
8,351
|
(13.5)%
|
(13.5)%
|
|
Number of fixed Wholesale accesses
|
15,453
|
15,797
|
15,797
|
(2.2)%
|
(2.2)%
|
|
Group total (3)
|
263,171
|
253,076
|
253,076
|
4.0%
|
4.0%
|
|
|
|
|
|
|
|
|
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Excluding customers of Mobile Virtual Network Operators (MVNOs).
(3) Number of mobile service and fixed service customers.
1.2.2 Group operating results
1.2.2.1 Group ETDAaL
This section presents the transition from Group revenue to EBITDAaL by type of expense, after presentation adjustments, as presented in Section 1.5.2 EBITDAaL and in Note 1 to the Consolidated Financial Statements.
|
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
20,867
|
20,553
|
20,769
|
1.5%
|
0.5%
|
|
External purchases (2) (3)
|
(8,733)
|
(8,446)
|
(8,546)
|
3.4%
|
2.2%
|
|
|
Commercial expenses, equipment and content costs (2)
|
(3,483)
|
(3,054)
|
(3,095)
|
14.0%
|
12.5%
|
|
|
Service fees and inter-operator costs (2)
|
(2,198)
|
(2,312)
|
(2,332)
|
(5.0)%
|
(5.8)%
|
|
|
Other network expenses and IT expenses (2)
|
(1,766)
|
(1,667)
|
(1,698)
|
5.9%
|
4.0%
|
|
|
Other external purchases (2) (3)
|
(1,286)
|
(1,412)
|
(1,420)
|
(8.9)%
|
(9.4)%
|
|
Other operating income and expenses (2) (3)
|
96
|
6
|
(3)
|
N/A
|
N/A
|
|
Labor expenses (2) (3)
|
(4,373)
|
(4,308)
|
(4,342)
|
1.5%
|
0.7%
|
|
Operating taxes and levies (2) (3)
|
(1,188)
|
(1,222)
|
(1,232)
|
(2.8)%
|
(3.6)%
|
|
Depreciation and amortization of financed assets
|
(41)
|
(22)
|
(22)
|
92.2%
|
92.2%
|
|
Depreciation and amortization of right-of-use assets
|
(731)
|
(647)
|
(652)
|
13.0%
|
12.0%
|
|
Interest on debts related to financed assets (3) (4)
|
(1)
|
(1)
|
(1)
|
27.5%
|
27.5%
|
|
Interest on lease liabilities (3) (4)
|
(58)
|
(56)
|
(58)
|
2.8%
|
(0.6)%
|
|
EBITDAaL (4)
|
5,837
|
5,859
|
5,914
|
(0.4)%
|
(1.3)%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.6.4 Financial glossary.
(3) Adjusted data (see Section 3.1.5 Financial indicators not defined by IFRSs and Note 1 to the Consolidated Financial Statements).
(4) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
In the first half of 2021, Orange group EBITDAaL stood at 5,837 million euros (including 5,893 million euros from telecom activities and a loss of 56 million euros from Mobile Finance Services activities), down 1.3% on a historical basis and 0.4% on a comparable basis compared to the first half of 2020. The ratio of EBITDAaL from telecom activities to revenue ratio was 28.2% in the first half of 2020, down 0.6 points on a historical basis and on a comparable basis compared to the first half of 2019.
Change in data on a historical basis
On a historical basis, the 1.3% drop (76 million euros) in Group EBITDAaL between the first half of 2020 and the first half of 2021 is due to:
− the negative impact of foreign exchange fluctuations, which came to 54 million euros, mainly as a result of movements in the US dollar, the Egyptian pound and the Guinean franc against the euro;
− the adverse impact from changes in the scope of consolidation and other changes for 1 million euros; and
− the organic change on a comparable basis, representing a 21 million euro fall in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 0.4% drop, i.e., 21 million euros, in Group EBITDAaL between the first half of 2020 and the first half of 2021, was mainly due to:
− the 14.0% or 429 million euro increase in commercial expenses, equipment and content costs (see Section 1.6.4 Financial glossary), in connection with (i) the uptrend in sales activity in almost all countries (growth in equipment sales, increase in advertising, promotional and sponsoring expenses following the reopening of points of sale), after the 10.1% decline recorded in the first half of 2020 in the context of the Covid-19 health crisis, and (ii) additionally, the increase in distribution commissions in Africa & Middle East countries (in connection with business growth, in particular from Orange Money);
− the 5.9% or 99 million euro increase in other network expenses and IT expenses (see Section 1.6.4 Financial glossary), mainly due to (i) the increase in operating and technical maintenance outsourcing expenses in France and in Africa & Middle East countries (further roll out of networks in all countries), as well as IT expenses for services to International Carriers & Shared Services;
− the 13.0% or 84 million euro increase in depreciation and amortization of right-of-use assets, mainly in France (due in particular to the commissioning of new technical sites) and, to a lesser extent, in Africa & Middle East countries;
− the 1.5% or 66 million euro increase, in adjusted labor expenses (see Section 1.6.4 Financial glossary), mainly related to (i) the unusual change in provisions for paid leave between the two periods (linked to the specific context of the Covid-19 health crisis in the first half of 2020), (ii) the increase in IT & integration services (in particular cybersecurity and cloud) for business services, and (iii) business growth in Africa & Middle East countries; and additionally; and
− the 92.2% or 20 million euro increase in depreciation and amortization of financed assets (set-up boxes in France financed by a banking intermediary).
These favorable changes were partially offset by:
− the 1.5% or 314 million euro growth in revenue;
− the 8.9% or 126 million euro decrease in other adjusted external purchases (see Section 1.6.4 Financial glossary), relating to (i) the decrease in overheads (travel, entertainment and vehicle expenses), mainly in France, Europe and for business services, in connection with travel savings and the cancellation of various events, and (ii) the counter-effect of the Covid-19 health crisis, with the recognition in the first half of 2020 of significant additional costs related to health arrangements;
− the 5.0% or 115 million euro decrease in service fees and inter-operator costs (see Section 1.6.4 Financial glossary) in most countries, mainly due to (i) the wide-spread decline in interconnection costs, but more particularly in France and Europe, the counter-effect of the increase in these costs recorded in the first half of 2020 in the context of the Covid-19 health crisis, and (ii) to a lesser extent, the drop in network expenses in Spain (due to the increase in fiber optic roll out and the decline in sales activity);
− the 89 million euro decrease in other adjusted operating income (net of other adjusted operating expenses, see section 1.6.4 Financial glossary), which is mainly attributable to the decrease in impairment and losses on trade receivables from telecom activities, mainly due to the reassessment regarding the risk of non-recovery of trade receivables at June 30, 2021 (see Notes 4.1 and 5.1 to the Consolidated Financial Statements); and
− to a lesser extent, the 2.8% or 34 million euro decrease in adjusted operating taxes and levies (see Section 1.6.4 Financial glossary), mainly in France (in particular the Territorial Economic Contribution (CET)), partially offset by the increase in Africa & Middle East countries (due to business growth).
In the first half of 2020, 160 million euros had been recognized as the main specific cost overruns incurred in managing the Covid-19 health crisis.
1.2.2.2 Group operating income
This section presents the transition from EBITDAaL to Group operating income by type of expense, after presentation adjustments, as presented in Section 1.5.2 EBITDAaL and in Note 1 to the Consolidated Financial Statements.
|
|
2021
|
2020
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
|
EBITDAaL
|
5,837
|
5,859
|
5,914
|
|
Significant litigations
|
(89)
|
(169)
|
(169)
|
|
Specific labor expenses
|
(41)
|
(28)
|
(28)
|
|
Fixed assets, investments and business portfolio review
|
12
|
58
|
59
|
|
Restructuring program costs
|
(305)
|
(19)
|
(19)
|
|
Acquisition and integration costs
|
(20)
|
(10)
|
(10)
|
|
Depreciation and amortization of fixed assets
|
(3,499)
|
(3,523)
|
(3,549)
|
|
Reclassification of translation adjustment from liquidated entities
|
(0)
|
-
|
-
|
|
Impairment of goodwill
|
(3,702)
|
-
|
-
|
|
Impairment of fixed assets
|
(4)
|
1
|
1
|
|
Share of profits (losses) of associates and joint ventures
|
1
|
(5)
|
(6)
|
|
Elimination of interest on debts related to financed assets (1)
|
1
|
1
|
1
|
|
Elimination of interest on lease liabilities (1)
|
58
|
56
|
58
|
|
Operating Income
|
(1,752)
|
2,220
|
2,250
|
(1) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
In the first half of 2021, Orange group operating income amounted to a loss of 1,752 million euros (including 1,676 million euros from telecom activities and 77 million euros from Mobile Finance Services activities), down 4,002 million euros on a historical basis and 3,972 million euros on a comparable basis compared to the first half of 2020.
Change in data on a historical basis
On a historical basis, the 4,002 million euro decrease in Group operating income between the first half of 2020 and the first half of 2021 was due to:
− the negative impact of foreign exchange fluctuations, which came to 29 million euros, mainly as a result of movements in the US dollar against the euro;
− the adverse impact from changes in the scope of consolidation and other changes for 1 million euros; and
− organic change on a comparable basis, representing a 3,972 million euro decrease in operating income.
Change in data on a comparable basis
On a comparable basis, the 3,972 million euro decrease in Group operating income between the first half of 2020 and the first half of 2021 was attributable to:
− primarily, the 3,702 million euro goodwill impairment in Spain in the first half of 2021. In Spain, the business plan was subject to a significant downwards revision since December 31, 2020 due to (i) a competitive environment which is further deteriorating despite ongoing operations aimed at market consolidation (marked by an erosion in average revenue per user), and (ii) uncertainties regarding the continuation of the health crisis (expected timeframe for economic recovery extended). In addition to the downgrading of the business plan, the expected effects of the TowerCos transaction in Spain have also been included in the future cash flows of the Spain Cash Generating Unit (CGU), with the transaction expected to take place by the end of the year (see Note 6 to the Consolidated Financial Statements); and
− in addition, (i) the recognition, in the first half of 2021, of a 305 million euro expense for restructuring program costs, mainly in Spain (employee departure plans) and services to International Carriers & Shared Services (in particular for the optimization of the real estate portfolio), (ii) the 47 million euro decrease in the expense for the fixed asset, investment and business portfolio review, mainly due to the decrease in gains on disposals of fixed assets in France and Spain (see Note 3.1 to the consolidated financial statements), (iii) partially offset by the 80 million euro decrease in net expenses for significant litigations, corresponding to the reassessment of the risk on various disputes.
1.2.3 Group net income
|
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Operating income
|
(1,752)
|
2,250
|
|
Cost of gross financial debt (except financed assets)
|
(461)
|
(569)
|
|
Interest on debts related to financed assets (1)
|
(1)
|
(1)
|
|
Gains (losses) on assets contributing to net financial debt
|
(5)
|
1
|
|
Foreign exchange gains (losses)
|
57
|
(115)
|
|
Interest on lease liabilities (1)
|
(58)
|
(58)
|
|
Other net financial expenses
|
32
|
(3)
|
|
Finance costs, net
|
(436)
|
(744)
|
|
Income taxes
|
(417)
|
(491)
|
|
Consolidated net income
|
(2,605)
|
1,015
|
|
Net income attributable to owners of the parent company
|
(2,769)
|
927
|
|
Net income attributable to non-controlling interests
|
165
|
88
|
(1) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
Consolidated net income of the Orange group amounted to a loss of 2,605 million euros in the first half of 2021, compared with profit of 1,015 million euros in the first half of 2020, a decrease of 3,620 million euros. This fall was mainly due to the 4,002 million euro decline in operating income, partially offset (i) by the 308 million euro improvement in finance costs (see Note 8 to the Consolidated Financial Statements), and (ii) the 74 million euro decrease in income taxes expense (see Note 7 to the Consolidated Financial Statements).
Between the two periods, the improvement in finance costs mainly stems from (i) the decline in the cost of gross financial debt excluding financed assets, due in particular to the reduction in the volume of bonds, and (ii) the improvement in foreign currency gains, primarily due to the impact of derivatives (cross-currency swaps) set up by the Group to hedge its economic exposure to subordinated notes issued in pounds sterling, for which the revaluation for foreign exchange risk is not recognized (see Notes 8.2 and 11.4 to the Consolidated Financial Statements).
After taking into account non-controlling interests (see Note 11.6 to the Consolidated Financial Statements), net income attributable to owners of the parent company amounted to a loss of 2,769 million euros in the first half of 2021, compared with a gain of 927 million euros in the first half of 2020, making a decrease of 3,696 million euros.
1.2.4 Group comprehensive income
The transition from consolidated net income to consolidated comprehensive income is described in the Consolidated statement of comprehensive income in the Consolidated Financial Statements.
1.2.5 Group capital expenditure
|
Investments in property, plant and equipment and intangible assets (2)
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
eCAPEX
|
3,845
|
3,131
|
3,156
|
22.8%
|
21.9%
|
|
Elimination of proceeds from sales of property, plant and equipment and intangible assets (3)
|
48
|
197
|
197
|
(75.7)%
|
(75.7)%
|
|
Telecommunication licenses
|
293
|
42
|
42
|
N/A
|
N/A
|
|
Financed assets (4)
|
23
|
117
|
117
|
(80.7)%
|
(80.7)%
|
|
Group total
|
4,208
|
3,488
|
3,513
|
20.7%
|
19.8%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Note 1.4 to the Consolidated Financial Statements.
(3) Elimination of proceeds from sales of property, plant and equipment and intangible assets included in economic CAPEX (eCAPEX).
(4) Financed assets include set-up boxes in France, which are financed by an intermediary bank and meet the standard criterion for the definition of property, plant and equipment according to IAS 16.
Between the first half of 2020 and the first half of 2021, the rise in investments in Group property, plant and equipment and intangible assets results from (i) the increase in investments in property, plant and equipment and intangible assets excluding telecommunication licenses, and (ii) higher expenses related to telecommunication licenses, (iii) partially offset by the decline in expenses related to financed assets.
Group Financial investments (see Section 1.6.4 Financial glossary) are detailed in the Consolidated statement of cash flows in the Consolidated Financial Statements and in Section 1.4.1 Liquidity and cash flows from telecom activities.
1.2.5.1 Economic CAPEX
In the first half of 2021, Orange group economic CAPEX stood at 3,845 million euros (including 3,832 million euros from telecom activities and 13 million euros from Mobile Finance Services), up 21.9% on a historical basis and 22.8% on a comparable basis compared to the first half of 2020. The economic CAPEX to revenue ratio for telecom activities was 18.4% in the first half of 2021, up 3.2 points on a historical basis and on comparable basis compared to the first half of 2020.
Change in data on a historical basis
On a historical basis, the 21.9% or 690 million euro increase in Group economic CAPEX between the first half of 2020 and the first half of 2021 includes:
− the negative impact of exchange rate fluctuations, which came in at 25 million euros; and
− organic change on a comparable basis, representing a 714 million euro increase in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 714 million euro increase in Group economic CAPEX between the first half of 2020 and the first half of 2021, representing a 22.8% rise, is mainly due to:
− the strong rise in investments in very high-speed fixed and mobile broadband networks (FTTH and 4G/5G), mainly in France, and to a lesser extent, in Africa & Middle East countries and in Europe. The first half of 2020 was marked by significant delays in the roll-out of very high-speed fixed and mobile broadband networks due to the Covid-19 health crisis. At June 30, 2021, the Group thus had 51.8 million FTTH-connectable households (and a total of 52.8 million households connectable to very high-speed broadband) worldwide, up 22.4% year-on-year, including 26.1 million in France, 15.3 million in Spain, 5.4 million in Poland and 2.3 million in Romania (see Section 1.1.3 Significant events). Furthermore, at the end of June 2021, Orange began to market its 5G network in six European countries (see Section 1.1.3 Significant events);
− the decrease in fixed asset disposals, due to the counter-effect from significant disposals carried out in the first half of 2020, (i) in Spain, as part of the sale of 1,500 non-strategic mobile sites to Cellnex for 260 million euros (including 75 million euros in the first half of 2020), and (ii) in France, with the sale of FTTH connections to SFR in the first half of 2020, following the agreement signed in May 2018 between Orange and SFR (which led to Orange withdrawing from 236 municipalities in its AMII area, in favor of SFR); and
− the increase in economic CAPEX relating to leased handsets, Liveboxes and equipment installed at customers' premises, mainly in France.
Group investments benefitted from co-financing received from other operators and subsidies, particularly in France, Spain and Poland.
1.2.5.2 Telecommunication licenses
In the first half of 2021, telecommunication licenses amounted to 293 million euros and mainly concerned (i) France for 207 million euros (with the renewal of 2G licenses in the 900 MHz and 1,800 MHz spectrums), Spain for 64 million euros (mainly for 5G licenses), Belgium for 11 million euros and Guinea for 10 million euros.
In the first half of 2020, telecommunication licenses amounted to 42 million euros, on a historical basis and on a comparable basis, and mainly concerned (i) Romania for 30 million euros (with the renewal of the 3G license in the 2,100 MHz spectrum), and (ii) Morocco for 9 million euros.
In addition, telecommunication licenses may, in some cases, give rise to annual fees recognized as taxes and operating levies in the Consolidated income statement.
1.3 Review by operating segment
The following table presents, for the Orange group, the main operating data (financial data and workforce information) by segment for the first half years of 2021 and 2020 on a comparable basis and 2020 on a historical basis.
For more details on segment information, see Note 1 to the Consolidated Financial Statements.
|
Period ended June 30
|
France
|
|
|
|
Europe
|
Africa & Middle-East
|
Enterprise
|
International Carriers & Shared Services
|
Telecom activity eliminations
|
Total telecom activities
|
Mobile Finance Services
|
Group eliminations
|
Group total
|
|
(in millions of euros)
|
Spain
|
Other European countries
|
Eliminations Europe
|
Europe Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
|
|
|
|
|
|
|
|
|
Revenue
|
8,950
|
2,368
|
2,800
|
(4)
|
5,164
|
3,043
|
3,840
|
743
|
(869)
|
20,870
|
-
|
(4)
|
20,867
|
|
EBITDAaL
|
3,181
|
610
|
749
|
-
|
1,359
|
1,051
|
484
|
(182)
|
-
|
5,893
|
(56)
|
1
|
5,837
|
|
Operating income
|
1,548
|
(3,773)
|
189
|
-
|
(3,584)
|
579
|
295
|
(514)
|
-
|
(1,676)
|
(77)
|
1
|
(1,752)
|
|
eCAPEX
|
2,171
|
457
|
413
|
-
|
870
|
525
|
157
|
110
|
-
|
3,832
|
13
|
-
|
3,845
|
|
Telecommunication licenses
|
207
|
64
|
11
|
-
|
75
|
11
|
-
|
-
|
-
|
293
|
-
|
-
|
293
|
|
Average number of employees
|
49,927
|
6,749
|
19,251
|
-
|
26,000
|
14,575
|
27,990
|
12,719
|
-
|
131,211
|
942
|
-
|
132,153
|
|
|
|
|
|
|
|
|
|
|
|
2020 - Data on a comparable basis (1)
|
|
|
|
|
|
|
|
|
|
Revenue
|
8,992
|
2,495
|
2,689
|
(4)
|
5,181
|
2,748
|
3,789
|
729
|
(883)
|
20,555
|
-
|
(2)
|
20,553
|
|
EBITDAaL
|
3,252
|
728
|
715
|
-
|
1,444
|
898
|
486
|
(148)
|
-
|
5,933
|
(75)
|
1
|
5,859
|
|
Operating income
|
1,508
|
228
|
169
|
-
|
397
|
435
|
281
|
(312)
|
-
|
2,309
|
(90)
|
1
|
2,220
|
|
eCAPEX
|
1,647
|
392
|
363
|
-
|
755
|
434
|
170
|
110
|
-
|
3,115
|
16
|
-
|
3,131
|
|
Telecommunication licenses
|
0
|
3
|
30
|
-
|
33
|
9
|
0
|
0
|
-
|
42
|
-
|
-
|
42
|
|
Average number of employees
|
51,946
|
7,017
|
20,089
|
-
|
27,107
|
14,440
|
27,142
|
12,589
|
-
|
133,225
|
860
|
-
|
134,085
|
|
|
|
|
|
|
|
|
|
|
|
2020 - Data on a historical basis
|
|
|
|
|
|
|
|
|
|
Revenue
|
9,024
|
2,503
|
2,729
|
(4)
|
5,229
|
2,845
|
3,859
|
728
|
(915)
|
20,771
|
-
|
(1)
|
20,769
|
|
EBITDAaL
|
3,301
|
728
|
729
|
-
|
1,457
|
935
|
471
|
(179)
|
-
|
5,985
|
(72)
|
1
|
5,914
|
|
Operating income
|
1,557
|
228
|
174
|
-
|
402
|
456
|
267
|
(345)
|
-
|
2,337
|
(87)
|
1
|
2,250
|
|
eCAPEX
|
1,635
|
392
|
369
|
-
|
761
|
449
|
174
|
123
|
-
|
3,142
|
14
|
-
|
3,156
|
|
Telecommunication licenses
|
0
|
3
|
30
|
-
|
33
|
9
|
0
|
0
|
-
|
42
|
-
|
-
|
42
|
|
Average number of employees
|
51,909
|
7,017
|
20,089
|
-
|
27,107
|
14,440
|
27,116
|
12,682
|
-
|
133,254
|
831
|
-
|
134,085
|
(1) See Section 1.5.1 Data on a comparable basis.
1.3.1 France
|
France
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
8,950
|
8,992
|
9,024
|
(0.5)%
|
(0.8)%
|
|
EBITDAaL
|
3,181
|
3,252
|
3,301
|
(2.2)%
|
(3.6)%
|
|
EBITDAaL / Revenue
|
35.5%
|
36.2%
|
36.6%
|
(0.6 pt)
|
(1.0 pt)
|
|
Operating income
|
1,548
|
1,508
|
1,557
|
2.7%
|
(0.5)%
|
|
eCAPEX
|
2,171
|
1,647
|
1,635
|
31.8%
|
32.8%
|
|
eCAPEX / Revenue
|
24.3%
|
18.3%
|
18.1%
|
5.9 pt
|
6.1 pt
|
|
Telecommunication licenses (2)
|
207
|
0
|
0
|
N/A
|
N/A
|
|
Average number of employees
|
49,927
|
51,946
|
51,909
|
(3.9)%
|
(3.8)%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.2.6.2 Telecommunication licenses.
1.3.1.1 Revenue - France
|
France
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
8,950
|
8,992
|
9,024
|
(0.5)%
|
(0.8)%
|
|
Retail services (2)
|
5,383
|
5,377
|
5,377
|
0.1%
|
0.1%
|
|
|
Convergent services
|
2,317
|
2,268
|
2,268
|
2.2%
|
2.2%
|
|
|
Mobile only services
|
1,122
|
1,120
|
1,124
|
0.2%
|
(0.1)%
|
|
|
Fixed only services
|
1,944
|
1,990
|
1,986
|
(2.3)%
|
(2.1)%
|
|
|
|
Fixed only broadband services
|
1,415
|
1,367
|
1,363
|
3.5%
|
3.8%
|
|
|
|
Fixed only narrowband services
|
529
|
623
|
623
|
(15.1)%
|
(15.1)%
|
|
Wholesale services
|
2,720
|
2,838
|
2,871
|
(4.2)%
|
(5.3)%
|
|
Equipment sales
|
523
|
458
|
458
|
14.2%
|
14.2%
|
|
Other revenue
|
325
|
319
|
318
|
1.9%
|
2.1%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.6.4 Financial glossary.
Change in data on a historical basis
On a historical basis, the 74 million euro decrease in revenue in France between the first half of 2020 and the first half of 2021 is attributable to (i) the unfavorable effect of changes in the scope of consolidation and other changes for 32 million euros, and (ii) organic change on a comparable basis, i.e., a 42 million euro decline in revenue.
Change in data on a comparable basis
On a comparable basis, the 42 million euro decrease in revenue in France between the first half of 2020 and the first half of 2021, representing a 0.5% drop, is mainly attributable to (i) the decline in wholesale services and, to a lesser extent, the fall in conventional narrowband services, (ii) partially offset by the increase in equipment sales, the rise in convergent services and the increase in fixed only broadband services.
Between the two periods, the 42 million euro drop in revenue in France is mainly due to:
− the 118 million euro decrease in Wholesale services, mainly linked to the counter-effect of the significant co-financing received in the first half of 2020, and the impact of the decline in unbundling, national roaming and mobile call termination; and
− the drop in revenue from Fixed only services, down 46 million euros, due to the downward trend in conventional telephony (down 15.1%, i.e., 94 million euros) and the migration of customers towards convergent offers. Revenue from fixed only broadband services continued to grow (up 48 million euros, i.e., an increase of 3.5%), due to the 3.1% increase in the fixed only broadband access base year-on-year, partially offset by the 2.1% decline in half-year fixed only broadband ARPO (see Section 1.6.4 Financial glossary) between the two periods.
This decrease was partly offset by:
− the 65 million euro increase in revenue from Equipment sales, in line with the recovery of business activity following the reopening of stores, in the wake of the marked decline recorded in the first half of 2020 due to the Covid-19 health crisis; and
− the 49 million euro increase in Convergent services, which continued to grow, with year-on-year growth of 1.1% in the convergent customer base. Half-year convergent ARPO (see section 1.6.4 Financial glossary) increased 0.3% between June 30, 2020 and June 30, 2021, despite (i) the decrease in customer roaming due to travel restrictions on account of the health crisis, and (ii) the decline in content offers compared to the high consumption posted during the first lockdown in the first half of 2020. Furthermore, the number of mobile telephones in households continued to grow, with 9.8 million convergent mobile customers at June 30, 2021 (growth of 1.5% year-on-year) equivalent to 1.68 mobile accesses per convergent customer.
1.3.1.2 EBITDAaL - France
Change in data on a historical basis
On a historical basis, the 120 million euro decrease in EBITDAaL in France between the first half of 2020 and the first half of 2021 includes (i) the negative effect of changes in scope of consolidation and other changes for 49 million euros, (ii) the positive impact of exchange rate fluctuations for 1 million euros, and (iii) organic change on a comparable basis, i.e., a 71 million euro decrease in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 71 million euro decrease in EBITDAaL in France between the first half of 2020 and the first half of 2021 was mainly attributable to:
− (i) the increase in commercial expenses and equipment costs (mainly the costs of handsets and other equipment sold), in line with the increase in equipment sales, the upturn in business activity and the acceleration of fiber penetration, (ii) the increase in other network expenses and IT expenses, related in particular to network maintenance and operations, (iii) the increase in depreciation and amortization of right-of-use assets and financed assets (due in particular to the commissioning of new technical sites), and (iv) the 42 million euro drop in revenue;
− partly offset by (i) the decline in other external purchases (lower overheads, counter-effect of specific additional costs resulting from the management of the Covid-19 health crisis in the first half of 2020), (ii) the reduction in operating taxes and levies (including the Territorial Economic Contribution (CET), (iii) the increase in other operating expenses, due in particular to the decrease in impairments and losses on trade receivables, (iv) the fall in interconnection costs (counter-effect of the increase posted in the first half of 2020 in the context of the Covid-19 health crisis), and (v) to a lesser extent, the reduction in labor expenses, owing mainly to the decrease in the average number of employees (full-time equivalents).
1.3.1.3 Operating income - France
Change in data on a historical basis
On a historical basis, the 9 million euro decrease in operating income in France between the first half of 2020 and the first half of 2021 includes (i) the negative effect of changes in the scope of consolidation and other changes for 49 million euros, (ii) the positive impact of exchange rate fluctuations for 1 million euros, and (iii) organic change on a comparable basis, i.e., a 40 million euro increase in operating income.
Change in data on a comparable basis
On a comparable basis, the 40 million euro increase in operating income in France between the first half of 2020 and the first half of 2021 was mainly attributable to:
− the counter-effect of the recognition of a net expense on significant litigations of 167 million euros in the first half of 2020, relating to the reassessment of risk on various disputes;
− partially offset by (i) the 71 million euro decrease in EBITDAaL, and (ii) the counter-effect of the recognition of a 23 million euro gain on disposal of fixed assets in the first half of 2020.
1.3.1.4 Economic CAPEX - France
Change in data on a historical basis
On a historical basis, the 536 million euro increase in economic CAPEX in France between the first half of 2020 and the first half of 2021 was attributable to (i) the positive effect of changes in the scope of consolidation and other changes for 12 million euros, and (ii) organic change on a comparable basis, i.e., a 524 million euro rise in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 524 million euro increase in economic CAPEX in France between the first half of 2020 and the first half of 2021 was mainly attributable to:
− the strong increase in investments in very high-speed fixed broadband networks (FTTH, with the increase in purchases of co-financing from other operators and the counter-effect of the significant delays in the roll-out of networks in the context of the Covid-19 health crisis in the first half of 2020), and additionally, in mobile networks (5G network roll out); and
− the decrease in disposals of fixed assets, stemming mainly from the counter-effect of the sale of FTTH connections to SFR in the first half of 2020, following the agreement signed in May 2018 between Orange and SFR (which led to Orange withdrawing from 236 municipalities in its AMII area, in favor of SFR).
1.3.1.5 Additional information - France
|
France
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in thousands, at the end of the period)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Convergent services
|
|
|
|
|
|
|
Number of convergent customers
|
5,858
|
5,796
|
5,796
|
1.1%
|
1.1%
|
|
6-month convergent ARPO (in euros) (3)
|
69.0
|
68.8
|
68.8
|
0.3%
|
0.3%
|
|
Mobile services
|
|
|
|
|
|
|
Number of mobile accesses (2)
|
21,556
|
21,467
|
21,467
|
0.4%
|
0.4%
|
|
Incl. Mobile accesses of convergent customers
|
9,842
|
9,692
|
9,692
|
1.5%
|
1.5%
|
|
|
Mobile only accesses
|
11,714
|
11,775
|
11,775
|
(0.5)%
|
(0.5)%
|
|
Incl. Contract customers
|
19,802
|
19,417
|
19,417
|
2.0%
|
2.0%
|
|
|
Prepaid customers
|
1,754
|
2,050
|
2,050
|
(14.4)%
|
(14.4)%
|
|
6-month mobile only ARPO (in euros) (3)
|
16.9
|
16.6
|
16.6
|
2.0%
|
1.7%
|
|
Fixed services
|
|
|
|
|
|
|
Number of fixed accesses
|
29,835
|
30,674
|
30,674
|
(2.7)%
|
(2.7)%
|
|
Number of fixed Retail accesses
|
15,692
|
16,044
|
16,044
|
(2.2)%
|
(2.2)%
|
|
Incl.
|
Number of fixed broadband accesses
|
12,118
|
11,755
|
11,755
|
3.1%
|
3.1%
|
|
|
Incl. Very high-speed broadband accesses
|
5,253
|
3,766
|
3,766
|
39.5%
|
39.5%
|
|
|
Incl. Fixed accesses of convergent customers
|
5,858
|
5,796
|
5,796
|
1.1%
|
1.1%
|
|
|
|
Fixed only accesses
|
6,261
|
5,959
|
5,959
|
5.1%
|
5.1%
|
|
6-month fixed only broadband ARPO (in euros) (3)
|
35.8
|
36.5
|
36.4
|
(2.1)%
|
(1.8)%
|
|
Incl.
|
Number of fixed narrowband accesses
|
3,574
|
4,289
|
4,289
|
(16.7)%
|
(16.7)%
|
|
|
Incl. STN accesses
|
3,539
|
4,253
|
4,253
|
(16.8)%
|
(16.8)%
|
|
|
|
Other fixed accesses
|
35
|
36
|
36
|
(1.9)%
|
(1.9)%
|
|
Number of fixed Wholesale accesses
|
14,143
|
14,630
|
14,630
|
(3.3)%
|
(3.3)%
|
|
Incl.
|
FTTH accesses
|
4,523
|
3,005
|
3,005
|
50.5%
|
50.5%
|
|
|
Copper accesses
|
9,621
|
11,624
|
11,624
|
(17.2)%
|
(17.2)%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Excluding customers of Mobile Virtual Network Operators (MVNOs).
(3) See Section 1.6.4 Financial glossary.
1.3.2 Europe
|
Europe
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
5,164
|
5,181
|
5,229
|
(0.3)%
|
(1.2)%
|
|
EBITDAaL
|
1,359
|
1,444
|
1,457
|
(5.9)%
|
(6.8)%
|
|
EBITDAaL / Revenue
|
26.3%
|
27.9%
|
27.9%
|
(1.6 pt)
|
(1.6 pt)
|
|
Operating income
|
(3,584)
|
397
|
402
|
N/A
|
N/A
|
|
eCAPEX
|
870
|
755
|
761
|
15.2%
|
14.4%
|
|
eCAPEX / Revenue
|
16.8%
|
14.6%
|
14.5%
|
2.3 pt
|
2.3 pt
|
|
Telecommunication licenses (2)
|
75
|
33
|
33
|
127.5%
|
127.5%
|
|
Average number of employees
|
26,000
|
27,107
|
27,107
|
(4.1)%
|
(4.1)%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.2.6.2 Telecommunication licenses.
1.3.2.1 Revenue - Europe
|
Europe
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
5,164
|
5,181
|
5,229
|
(0.3)%
|
(1.2)%
|
|
Retail services
|
3,451
|
3,569
|
3,596
|
(3.3)%
|
(4.0)%
|
|
|
Convergent services
|
1,337
|
1,371
|
1,377
|
(2.5)%
|
(2.9)%
|
|
|
Mobile only services
|
1,434
|
1,514
|
1,525
|
(5.3)%
|
(6.0)%
|
|
|
Fixed only services
|
522
|
540
|
546
|
(3.3)%
|
(4.5)%
|
|
|
IT & integration services
|
158
|
144
|
147
|
9.4%
|
7.2%
|
|
Wholesale services
|
926
|
944
|
952
|
(2.0)%
|
(2.8)%
|
|
Equipment sales
|
718
|
598
|
611
|
20.0%
|
17.5%
|
|
Other revenue
|
70
|
69
|
70
|
0.9%
|
(0.6)%
|
(1) See Section 1.5.1 Data on a comparable basis.
|
Europe
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
5,164
|
5,181
|
5,229
|
(0.3)%
|
(1.2)%
|
|
Spain
|
2,368
|
2,495
|
2,503
|
(5.1)%
|
(5.4)%
|
|
Poland
|
1,294
|
1,241
|
1,276
|
4.3%
|
1.4%
|
|
Belgium & Luxembourg
|
656
|
637
|
637
|
3.0%
|
3.0%
|
|
Central Europe (2)
|
856
|
817
|
823
|
4.7%
|
4.0%
|
|
Eliminations
|
(10)
|
(10)
|
(10)
|
|
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Central Europe: entities in Moldova, Romania and Slovakia.
Change in data on a historical basis
On a historical basis, the 65 million euro decrease in revenue in Europe between the first half of 2020 and the first half of 2021 was attributable to (i) the negative effect of foreign exchange fluctuations for 40 million euros, mainly as a result of movements in the Polish zloty against the euro (for 34 million euros), (ii) the unfavorable impact of changes in the scope of consolidation and other changes for 8 million euros, and (iii) organic change on a comparable basis, i.e., a 17 million euro decrease in revenue.
Change in data on a comparable basis
On a comparable basis, the 17 million euro decline in revenue in Europe between the first half of 2020 and the first half of 2021, corresponding to 0.3% decrease, was due to the fall in revenue in Spain, largely offset by revenue growth in Other European countries (all up), and was mainly attributable to:
− the decline in retail services in Spain, as well as the drop in wholesale services in all countries;
− partially offset by (i) the growth in equipment sales in all countries, the increase in retail services in the Other European countries, and (iii) to a lesser extent, the increase in IT & integration services in Poland.
Between the two periods, the 17 million euro decline in revenue in Europe stemmed mainly from:
− the 80 million euro decrease in revenue from Mobile only services, mainly in Spain (see Section 1.3.2.6 Additional information - Spain), and to a lesser extent, Belgium and Slovakia. This decline was mainly due to the fall in international customer roaming revenue due to travel restrictions related to the Covid-19 health crisis. The mobile only access base was up 1.3% year-on-year, driven by the growth of the mobile only access base in the Other European countries (up 2.2% year-on-year);
− the 34 million euro reduction in Convergent services, due to the deterioration in Spain (down 8.5%) as a result of strong competition (see Section 1.3.2.6 Additional information - Spain), partially offset by the increase in revenue from convergent services in Poland (up 14.3%) and Belgium (up 16.2%). The convergent customer base was up 6.2% year-on-year, growing in all countries, and totaled 5.3 million customers at June 30, 2021;
− the 19 million euro decrease in revenue from Wholesale services in all countries, mainly resulting from the decline in fixed wholesale services (in Spain, Belgium and Poland), in particular due to the decline in international wholesale services; and
− the 18 million euro drop in Fixed only services, mainly resulting from the downward trend in conventional telephony in Poland.
This decline was partially offset by:
− the 120 million euro increase in revenue from Equipment sales, up in all countries, owing to the recovery of business activity in the first half of 2021 with the opening of stores, unlike the first half of 2020 which was marked by restrictions related to the Covid-19 health crisis; and
− to a lesser extent, the 14 million euro rise in revenue from IT & integration services, mainly in Poland.
1.3.2.2 EBITDAaL - Europe
Change in data on a historical basis
On a historical basis, the 98 million euro decrease in EBITDAaL in Europe between the first half of 2020 and the first half of 2021 stemmed from (i) the negative effect of foreign exchange fluctuations for 12 million euros, (ii) the adverse impact of changes in the scope of consolidation and other changes for 2 million euros, and (iii) organic change on a comparable basis, i.e., an 85 million euro fall in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 85 million euro decrease in EBITDAaL in Europe between the first half of 2020 and the first half of 2021 was mainly attributable to:
− the increase in commercial expenses, equipment and content costs, in line with the rise in equipment sales and the business recovery in the first half of 2021 (counter-effect of the Covid-19 health crisis in the first half of 2020, which led to a reduction in costs of handsets and other equipment sold in almost all countries); and
− the 17 million euro decrease in revenue;
− partially offset by the decline in service fees and inter-operator costs, primarily due to the drop in interconnection charges (mainly in Spain, and to a lesser extent in Belgium and Romania) linked to the decline in wholesale services.
1.3.2.3 Operating income - Europe
Change in data on a historical basis
On a historical basis, the 3,986 million euro decrease in operating income in Europe between the first half of 2020 and the first half of 2021 was attributable to (i) the unfavorable impact of exchange rate fluctuations for 3 million euros, (ii) the negative effect of changes in the scope of consolidation and other changes for 2 million euros, and (iii) organic change on a comparable basis, i.e., a 3,981 million euro decrease in operating income.
Change in data on a comparable basis
On a comparable basis, the 3,981 million euro decrease in operating income in Europe between the first half of 2020 and the first half of 2021 was attributable:
− primarily, to the 3,702 million euro goodwill impairment in Spain in the first half of 2021. In Spain, the business plan was subject to a significant downwards revision since December 31, 2020 due to (i) a competitive environment which is further deteriorating despite ongoing operations aimed at market consolidation (marked by an erosion in average revenue per user), and (ii) uncertainties regarding the continuation of the health crisis (expected timeframe for economic recovery extended). In addition to the downgrading of the business plan, the expected effects of the TowerCos transaction in Spain have also been included in the future cash flows of the Spain Cash Generating Unit (CGU), with the transaction expected to take place by the end of the year (see Note 6 to the Consolidated Financial Statements); and
− as well as to (i) the recognition, in the first half of 2021, of a 145 million euro expense for the costs of restructuring programs in Spain (employee departure plans, see Note 5.2 to the Consolidated Financial Statements), and (ii) the 85 million euro decline in EBITDAaL.
1.3.2.4 Economic CAPEX - Europe
Change in data on a historical basis
On a historical basis, the 109 million euro increase in economic CAPEX in Europe between the first half of 2020 and the first half of 2021, includes (i) the negative effect of exchange rate fluctuations, i.e. 6 million euros, and (ii) organic change on a comparable basis, i.e., a 115 million euro increase in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 115 million euro increase in economic CAPEX in Europe between the first half of 2020 and the first half of 2021 was mainly due to (i) the counter-effect of the disposal of fixed assets in Spain in the first half of 2020 (see Section 1.3.2.6 Additional information - Spain), and (ii) an upturn in investments in networks, across all countries, in a context still marked by the Covid-19 health crisis.
1.3.2.5 Additional information - Europe
|
Europe
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in thousands, at the end of the period)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Convergent services
|
|
|
|
|
|
|
Number of convergent customers
|
5,327
|
5,018
|
5,018
|
6.2%
|
6.2%
|
|
Mobile services
|
|
|
|
|
|
|
Number of mobile accesses (2)
|
51,398
|
50,098
|
50,098
|
2.6%
|
2.6%
|
|
Incl. Mobile accesses of convergent customers
|
10,317
|
9,541
|
9,541
|
8.1%
|
8.1%
|
|
|
Mobile only accesses
|
41,081
|
40,557
|
40,557
|
1.3%
|
1.3%
|
|
Incl. Contract customers
|
38,765
|
37,009
|
37,009
|
4.7%
|
4.7%
|
|
|
Prepaid customers
|
12,633
|
13,089
|
13,089
|
(3.5)%
|
(3.5)%
|
|
Fixed services
|
|
|
|
|
|
|
Number of fixed accesses
|
10,898
|
10,702
|
10,702
|
1.8%
|
1.8%
|
|
Number of fixed Retail accesses
|
9,588
|
9,535
|
9,535
|
0.6%
|
0.6%
|
|
Incl. Number of fixed broadband accesses
|
7,873
|
7,529
|
7,529
|
4.6%
|
4.6%
|
|
|
Incl. Very high-speed broadband accesses
|
5,006
|
4,395
|
4,395
|
13.9%
|
13.9%
|
|
|
Incl. Fixed accesses of convergent customers
|
5,327
|
5,018
|
5,018
|
6.2%
|
6.2%
|
|
|
|
Fixed only accesses
|
2,546
|
2,512
|
2,512
|
1.4%
|
1.4%
|
|
Incl. Number of fixed narrowband accesses
|
1,715
|
2,005
|
2,005
|
(14.5)%
|
(14.5)%
|
|
Number of fixed Wholesale accesses
|
1,310
|
1,168
|
1,168
|
12.2%
|
12.2%
|
|
|
|
|
|
|
|
|
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Excluding customers of Mobile Virtual Network Operators (MVNOs).
1.3.2.6 Additional information - Spain
|
Spain
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
2,368
|
2,495
|
2,503
|
(5.1)%
|
(5.4)%
|
|
EBITDAaL
|
610
|
728
|
728
|
(16.2)%
|
(16.2)%
|
|
EBITDAaL / Revenue
|
25.8%
|
29.2%
|
29.1%
|
(3.4 pt)
|
(3.3 pt)
|
|
Operating Income
|
(3,773)
|
228
|
228
|
N/A
|
N/A
|
|
eCAPEX
|
457
|
392
|
392
|
16.6%
|
16.6%
|
|
eCAPEX / Revenue
|
19.3%
|
15.7%
|
15.7%
|
3.6 pt
|
3.6 pt
|
|
Telecommunication licenses (2)
|
64
|
3
|
3
|
N/A
|
N/A
|
|
Average number of employees
|
6,749
|
7,017
|
7,017
|
(3.8)%
|
(3.8)%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.2.6.2 Telecommunication licenses.
Revenue - Spain
|
Spain
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
2,368
|
2,495
|
2,503
|
(5.1)%
|
(5.4)%
|
|
Retail services
|
1,614
|
1,779
|
1,779
|
(9.2)%
|
(9.2)%
|
|
|
Convergent services
|
933
|
1,020
|
1,020
|
(8.5)%
|
(8.5)%
|
|
|
Mobile only services
|
450
|
517
|
517
|
(12.9)%
|
(12.9)%
|
|
|
Fixed only services
|
225
|
238
|
238
|
(5.4)%
|
(5.4)%
|
|
|
IT & integration services
|
6
|
4
|
4
|
42.6%
|
42.6%
|
|
Wholesale services
|
443
|
449
|
449
|
(1.4)%
|
(1.4)%
|
|
Equipment sales
|
310
|
255
|
263
|
21.5%
|
17.9%
|
|
Other revenue
|
0
|
12
|
12
|
(96.0)%
|
(96.0)%
|
(1) See Section 1.5.1 Data on a comparable basis.
Change in data on a historical basis
On a historical basis, the 135 million euro decrease in revenue in Spain between the first half of 2020 and the first half of 2021 was mainly attributable to (i) the unfavorable impact of changes in the scope of consolidation and other changes for 8 million euros, and (ii) organic change on a comparable basis, i.e., a 127 million euro decline in revenue.
Change in data on a comparable basis
On a comparable basis, the 127 million euro fall in revenue in Spain between the two periods, i.e., a 5.1% drop, stems primarily from:
− the 86 million euro decrease in revenue from Convergent services, which is attributable to a still very aggressive competitive environment, resulting in a decline in the half-year convergent ARPO (down 8.3% year-on-year), despite a 2.4% year-on-year increase in the convergent customer base;
− the 67 million euro decline in revenue from Mobile only services, mainly due to the ongoing migration of the market towards low cost offers, resulting in (i) a drop of 3.8% in the half-year mobile only ARPO year-on-year, and (ii) a decline of 1.5% in the mobile only access base year-on-year. The contract customer base (excluding M2M) was affected by competitive pressure and by the migration of customers towards low cost offers, while the prepaid offer customer base continued to suffer from the Covid-19 health crisis and its effects on tourism; and
− to a lesser extent, (i) the 13 million euro drop in revenue from Fixed only services, also impacted by a very competitive environment, resulting in a 10.9% decline in the half-year fixed only ARPO year-on-year, and a 1.2% drop in the fixed only broadband access base, and (ii) the 11 million euro fall in Other revenue;
− partially offset by the 55 million euro increase in Equipment sales, owing to the recovery of commercial activity in the first half of 2021 and the counter-effect of the Covid-19 health crisis in the first half of 2020 (notably with the closure of stores).
EBITDAaL - Spain
Change in data on a historical basis and on a comparable basis
On both a historical and a comparable basis, the 118 million euro decrease in EBITDAaL in Spain between the first half of 2020 and the first half of 2021 is mainly attributable to:
− (i) the 127 million euro decrease in revenue, (ii) the increase in commercial expenses and equipment costs in connection with the rise in equipment sales and the business recovery in the first half of 2021, and (iii) the increase in content costs, mainly due to the rise in television service costs and soccer rights;
− partially offset (i) by the decrease in service fees and inter-operator costs, due to the drop in network access connectivity costs owing to the migration of customers to fiber on the proprietary network, as well as the decline in business, and (ii) the decrease in other external purchases due in particular to efforts to optimize the cost structure.
Operating income - Spain
Change in data on a historical basis and on a comparable basis
On both a historical basis and a comparable basis, the 4,001 million euro decrease in operating income in Spain between the first half of 2020 and the first half of 2021 was attributable to:
− primarily, in the first half of 2021, the 3,702 million euro goodwill impairment in Spain, where the business plan has been subject to a significant downwards revision since December 31, 2020 due to (i) a competitive environment which is further deteriorating despite ongoing operations aimed at market consolidation (marked by an erosion in average revenue per user), and (ii) uncertainties regarding the continuation of the health crisis (expected timeframe for economic recovery extended). In addition to the downgrading of the business plan, the expected effects of the TowerCos transaction have also been included in the future cash flows of the Spain Cash Generating Unit (CGU), with the transaction expected to take place by the end of the year (see Note 6 to the Consolidated Financial Statements); and
− additionally, (i) the recognition, in the first half of 2021, of a 145 million euro expense for the costs of restructuring programs in Spain (employee departure plans, see Note 5.2 to the Consolidated Financial Statements), (ii) the 118 million euro decrease in EBITDAaL, and (iii) to a lesser extent, the 22 million euro reduction in the expense for the fixed asset, investment and business portfolio review, mainly due to the decrease in gains on disposals of fixed assets.
Economic CAPEX - Spain
Change in data on a historical basis and on a comparable basis
On both a historical and a comparable basis, the 65 million euro increase in economic CAPEX in Spain between the first half of 2020 and the first half of 2021 is mainly due to (i) the counter-effect of disposals completed in the first half of 2020 as part of the sale of 1,500 non-strategic mobile sites to Cellnex for 260 million euros (including 75 million euros in the first half of 2020), and (ii) an acceleration of investments in mobile networks, which had slowed down in the first half of 2020 due to the Covid-19 health crisis, (iii) partially offset by lower IT-related investments.
1.3.3 Africa & Middle East
|
Africa & Middle East
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
3,043
|
2,748
|
2,845
|
10.7%
|
6.9%
|
|
EBITDAaL
|
1,051
|
898
|
935
|
17.0%
|
12.4%
|
|
EBITDAaL / Revenue
|
34.5%
|
32.7%
|
32.9%
|
1.9 pt
|
1.7 pt
|
|
Operating Income
|
579
|
435
|
456
|
33.0%
|
27.0%
|
|
eCAPEX
|
525
|
434
|
449
|
21.0%
|
16.9%
|
|
eCAPEX / Revenue
|
17.2%
|
15.8%
|
15.8%
|
1.5 pt
|
1.5 pt
|
|
Telecommunication licenses (2)
|
11
|
9
|
9
|
15.5%
|
15.7%
|
|
Average number of employees
|
14,575
|
14,440
|
14,440
|
0.9%
|
0.9%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) See Section 1.2.6.2 Telecommunication licenses.
Africa & Middle East continued to suffer political or economic instability and sometimes tax or regulatory pressures that could affect the business and results of Group subsidiaries and holdings, and may continue to affect them in the future. In some cases, these situations have led the Group to book impairments on assets (see Note 6 to the Consolidated Financial Statements). For further information on the risk factors, see Section 2.1 Risk factors of the 2020 Universal Registration Document.
1.3.3.1 Revenue - Africa & Middle East
|
Africa & Middle East
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
3,043
|
2,748
|
2,845
|
10.7%
|
6.9%
|
|
Retail services
|
2,660
|
2,359
|
2,444
|
12.8%
|
8.8%
|
|
|
Mobile only services
|
2,329
|
2,080
|
2,164
|
11.9%
|
7.6%
|
|
|
Fixed only services
|
318
|
265
|
270
|
19.9%
|
17.9%
|
|
|
IT & integration services
|
13
|
13
|
11
|
1.6%
|
24.6%
|
|
Wholesale services
|
310
|
329
|
342
|
(5.6)%
|
(9.3)%
|
|
Equipment sales
|
54
|
42
|
40
|
28.8%
|
34.3%
|
|
Other revenue
|
18
|
18
|
19
|
0.7%
|
(4.3)%
|
(1) See Section 1.5.1 Data on a comparable basis.
|
Africa & Middle East
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
3,043
|
2,748
|
2,845
|
10.7%
|
6.9%
|
|
Sonatel sub-group (2)
|
978
|
868
|
895
|
12.7%
|
9.3%
|
|
Côte d’Ivoire sub-group (3)
|
710
|
633
|
636
|
12.1%
|
11.5%
|
|
Egypt
|
449
|
406
|
440
|
10.7%
|
2.1%
|
|
Morocco
|
314
|
296
|
295
|
6.1%
|
6.3%
|
|
Jordan
|
190
|
182
|
200
|
4.3%
|
(4.7)%
|
|
Cameroon
|
185
|
159
|
159
|
16.6%
|
16.6%
|
|
Congo (DRC)
|
131
|
130
|
143
|
0.4%
|
(8.2)%
|
|
Other countries (4)
|
113
|
100
|
105
|
13.1%
|
8.2%
|
|
Eliminations
|
(28)
|
(27)
|
(27)
|
|
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Sonatel sub-group: entities in Senegal, Mali, Guinea, Guinea-Bissau and Sierra Leone.
(3) Côte d’Ivoire sub-group: entities in Côte d’Ivoire, Burkina Faso and Liberia.
(4) Other countries: mainly Botswana, Central African Republic (CAR) and Madagascar.
Change in data on a historical basis
On a historical basis, the 197 million euro increase in revenue in Africa & Middle East countries between the first half of 2020 and the first half of 2021 includes (i) the negative impact of exchange rate fluctuations for 98 million euros, mainly as a result of movements in the Egyptian pound (for 33 million euros), the Guinean franc (for 22 million euros), and the Jordanian dinar (for 17 million euros) against the euro, and (ii) organic change on a comparable basis, representing a 295 million euro increase in revenue.
Change in data on a comparable basis
On a comparable basis, the 295 million euro increase in revenue in Africa & Middle East countries between the first half of 2020 and the first half of 2021, corresponding to a 10.7% rise, was mainly due to business growth in all countries in the region, with the exception of the Central African Republic (CAR, affected by a data center fire in the first half of 2021), with ten countries posting double-digit growth.
Between the two periods, the 295 million euro growth in revenue in Africa & Middle East was mainly driven by the 248 million euro increase in Mobile only services, owing in large part to the performance of its growth drivers:
− data services, which posted growth of 23.0% year-on-year, driven in particular by momentum in the 4G customer base, which grew 36.6% year-on-year and recorded over 38 million customers as of June 30, 2021; and
− Orange Money, up 20.6% year-on-year.
Furthermore, the mobile access base continues to grow and posted an increase of 7.0% year-on-year.
Revenue from Fixed only services grew 53 million euros between the two periods, driven by the growth in broadband services, which increased by 48 million euros (i.e., up 29.8% year-on-year), with 1.9 million fixed only broadband accesses as of June 30, 2021 (growth of 29.6% year-on-year).
These favorable developments were partly offset by the decline in revenue from Wholesale services, which fell 19 million euros between the two periods, due in particular to the decrease in revenue from hubbing and incoming international traffic volumes.
1.3.3.2 EBITDAaL - Africa & Middle East
Change in data on a historical basis
On a historical basis, the 116 million euro increase in EBITDAaL in Africa & Middle East countries between the first half of 2020 and the first half of 2021 included (i) the negative effect of foreign exchange fluctuations for 35 million euros, (ii) the unfavorable impact of changes in the scope of consolidation and other changes for 2 million euros, and (iii) organic change on a comparable basis, i.e., an increase of 153 million euros in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 153 million euro increase in EBITDAaL in Africa & Middle East countries between the first half of 2020 and the first half of 2021 was primarily attributable to:
− the growth of 295 million euros in revenue;
− partially offset by (i) the rise in commercial expenses and equipment costs, mainly due to the increase in distribution fees in connection with business growth (in particular Orange Money), (ii) the increase in other network expenses and IT expenses, due to the continued network roll-outs in all countries, (iii) the rise in operating taxes and levies, particularly due to the region's business growth, and (iv) the increase in other operating expenses.
1.3.3.3 Operating income - Africa & Middle East
Change in data on a historical basis
On a historical basis, the 123 million euro increase in operating income in Africa & Middle East countries between the first half of 2020 and the first half of 2021 included (i) the negative effect of foreign exchange fluctuations for 18 million euros, (ii) the unfavorable impact of changes in the scope of consolidation and other changes for 2 million euros, and (iii) organic change on a comparable basis, i.e., an increase of 144 million euros in operating income.
Change in data on a comparable basis
On a comparable basis, the 144 million euro increase in operating income in Africa & Middle East countries between the first half of 2020 and the first half of 2021 was mainly due to the 153 million euro rise in EBITDAaL, partially offset by the recognition, in the first half of 2021, of a 32 million euro expense for restructuring program costs.
1.3.3.4 Economic CAPEX - Africa & Middle East
Change in data on a historical basis
On a historical basis, the 76 million euro increase in economic CAPEX in Africa & Middle East countries between the first half of 2020 and the first half of 2021, includes (i) the negative effect of exchange rate fluctuations, i.e., 15 million euros, and (ii) organic change on a comparable basis, i.e., a 91 million euro increase in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 91 million euro increase in economic CAPEX for Africa & Middle East countries between the first half of 2020 and the first half of 2021 was mainly attributable to increased investments in very high-speed mobile and fixed broadband networks (4G and FTTH), in particular in Egypt and for the Sonatel subgroup.
1.3.3.5 Additional information - Africa & Middle East
|
Africa & Middle East
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in thousands, at the end of the period)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Mobile services
|
|
|
|
|
|
|
Number of mobile accesses (2)
|
132,192
|
123,516
|
123,516
|
7.0%
|
7.0%
|
|
Incl. Contract customers
|
6,979
|
5,793
|
5,793
|
20.5%
|
20.5%
|
|
|
Prepaid customers
|
125,214
|
117,723
|
117,723
|
6.4%
|
6.4%
|
|
Fixed services
|
|
|
|
|
|
|
Number of fixed accesses
|
2,712
|
2,277
|
2,277
|
19.1%
|
19.1%
|
|
Number of fixed Retail accesses
|
2,712
|
2,277
|
2,277
|
19.1%
|
19.1%
|
|
Incl. Number of broadband accesses
|
1,867
|
1,441
|
1,441
|
29.6%
|
29.6%
|
|
|
Number of fixed narrowband accesses
|
845
|
836
|
836
|
1.0%
|
1.0%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Excluding customers of Mobile Virtual Network Operators (MVNOs).
1.3.4 Enterprise
|
Enterprise
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
3,840
|
3,789
|
3,859
|
1.3%
|
(0.5)%
|
|
EBITDAaL
|
484
|
486
|
471
|
(0.5)%
|
2.7%
|
|
EBITDAaL / Revenue
|
12.6%
|
12.8%
|
12.2%
|
(0.2 pt)
|
0.4 pt
|
|
Operating income
|
295
|
281
|
267
|
4.8%
|
10.4%
|
|
eCAPEX
|
157
|
170
|
174
|
(8.0)%
|
(9.9)%
|
|
eCAPEX / Revenue
|
4.1%
|
4.5%
|
4.5%
|
(0.4 pt)
|
(0.4 pt)
|
|
Average number of employees
|
27,990
|
27,142
|
27,116
|
3.1%
|
3.2%
|
(1) See Section 1.5.1 Data on a comparable basis.
1.3.4.1 Revenue - Enterprise
|
Enterprise
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
3,840
|
3,789
|
3,859
|
1.3%
|
(0.5)%
|
|
Fixed only services
|
1,834
|
1,921
|
1,958
|
(4.5)%
|
(6.3)%
|
|
|
Voice services (2)
|
569
|
626
|
632
|
(9.0)%
|
(10.0)%
|
|
|
Data services (3)
|
1,265
|
1,296
|
1,326
|
(2.4)%
|
(4.6)%
|
|
IT & integration services
|
1,565
|
1,442
|
1,475
|
8.6%
|
6.1%
|
|
Mobile services and equipment (4)
|
440
|
426
|
426
|
3.4%
|
3.4%
|
|
|
Mobile only services
|
318
|
324
|
327
|
(1.6)%
|
(2.7)%
|
|
|
Wholesale services
|
21
|
21
|
21
|
0.3%
|
0.3%
|
|
|
Equipment sales
|
101
|
81
|
77
|
24.6%
|
30.2%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Voice services include (i) legacy voice offers (PSTN access), (ii) Voice over Internet Protocol (VoIP) products, (iii) audio-conference services, (iv) incoming traffic for call centers, and (v) sales of network equipment related to the operation of voice services.
(3) Data services include (i) legacy data solutions still offered by Orange Business Services (Frame Relay, Transrel, leased lines, narrowband), (ii) services having reached a certain maturity such as IP-VPN, and broadband infrastructure products such as satellite or fiber optic access, (iii) satellite TV broadcast services, (iv) Business Everywhere roaming offers, and (v) network equipment sales related to the operation of data services.
(4) Mobile services and equipment include (i) mobile only services, (ii) wholesale services corresponding to incoming mobile B2B traffic invoiced to other carriers, and (iii) mobile equipment sales invoiced to businesses.
Change in data on a historical basis
On a historical basis, the 19 million euro decrease in Enterprise revenue between the first half of 2020 and the first half of 2021 includes (i) the unfavorable effect of foreign exchange fluctuations for 59 million euros, mainly as a result of movements in the US dollar against the euro, (ii) the negative impact of changes in scope of consolidation and other changes for 11 million euros, and (iii) organic change on a comparable basis, i.e., a 51 million euro increase in revenue.
Change in data on a comparable basis
On a comparable basis, the 51 million euro increase in Enterprise revenue between the first half of 2020 and the first half of 2021, corresponding to a 1.3% increase, was mainly due to (i) the growth in IT & integration services and, to a lesser extent, Mobile services and equipment sales, (ii) partially offset by the decline in Fixed only services (voice and data).
Between the two periods, the 123 million euro increase in IT & integration services revenue was mainly due to the growth in Cloud (up 9.8% year-on-year) and security services (up 14.3% year-on-year).
Revenue from Mobile services and equipment was up 15 million euros, driven by the upturn in equipment sales, while roaming remained impacted by travel restrictions related to the Covid-19 health crisis.
These changes were partially offset by the 57 million euro decrease in revenue from Voice services, which stems from the underlying decline in voice services (particularly conventional fixed-line telephony, down by 11.2% year-on-year) and the counter-effect of the substantial use of audioconferencing services in the first half of 2020 during the lockdown periods. Between the two periods, revenue from Data services also fell (down 31 million euros) mainly outside France, due in particular to the transformation of service technologies as well as the 5.9% decline in revenue from satellite broadcasting services (Globecast), which remained impacted by the Covid-19 health crisis (postponements and cancellations of sporting and cultural events).
1.3.4.2 EBITDAaL - Enterprise
Change in data on a historical basis
On a historical basis, the 13 million euro increase in Enterprise EBITDAaL between the first half of 2020 and the first half of 2021 includes (i) the positive effect of changes in scope of consolidation and other changes for 26 million euros, (ii) the unfavorable impact of exchange rate fluctuations for 11 million euros, and (iii) organic change on a comparable basis, i.e., a 2 million euro decrease in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 2 million euro decrease in Enterprise EBITDAaL between the first half of 2020 and the first half of 2021 was mainly attributable to:
− (i) the increase in commercial expenses and equipment costs, in connection with the growth in mobile equipment sales, (ii) the rise in labor expenses, due in particular to the higher average number of employees (full-time equivalents) linked to the growth of IT & integration services, and (iii) the increase in other service fees and costs;
− partially offset by (i) the 51 million euro increase in revenue, (ii) the decrease in service fees and inter-operator costs, (iii) the reduction in overheads, (iv) the drop in other operating expenses (net of other operating income), and (v) the reduction in operating taxes and levies.
1.3.4.3 Operating income - Enterprise
Change in data on a comparable basis
On a historical basis, the 28 million euro increase in Enterprise operating income between the first half of 2020 and the first half of 2021 includes (i) the positive impact of changes in the scope of consolidation and other changes for 26 million euros, (ii) the unfavorable effect of foreign exchange rate fluctuations for 11 million euros, mainly as a result of movements in the US dollar against the euro, and (iii) organic change on a comparable basis, i.e., a 14 million euro increase in operating income.
Change in data on a comparable basis
On a comparable basis, the 14 million euro increase in Enterprise operating income between the first half of 2020 and the first half of 2021 was mainly due to the decrease in depreciation and amortization of fixed assets, as a result of the slowdown in investments as well as handset retirements.
1.3.4.4 Economic CAPEX - Enterprise
Change in data on a historical basis
On a historical basis, the 17 million euro decrease in Enterprise economic CAPEX between the first half of 2020 and the first half of 2021, is attributable to (i) the unfavorable effect of exchange rate fluctuations, i.e., 4 million euros, and (ii) organic change on a comparable basis, i.e., a 14 million euro reduction in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 14 million euro decrease in Enterprise economic CAPEX between the first half of 2020 and the first half of 2021 is mainly attributable to a lower number of projects under construction.
1.3.4.5 Additional information - Enterprise
|
Enterprise
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in thousands, at the end of the period)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Mobile services
|
|
|
|
|
|
|
Number of mobile accesses in France (2)
|
13,254
|
12,875
|
12,875
|
2.9%
|
2.9%
|
|
Fixed services
|
|
|
|
|
|
|
Number of fixed accesses in France
|
1,325
|
1,467
|
1,467
|
(9.7)%
|
(9.7)%
|
|
Number of fixed Retail accesses
|
1,325
|
1,467
|
1,467
|
(9.7)%
|
(9.7)%
|
|
Incl. Number of fixed broadband accesses
|
236
|
246
|
246
|
(4.0)%
|
(4.0)%
|
|
|
Number of fixed narrowband accesses
|
1,088
|
1,220
|
1,220
|
(10.8)%
|
(10.8)%
|
|
Number of IP-VPN accesses worldwide (3)
|
352
|
360
|
360
|
(2.3)%
|
(2.3)%
|
|
Incl. Number of IP-VPN accesses in France (3)
|
304
|
305
|
305
|
(0.4)%
|
(0.4)%
|
|
|
|
|
|
|
|
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Contract customers. Excluding customers of Mobile Virtual Network Operators (MVNOs).
(3) Access of customers outside the Orange group, not including carrier market.
1.3.5 International Carriers & Shared Services
|
International Carriers & Shared Services
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
743
|
729
|
728
|
2.0%
|
2.0%
|
|
EBITDAaL
|
(182)
|
(148)
|
(179)
|
(23.6)%
|
(1.7)%
|
|
EBITDAaL / Revenue
|
(24.5)%
|
(20.2)%
|
(24.6)%
|
(4.3 pt)
|
0.1 pt
|
|
Operating income
|
(514)
|
(312)
|
(345)
|
(64.4)%
|
(49.0)%
|
|
eCAPEX
|
110
|
110
|
123
|
0.5%
|
(10.8)%
|
|
eCAPEX / Revenue
|
14.8%
|
15.0%
|
16.9%
|
(0.2 pt)
|
(2.1 pt)
|
|
Average number of employees
|
12,719
|
12,589
|
12,682
|
1.0%
|
0.3%
|
(1) See Section 1.5.1 Data on a comparable basis.
1.3.5.1 Revenue - International Carriers & Shared Services
|
International Carriers & Shared Services
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Revenue
|
743
|
729
|
728
|
2.0%
|
2.0%
|
|
Wholesale services
|
522
|
532
|
530
|
(1.9)%
|
(1.4)%
|
|
Other revenue
|
221
|
196
|
199
|
12.4%
|
11.2%
|
(1) See Section 1.5.1 Data on a comparable basis.
Change in data on a historical basis
On a historical basis, the 15 million euro increase in International Carriers & Shared Services revenue between the first half of 2020 and the first half of 2021 includes (i) the favorable impact from changes in scope of consolidation and other changes for 4 million euros, (ii) the negative impact of foreign exchange fluctuations for 4 million euros, and (iii) organic change on a comparable basis, i.e., a 14 million euro increase in revenue.
Change in data on a comparable basis
On a comparable basis, the 14 million euro increase in International Carriers & Shared Services revenue between the first half of 2020 and the first half of 2021, up 2%, was attributable to:
− the 24 million euro growth in Other revenue, in particular due to the increase in Orange Marine's installation and survey activities, with low business activity in the first half of 2020 due to the Covid-19 health crisis;
− partially offset by the 10 million euro decrease in Wholesale services, in connection with the decline in international wholesale services (in particular voice and roaming activities) still impacted by the Covid-19 health crisis and the transformation of uses.
1.3.5.2 EBITDAaL - International Carriers & Shared Services
Change in data on a historical basis
On a historical basis, the 3 million euro decrease in International Carriers & Shared Services EBITDAaL between the first half of 2020 and the first half of 2021 includes (i) the positive effect of changes in scope of consolidation and other changes for 29 million euros, (ii) the favorable impact of exchange rate fluctuations for 3 million euros, and (iii) organic change on a comparable basis, i.e., a 35 million euro decrease in EBITDAaL.
Change in data on a comparable basis
On a comparable basis, the 35 million euro decrease in International Carriers & Shared Services EBITDAaL between the first half of 2020 and the first half of 2021 stemmed mainly from:
− (i) the increase in commercial expenses and equipment costs, mainly due to the rise in advertising, promotion and sponsorship costs (2024 Olympic Games rights), the increase in labor expenses, and (iii) the increase in IT expenses;
− partially offset by (i) the 14 million euro increase in revenue, and (ii) the decrease in overheads of shared services, due in particular to ongoing travel restrictions due to the Covid-19 health crisis.
1.3.5.3 Operating income - International Carriers & Shared Services
Change in data on a historical basis
On a historical basis, the 169 million euro decrease in International Carriers & Shared Services operating income between the first half of 2020 and the first half of 2021 includes (i) the positive effect of changes in scope of consolidation and other changes for 30 million euros, (ii) the favorable impact of exchange rate fluctuations for 2 million euros, and (iii) organic change on a comparable basis, i.e., a 201 million euro decrease in operating income.
Change in data on a comparable basis
On a comparable basis, the 201 million euro decrease in International Carriers & Shared Services operating income between the first half of 2020 and the first half of 2021 mainly resulted from (i) the recognition, in the first half of 2021, of a 114 million euro expense for restructuring program costs (mainly due to the optimization of the property portfolio), (ii) the recognition, in the first half of 2021, of a 58 million euro expense in respect of significant litigations, corresponding to the reassessment of the risk on various disputes, and (iii) the 35 million euro drop in EBITDAaL.
1.3.5.4 Economic CAPEX - International Carriers & Shared Services
Change in data on a historical basis
On a historical basis, the 13 million euro decrease in International Carriers & Shared Services economic CAPEX between the first half of 2020 and the first half of 2021 was attributable to (i) the unfavorable impact of changes in the scope of consolidation and other changes for 14 million euros, (ii) partially offset by organic change on a comparable basis, i.e., a 1 million euro increase in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 1 million euro increase in International Carriers & Shared Services economic CAPEX between the first half of 2020 and the first half of 2021 was mainly due to (i) the increase in disposals of fixed assets carried out as part of the real estate optimization program, and (ii) the rise in investments in major real estate projects.
1.3.6 Mobile Finance Services
|
Mobile Finance Services
|
2021
|
2020
|
2020
|
% change
|
% change
|
|
(at June 30, in millions of euros)
|
|
data on a comparable basis (1)
|
data on a historical basis
|
data on a comparable basis (1)
|
data on a historical basis
|
|
Net banking income (NBI) (2)
|
53
|
34
|
34
|
57.1%
|
57.1%
|
|
Cost of bank credit risk (3)
|
(14)
|
(11)
|
(11)
|
26.5%
|
26.5%
|
|
Operating income
|
(77)
|
(90)
|
(87)
|
14.8%
|
11.9%
|
|
eCAPEX
|
13
|
16
|
14
|
(18.5)%
|
(8.9)%
|
|
Average number of employees
|
942
|
860
|
831
|
9.5%
|
13.3%
|
(1) See Section 1.5.1 Data on a comparable basis.
(2) Net Banking Income (NBI) recognized as other operating income (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
(3) Cost of bank credit risk recognized in other operating expenses (see Notes 1.2 and 1.3 to the Consolidated Financial Statements).
In the first half of 2021, the Mobile Finance Services business continued to grow, particularly:
− in Europe, with (i) the continued development of value offers, (ii) the migration of all account customers of products sold by Orange Bank to a Mastercard payment and withdrawal system, and (iii) the signing of a partnership with Younited Crédit aimed at accelerating the development of consumer credit (see Section 1.1.3 Significant events). At June 30, 2021, Orange Bank had nearly 1.6 million customers in France and Spain (this number includes customers of all products sold by Orange Bank for individuals, professionals and businesses: accounts, loans and mobile insurance); and
− in Africa, with further customer acquisition in Côte d'Ivoire and the development of an enhanced credit offer. At June 30, 2021, Orange Bank Africa had 575,000 customers.
1.3.6.1 Operating activities
The segment information for Mobile Finance Services (operating income, investments in property, plant and equipment and intangible assets) is presented in Notes 1.2 and 1.3 to the Consolidated Financial Statements.
Operating income - Mobile Finance Services
Change in data on a historical basis
On a historical basis, the 10 million euro improvement in Mobile Finance Services operating income between the first half of 2020 and the first half of 2021 includes (i) the unfavorable effect of changes in the scope of consolidation and other changes for 3 million euros, and (ii) organic change on a comparable basis, i.e., a 13 million euro improvement in operating income.
Change in data on a comparable basis
On a comparable basis, the 13 million euro improvement in operating income between the first half of 2020 and the first half of 2021 was mainly attributable to:
− the 19 million euro increase in Net Banking Income (NBI, see Notes 1.2 and 1.3 to the Consolidated Financial Statements), driven by the development of bank account and credit products in France and Spain, the integration of the neobank Anytime (see Section 1.1.3 Significant events) and the launch of banking activities in Africa;
− partially offset (i) by the 3 million euro increase in the cost of bank credit risk (see Notes 1.2, 1.3, 5.1 and 10.2 to the Consolidated Financial Statements), mainly due to the development of credit activity in Spain and Africa, (ii) the 3 million euro increase in acquisition and integration costs, in connection with the integration of the neobank Anytime, and (iii) the 4 million euro increase in depreciation and amortization of fixed assets, due to the rise in year-on-year investments.
Economic Capex - Mobile Finance Services
Change in data on a historical basis
On a historical basis, the 1 million euro decline in Mobile Finance Services economic CAPEX between the first half of 2020 and the first half of 2021 includes (i) the favorable effect of changes in the scope of consolidation and other changes for 2 million euros, and (ii) organic change on a comparable basis, i.e., a 3 million euro reduction in economic CAPEX.
Change in data on a comparable basis
On a comparable basis, the 3 million euro decrease in Mobile Finance Services economic CAPEX between the first half of 2020 and the first half of 2021 was attributable to the decline in investments in Spain and Africa.
1.3.6.2 Assets, liabilities and cash flows
The segment information for Mobile Finance Services (operating income, investments in property, plant and equipment and intangible assets, assets, liabilities and cash flows) is presented in Note 1 to the Consolidated Financial Statements, and the activities of Mobile Finance Services (financial assets and liabilities) are described in Note 10 to the Consolidated Financial Statements.
For more information on the risks related to Mobile Finance Services activities, see Section 2.1.3 Financial risks of the 2020 Universal Registration Document.
1.4 Cash flow and financial debt of telecom activities
To ensure the transparency of the financial statements and separate out the performance of telecom activities and Mobile Finance Services activities, the analysis and financial commentary are split to reflect these two business areas. Thus, Section 1.4 Cash flow and financial debt of telecom activities covers telecom activities, and Section 1.3.7 Mobile Finance Services is dedicated to the Group's banking activities.
1.4.1 Liquidity and cash flows from telecom activities
1.4.1.1 Organic cash flow from telecom activities
Organic cash flow from telecom activities is not a financial indicator defined by IFRS. For further information on the calculation of organic cash flow from telecom activities and the reasons why the Orange group uses this indicator, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary.
Organic cash flow from telecom activities stood at 840 million euros in the first half of 2021, compared with 255 million euros in the first half of 2020 (see Note 1.7 to the Consolidated Financial Statements).
|
Organic cash flow from telecom activities
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
EBITDAaL from telecom activities
|
5,893
|
5,985
|
|
eCAPEX of telecom activities
|
(3,832)
|
(3,142)
|
|
EBITDAaL - eCAPEX of telecom activities
|
2,060
|
2,843
|
|
Increase (decrease) in eCAPEX trade payables (1)
|
(284)
|
(340)
|
|
Decrease (increase) in working capital requirement (2)
|
382
|
(1,017)
|
|
Interest paid and interest rate effects on derivatives, net (net of dividends received) (3)
|
(582)
|
(559)
|
|
Income taxes paid
|
(500)
|
(527)
|
|
Other operating items (4)
|
(236)
|
(146)
|
|
Organic cash flow from telecom activities
|
840
|
255
|
(1) Including investment grant advances.
(2) See Section 1.6.4 Financial glossary.
(3) Excluding (i) interest paid on lease liabilities for 59 million euros in the first half of 2021 and 63 million euros in the first half of 2020, and (ii) interest paid on debt related to financed assets for 1 million euros in the first half of 2021 and in the first half of 2020 (see Note 1.7 to the Consolidated Financial Statements).
(4) Including (i) disbursements related to the French part-time for seniors plans (TPS, plans relating to agreements for the employment of older workers in France) and restructuring and integration costs, (ii) repayment of lease liabilities and payables related to financed assets, (iii) change in receivables and payables related to operating taxes and levies, and (iv) elimination of non-monetary effects.
Between the first half of 2020 and the first half of 2021, the 585 million euro increase in organic cash flow from telecom activities was attributed mainly to:
− the 1,398 million euro change in working capital requirement between the two periods. This change was mainly due to (i) the decline in receivables relating to the construction, operation and marketing of fiber optic networks in France, and (ii) the counter-effect of the impacts of the Covid-19 health crisis in the first half of 2020, which had been marked by the increase in overdue payments from customers and by the measures taken by the Group to support suppliers of goods and services in France, while the situation is gradually getting back to normal in the first half of 2021 (see Notes 4.1 and 5.3 to the Consolidated Financial Statements);
− partly offset by (i) the 691 million euro increase in economic CAPEX from telecom activities on a historical basis, mainly due to the counter-effect of the slowdown in the roll-out of fixed and mobile networks during the first half of 2020 in the context of the Covid-19 health crisis, and the decline in disposals of fixed assets (see Section 1.2.6.1 Economic CAPEX), and (ii) to a lesser extent, the 92 million euro drop in EBITDAaL from telecom activities on a historical basis (see Section 1.2.2.1 Group EBITDAaL).
1.4.1.2 Cash flows from telecom activities
Cash flows from telecom activities are presented in Note 1.7 to the Consolidated Financial Statements.
|
Simplified statement of cash flows from telecom activities (1)
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Net cash provided by operating activities
|
5,523
|
4,385
|
|
Net cash used in investing activities
|
(3,317)
|
(3,280)
|
|
Net cash used in financing activities
|
(3,594)
|
(1,168)
|
|
Cash change in cash and cash equivalents
|
(1,386)
|
(62)
|
|
Cash and cash equivalents in the opening balance
|
7,891
|
6,112
|
|
Cash change in cash and cash equivalents
|
(1,386)
|
(62)
|
|
Non-cash change in cash and cash equivalents
|
19
|
(19)
|
|
Cash and cash equivalents in the closing balance
|
6,523
|
6,031
|
(1) See Note 1.7 to the Consolidated Financial Statements.
Net cash provided by operating activities (telecom activities)
Between the first half of 2020 and the first half of 2021, the 1,138 million euro increase in net operating cash flow from telecom activities, was mainly due to:
− the 1,398 million euro change in working capital requirement between the two periods (see above);
− partially offset by the 310 million euro decrease in operating income from telecom activities, excluding the 3,702 million euro goodwill impairment in Spain in the first half of 2021 (with no effect on cash flow, see Note 6 to the Consolidated Financial Statements).
Net cash used in investing activities (telecom activities)
Between the first half of 2020 and the first half of 2021, the 37 million euro increase in net cash used in investing activities of telecom activities resulted primarily from:
− the 630 million euro increase in acquisitions and disposals of property, plant and equipment and intangible assets (net of the change in fixed asset payables), mainly due to (i) the counter-effect of the slowdown in the roll-out of fixed and mobile networks during the first half of 2020 in the context of the Covid-19 health crisis, and (ii) the decline in disposals of fixed assets (see Section 1.2.6 Group investments), (iii) telecommunication license expenses, which were stable overall between the two periods;
− largely offset by (i) changes in investments and other financial assets between the two periods, with a 900 million euro decrease in investments at fair value in the first half of 2021, compared to a 357 million euro decrease in the first half of 2020, due to higher dividend payments in the first half of 2021 than in the first half of 2020 (see below), and (ii) to a lesser extent, the 74 million euro increase in disposals of equity investments measured at fair value.
Net cash used in financing activities (telecom activities)
Between the first half of 2020 and the first half of 2021, the 2,426 million euro increase in net cash used in financing activities of telecom activities resulted primarily from:
− the 1,497 million euro increase in medium- and long-term debt repayment and the 502 million euro decrease in medium- and long-term debt issuance (see Note 8.4 to the Consolidated Financial Statements);
− the 798 million euro increase in dividends paid by Orange SA, due to the payment in the first half of 2021 of the balance of the dividend of 0.50 euro per share in respect of the 2020 fiscal year (see Note 11.3 to the Consolidated Financial Statements). In the first half of 2020, the balance of the dividend paid in respect of the 2019 fiscal year was 0.20 euro per share; and
− the acquisition of a 23.94% stake in Orange Belgium for 316 million euros as part of the conditional voluntary public tender offer completed in the first half of 2021 (see Section 1.1.3 Significant events);
− partly offset by (i) the change in bank overdrafts and short-term borrowings for 837 million euros, due in particular to the counter-effect of the 500 million euro purchase in February 2020 of subordinated notes that had been reclassified as short-term borrowings at December 31, 2019, and (ii) the net change in cash collateral deposits, with a 568 million euro improvement in the first half of 2021 compared to a 133 million euro improvement in the first half of 2020, reflecting the change in the fair value of derivatives.
1.4.2 Financial debt and liquidity position of telecom activities
Net financial debt (see Note 8.3 to the Consolidated Financial Statements) and the ratio of net financial debt to EBITDAaL of telecom activities are financial indicators that are not defined by IFRS. For further information on the calculation of these indicators and the reasons why the Orange group uses them, see Section 1.5 Financial indicators not defined by IFRS and Section 1.6.4 Financial glossary. Net financial debt as defined and used by Orange does not include the activities of Mobile Finance Services, for which this concept is not relevant.
For further information on the risks relating to the Orange group’s financial debt, see Section 2.1.3 Financial risks of the 2020 Universal Registration Document.
|
|
June 30, 2021
|
Dec. 31, 2020
|
|
|
|
data on a historical basis
|
|
Net financial debt (1) (2)
|
25,344
|
23,489
|
|
Ratio of Net financial debt/EBITDAaL from telecom activities (1)
|
1.99
|
1.83
|
(1) See Section 1.5 Financial indicators not defined by IFRS.
(2) In millions of euros.
Between December 31, 2020, and June 30, 2021, net financial debt rose by 1,855 million euros.
|
Change in net financial debt
|
Decrease/
(Increase)
|
|
(at June 30, in millions of euros)
|
|
Net financial debt as of December 31, 2020
|
(23,489)
|
|
Organic cash flow from telecom activities (1)
|
840
|
|
Telecommunication licenses paid
|
(129)
|
|
Significant litigations paid (and received)
|
(354)
|
|
Purchases and disposals of investments securities (net of cash acquired or transferred) (2)
and changes in ownership interest with no gain or loss of control
|
(286)
|
|
Subordinated note issuances (purchases) (3)
|
(311)
|
|
Coupons on subordinated notes (3)
|
(163)
|
|
Dividends paid to owners of the parent company (4)
|
(1,330)
|
|
Dividends paid to non-controlling interest
|
(190)
|
|
Other financial items
|
69
|
|
|
Orange Bank capital increase subscribed by the Group (5)
|
(70)
|
|
|
Other
|
139
|
|
Decrease (increase) in net financial debt
|
(1,855)
|
|
Net financial debt as of June 30, 2021
|
(25,344)
|
(1) See Section 1.4.1.1 Organic cash flow from telecom activities and Note 1.7 to the Consolidated Financial Statements.
(2) Primarily the acquisition of a 23.94% stake in Orange Belgium for 316 million euros as part of the conditional voluntary public tender offer in the first half of 2021 (see Section 1.1.3 Significant events);
(3) See Note 11.4 to the Consolidated Financial Statements.
(4) The Shareholders' Meeting of May 18, 2021 resolved to pay shareholders a dividend of 0.90 euros per share in respect of the 2020 fiscal year. Taking into account the interim dividend of 0.40 euro per share, paid on December 9, 2020, for a total of 1,064 million euros, the 0.50 euro per share balance of the dividend to be paid was paid on June 17, 2021, for an amount of 1,330 million euros (see Note 11.3 to the Consolidated Financial Statements).
(5) See Note 1.7 to the Consolidated Financial Statements.
As of June 30, 2021, the liquidity position of telecom activities amounted to 14,985 million euros (see Note 9.1 to the Consolidated Financial Statements). The changes in financial assets, liabilities and financial result (excluding Mobile Finance Services) are detailed in Note 8 to the Consolidated Financial Statements.
1.5 Financial indicators not defined by IFRS
In this document, in addition to the financial indicators reported in accordance with IFRS (International Financial Reporting Standards), Orange publishes financial indicators that are not defined by IFRS. As described below, these figures are presented as additional information and are not meant to be substitutes for or to be confused with financial indicators as defined by IFRS.
1.5.1 Data on a comparable basis
In order to allow investors to track the annual changes in the Group’s operations, data on a comparable basis are presented for the previous period. The transition from data on a historical basis to data on a comparable basis consists of keeping the results for the year ended and restating the previous year in order to present financial data with comparable methods, scope of consolidation and exchange rates over comparable periods. Orange provides the details of the effect of changes in method, scope of consolidation and exchange rates on its key operating indicators in order to isolate the intrinsic business effect. The method used is to apply to the data of the corresponding period of the preceding year the methods and the scope of consolidation for the period ended, as well as the average exchange rates used for the Consolidated income statement in the Consolidated Financial Statements for the period ended.
Orange’s management believes that the presentation of these indicators on a comparable basis is relevant because these are indicators used internally by the Group for monitoring its operating activities. Changes in data on a comparable basis better reflect organic business changes.
Data on a comparable basis is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies. It is provided as additional information only and should not be considered as a substitute for an analysis of the Group’s historical data for the past year or previous periods.
Group
The table below presents, for the Orange group, the transition from data on a historical basis to data on a comparable basis for the first half of 2020, for the main operating data.
|
First half year 2020 / Group
|
Revenue
|
EBITDAaL
|
Operating Income
|
eCAPEX
|
Average number of employees
|
|
(at June 30, 2020, in millions of euros)
|
|
Data on a historical basis
|
20,769
|
5,914
|
2,250
|
3,156
|
134,085
|
|
Foreign exchange fluctuations (1)
|
(198)
|
(54)
|
(29)
|
(25)
|
-
|
|
|
US dollar (USD)
|
(72)
|
(25)
|
(24)
|
(6)
|
-
|
|
|
Polish zloty (PLN)
|
(34)
|
(9)
|
(1)
|
(5)
|
-
|
|
|
Egyptian pound (EGP)
|
(33)
|
(11)
|
(4)
|
(5)
|
-
|
|
|
Guinean franc (GNF)
|
(22)
|
(11)
|
(9)
|
(3)
|
-
|
|
|
Jordanian dinar (JOD)
|
(17)
|
(6)
|
(2)
|
(2)
|
-
|
|
|
Other
|
(20)
|
8
|
11
|
(4)
|
-
|
|
Changes in the scope of consolidation and other changes
|
(18)
|
(1)
|
(1)
|
-
|
-
|
|
Data on a comparable basis
|
20,553
|
5,859
|
2,220
|
3,131
|
134,085
|
(1) Foreign exchange fluctuations between the average exchange rates for the first half of 2020 and the average exchange rates for the first half of 2021.
The changes included in the transition from data on a historical basis to data on a comparable basis for the first half of 2020 include (i) foreign exchange fluctuations between the average exchange rates for the first half of 2020 and the average exchange rates for the first half of 2021 and (ii) changes in the scope of consolidation and other changes.
Segments
The following table presents, for each segment of the Orange group, the transition from data on a historical basis to data on a comparable basis for the first half of 2020 for the key operating data.
|
First half-year 2020 / Segments
|
Revenue
|
EBITDAaL
|
Operating income
|
eCAPEX
|
Average number of employees
|
|
(at June 30, 2020, in millions of euros)
|
|
France
|
|
|
|
|
|
|
Data on a historical basis
|
9,024
|
3,301
|
1,557
|
1,635
|
51,909
|
|
Foreign exchange fluctuations (1)
|
-
|
1
|
1
|
-
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
(32)
|
(49)
|
(49)
|
12
|
37
|
|
Data on a comparable basis
|
8,992
|
3,252
|
1,508
|
1,647
|
51,946
|
|
Europe
|
|
|
|
|
|
|
Data on a historical basis
|
5,229
|
1,457
|
402
|
761
|
27,107
|
|
Foreign exchange fluctuations (1)
|
(40)
|
(12)
|
(3)
|
(6)
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
(8)
|
(2)
|
(2)
|
-
|
-
|
|
Data on a comparable basis
|
5,181
|
1,444
|
397
|
755
|
27,107
|
|
Africa & Middle East
|
|
|
|
|
|
|
Data on a historical basis
|
2,845
|
935
|
456
|
449
|
14,440
|
|
Foreign exchange fluctuations (1)
|
(98)
|
(35)
|
(18)
|
(15)
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
-
|
(2)
|
(2)
|
-
|
-
|
|
Data on a comparable basis
|
2,748
|
898
|
435
|
434
|
14,440
|
|
Enterprise
|
|
|
|
|
|
|
Data on a historical basis
|
3,859
|
471
|
267
|
174
|
27,116
|
|
Foreign exchange fluctuations (1)
|
(59)
|
(11)
|
(11)
|
(4)
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
(11)
|
26
|
26
|
-
|
26
|
|
Data on a comparable basis
|
3,789
|
486
|
281
|
170
|
27,142
|
|
International Carriers & Shared Services
|
|
|
|
|
|
|
Data on a historical basis
|
728
|
(179)
|
(345)
|
123
|
12,682
|
|
Foreign exchange fluctuations (1)
|
(4)
|
3
|
2
|
0
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
4
|
29
|
30
|
(14)
|
(93)
|
|
Data on a comparable basis
|
729
|
(148)
|
(312)
|
110
|
12,589
|
|
Mobile Finance Services
|
|
|
|
|
|
|
Data on a historical basis
|
-
|
(72)
|
(87)
|
14
|
831
|
|
Foreign exchange fluctuations (1)
|
-
|
-
|
-
|
-
|
-
|
|
Changes in the scope of consolidation and other changes (2)
|
-
|
(3)
|
(3)
|
2
|
29
|
|
Data on a comparable basis
|
-
|
(75)
|
(90)
|
16
|
860
|
(1) Foreign exchange fluctuations between the average exchange rates for the first half of 2020 and the average exchange rates for the first half of 2021.
(2) Including the effect of internal reorganizations between segments, which have no effect at Group level.
1.5.2 EBITDAaL
EBITDAaL (or "EBITDA after Leases") relates to operating income (i) before depreciation and amortization of fixed assets, effects resulting from business combinations, reclassification of translation adjustment from liquidated entities, impairment of goodwill and fixed assets, share of profits (losses) of associates and joint ventures, (ii) after interest on lease liabilities and interest on debts related to financed assets, and (iii) adjusted for significant litigations, specific labor expenses, the fixed asset, investment and businesses portfolio review, restructuring program costs, acquisition and integration costs and, where appropriate, other specific items that are systematically specified in relation to income or expenses (see Note 1 to the Consolidated Financial Statements).
The reconciliation between EBITDAaL and consolidated net income is shown below.
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
data on a historical basis
|
|
(at June 30, in millions of euros)
|
Adjusted data
|
Presentation adjustments (1)
|
Consolidated income statement
|
Adjusted data
|
Presentation adjustments (1)
|
Consolidated income statement
|
|
Revenue
|
20,867
|
-
|
20,867
|
20,769
|
-
|
20,769
|
|
External purchases
|
(8,733)
|
(4)
|
(8,736)
|
(8,546)
|
-
|
(8,546)
|
|
Other operating income
|
322
|
-
|
322
|
271
|
-
|
271
|
|
Other operating expenses
|
(227)
|
(68)
|
(295)
|
(274)
|
(174)
|
(448)
|
|
Labor expenses
|
(4,373)
|
(48)
|
(4,421)
|
(4,342)
|
(33)
|
(4,376)
|
|
Operating taxes and levies
|
(1,188)
|
(31)
|
(1,219)
|
(1,232)
|
-
|
(1,232)
|
|
Gains (losses) on disposal of fixed assets, investments and activities
|
-
|
12
|
12
|
-
|
59
|
59
|
|
Restructuring costs
|
-
|
(245)
|
(245)
|
-
|
(13)
|
(13)
|
|
Depreciation and amortization of financed assets
|
(41)
|
-
|
(41)
|
(22)
|
-
|
(22)
|
|
Depreciation and amortization of right-of-use assets
|
(731)
|
-
|
(731)
|
(652)
|
-
|
(652)
|
|
Impairment of right-of-use assets
|
-
|
(60)
|
(60)
|
-
|
(6)
|
(6)
|
|
Interest on debts related to financed assets (2)
|
(1)
|
1
|
-
|
(1)
|
1
|
-
|
|
Interest on lease liabilities (2)
|
(58)
|
58
|
-
|
(58)
|
58
|
-
|
|
EBITDAaL
|
5,837
|
(385)
|
-
|
5,914
|
(109)
|
-
|
|
Significant litigations
|
(89)
|
89
|
-
|
(169)
|
169
|
-
|
|
Specific labor expenses
|
(41)
|
41
|
-
|
(28)
|
28
|
-
|
|
Fixed asset, investment and business portfolio review
|
12
|
(12)
|
-
|
59
|
(59)
|
-
|
|
Restructuring program costs
|
(305)
|
305
|
-
|
(19)
|
19
|
-
|
|
Acquisition and integration costs
|
(20)
|
20
|
-
|
(10)
|
10
|
-
|
|
Depreciation and amortization of fixed assets
|
(3,499)
|
-
|
(3,499)
|
(3,549)
|
-
|
(3,549)
|
|
Reclassification of translation adjustment from liquidated entities
|
(0)
|
-
|
(0)
|
-
|
-
|
-
|
|
Impairment of goodwill
|
(3,702)
|
-
|
(3,702)
|
-
|
-
|
-
|
|
Impairment of fixed assets
|
(4)
|
-
|
(4)
|
1
|
-
|
1
|
|
Share of profits (losses) of associates and joint ventures
|
1
|
-
|
1
|
(6)
|
-
|
(6)
|
|
Elimination of interest on debts related to financed assets (2)
|
1
|
(1)
|
-
|
1
|
(1)
|
-
|
|
Elimination of interest on lease liabilities (2)
|
58
|
(58)
|
-
|
58
|
(58)
|
-
|
|
Operating income
|
(1,752)
|
-
|
(1,752)
|
2,250
|
-
|
2,250
|
|
Finance costs, net
|
-
|
-
|
(436)
|
-
|
-
|
(744)
|
|
Income taxes
|
-
|
-
|
(417)
|
-
|
-
|
(491)
|
|
Consolidated net income
|
-
|
-
|
(2,605)
|
-
|
-
|
1,015
|
|
Net income attributable to owners of the parent company
|
-
|
-
|
(2,769)
|
-
|
-
|
927
|
|
Net income attributable to non-controlling interests
|
-
|
-
|
165
|
-
|
-
|
88
|
(1) The presentation adjustments allow reassignment of specific line items identified in the segment information (see Note 1 to the Consolidated Financial Statements) to the lines for operating income and expenses presented in the Consolidated income statement.
(2) Interest on debts related to financed assets and interest on lease liabilities are included in segment EBITDAaL. They are excluded from segment operating income and included in net finance costs presented in the Consolidated Financial Statements.
Orange’s management believes that the presentation of the EBITDAaL indicator is relevant because, by including lease expenses in its calculation, this indicator enables better reflection of the operational performance of business segments, while retaining consistency with the adjusted EBITDA indicator used in segment information until December 31, 2018. This is the operational performance indicator used internally by the Group since January 1, 2019 to (i) manage and assess its operating results and segment results, and (ii) implement its investments and resource allocation strategy. EBITDAaL, or similar management indicators used by Orange’s competitors, are indicators that are often disclosed and widely used by analysts, investors and other players in the telecommunication industry.
EBITDAaL is not a financial indicator defined by IFRS standards and may not be comparable to similarly-titled indicators used by other companies. It is provided as additional information only and should not be considered as a substitute for operating income or net cash provided by operating activities.
1.5.3 eCAPEX
eCAPEX (or "economic CAPEX") relates both to (i) investments in property, plant and equipment and intangible assets, excluding telecommunication licenses and financed assets sold, less the proceeds from sales of property, plant and equipment and intangible assets, and (ii) acquisitions of property, plant and equipment and intangible assets excluding telecommunication licenses and changes in fixed asset payables, less the proceeds from sales of property, plant and equipment and intangible assets.
The table below shows the transition of (i) investments in property, plant and equipment and intangible assets as presented in Note 1.4 to the Consolidated Financial Statements, and (ii) acquisitions of property, plant and equipment and intangible assets, excluding fixed asset payables, as presented in the Consolidated statement of cash flows in the Consolidated Financial Statements, to (iii) eCAPEX.
|
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Investments in property, plant and equipment and intangible assets
|
4,208
|
3,513
|
|
Financed assets
|
(23)
|
(117)
|
|
Purchases of property, plant and equipment and intangible assets (1)
|
4,186
|
3,395
|
|
Proceeds from sales of property, plant and equipment and intangible assets
|
(48)
|
(197)
|
|
Telecommunication licenses
|
(293)
|
(42)
|
|
eCAPEX
|
3,845
|
3,156
|
(1) See Consolidated statement of cash flows. Excluding the change in fixed asset payables. Investments financed through finance leases have no effect on cash flow upon acquisition.
Orange’s management believes that the presentation of economic CAPEX is relevant because this indicator (i) does not include investments in telecommunication licenses (the acquisition of these licenses is not part of the daily monitoring of operating investments) and financed assets (no effect on cash flow upon acquisition), and (ii) allows, in a context of asset rotation primarily linked to the fiber-optic economic model, to measure more accurately the actual amount of investments by excluding the proceeds from sales of property, plant and equipment and intangible assets. It is the indicator used internally by the Group since January 1, 2019 in allocating resources, in order to measure the operating efficiency of the use of investments for each of its business segments.
eCAPEX is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies. It is provided as additional information only and should not be considered as a substitute for purchases of or investments in property, plant and equipment and intangible assets.
1.5.4 EBITDAaL - eCAPEX
The "EBITDAaL - eCAPEX" indicator corresponds to EBITDAaL (see Section 1.5.2 EBITDAaL) less eCAPEX (see Section 1.5.3 eCAPEX).
Orange’s management considers that presenting the "EBITDAaL - eCAPEX" indicator is relevant because it is the operational performance indicator used internally by the Group since January 1, 2019 to (i) manage and assess its operating results and segment results, and (ii) implement its investments and resource allocation strategy.
The "EBITDAaL - eCAPEX" indicator is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies. It is provided as additional information only and should not be considered as a substitute for analysis of net cash provided by operating activities and net cash used in the Group’s investing activities.
1.5.5 Organic cash flow from telecom activities
Organic cash flow from telecom activities refers to net cash provided by operating activities, minus (i) repayments of lease liabilities and of debts related to financed assets, and (ii) purchases and sales of property plant and equipment and intangible assets, net of the change in fixed asset trade payables, (iii) excluding telecommunication licenses paid and the effect of the main litigations paid (and received).
The following table presents, for telecom activities, the transition from net cash provided by operating activities to organic cash flow from telecom activities as presented in Note 1.7 to the Consolidated Financial Statements.
|
Organic cash flow from telecom activities
|
2021
|
2020
|
|
(at June 30, in millions of euros)
|
|
data on a historical basis
|
|
Net cash provided by operating activities (telecom activities)
|
5,523
|
4,385
|
|
Purchases and sales of property, plant and equipment and intangible assets
|
(4,245)
|
(3,615)
|
|
Repayments of lease liabilities
|
(880)
|
(642)
|
|
Repayments of debts relating to financed assets
|
(41)
|
(24)
|
|
Elimination of telecommunication licenses paid
|
129
|
134
|
|
Elimination of significant litigations paid (and received)
|
354
|
18
|
|
Organic cash flow from telecom activities
|
840
|
255
|
Orange’s management believes that the presentation of organic cash flow from telecom activities is relevant for measuring the Group’s capacity to free up cash through its telecom activities taken as a whole, excluding the main items that are not under its control and which may vary significantly from one year to the next, which is particularly the case of the disbursements (and receipts) relating to significant litigations and the disbursements relating to acquisitions of telecommunication licenses. It is a more comprehensive indicator than "EBITDAaL - eCAPEX" (used internally to manage and assess operating and segment results and to implement its investment and resource allocation strategy), since it notably includes the effects of financial costs, income taxes and changes in working capital requirements. For this reason, this indicator has been chosen by Orange as a key performance indicator for telecom activities for its Engage 2025 strategic plan. This indicator is commonly used by companies in the telecommunication sector.
Organic cash flow from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies. It is not a substitute for cash generated by operating activities or allocated to investing activities.
1.5.6 Net financial debt
Net financial debt as defined and used by Orange does not include the activities of Mobile Finance Services, for which this concept is not relevant. It consists of (i) financial liabilities excluding operating payables (translated into euros at the year-end closing rate) including derivative instruments (assets and liabilities), (ii) less cash collateral paid, cash, cash equivalents and financial assets at fair value. Furthermore, financial instruments designated as cash flow hedges, included in net financial debt, are set up to hedge in particular items that are not included therein, such as future cash flows. As a consequence, the portion of these unmatured hedging instruments recorded in other comprehensive income is added to the gross financial debt to offset this temporary difference.
The breakdown of net financial debt is shown in Note 8.3 to the Consolidated Financial Statements.
Net financial debt is an indicator of financial position used by the Group. Net financial debt is a frequently disclosed indicator. It is widely used by analysts, investors, rating agencies and most groups in all business sectors in Europe.
Net financial debt is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies. It is provided as additional information only and should not be considered as a substitute for an analysis of all the Group’s assets and liabilities.
1.5.7 Ratio of net financial debt to EBITDAaL from telecom activities
The ratio of net financial debt to EBITDAaL from telecom activities is calculated based on the ratio of the Group’s net financial debt (see Section 1.5.6 Net financial debt) to EBITDAaL from telecom activities (see Section 1.5.2 EBITDAaL) over the previous 12 months. As net financial debt (as defined and used by Orange) does not take into account Mobile Finance Services activities, for which this concept is not relevant, net financial debt is divided by EBITDAaL from telecom activities. In addition, when changes in scope significantly affect the Group’s net financial debt at the end of the period, the calculation of the ratio of net financial debt to EBITDAaL from telecom activities is adjusted to take into account the EBITDAaL from those entities over the previous 12 months.
|
|
June 30, 2021
|
Dec. 31, 2020
|
|
(in millions of euros)
|
|
data on a historical basis
|
|
Net financial debt (a)
|
25,344
|
23,489
|
|
EBITDAaL from telecom activities (b)
|
12,747
|
12,839
|
|
Ratio of net financial debt/EBITDAaL from telecom activities (a/b)
|
1.99
|
1.83
|
The ratio of net financial debt to EBITDAaL from telecom activities is used by Orange to measure the Group’s ability to repay its debt, and more broadly to measure its financial strength. This ratio is commonly used by companies in the telecommunication sector.
The ratio of net financial debt to EBITDAaL from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies.
1.6 Additional information
1.6.1 Litigation and unrecognized contractual commitments
The main events that took place in the first half of 2021 affecting litigation and unrecognized contractual commitments are described in Note 12 to the Consolidated Financial Statements.
1.6.2 Related party transactions
During the first half of 2021, no transaction materially influenced the amounts of related party transactions reported as at December 31, 2020 (see Note 13 to the Consolidated Financial Statements).
1.6.3 Subsequent events
The main events occurring after June 30, 2021 are described in Note 14 to the Consolidated Financial Statements.
1.6.4 Financial glossary
Average number of employees (full-time equivalents): average number of active employees over the reporting period, prorated for their work time, including both permanent contracts and fixed-term contracts.
Change in working capital requirement: change in working capital requirement is made up of:
− the Change in working capital requirement for operations, which is made up of (i) the changes in gross inventories, (ii) the change in gross trade receivables, (iii) the change in trade payables for other goods and services, and (iv) the change in customer contract assets and liabilities; and
− the Change in working capital requirement excluding operations which includes the change in other assets and liabilities (excluding receivables and payables related to operating taxes and levies).
Commercial expenses, equipment and content costs: see External purchases.
Convergent ARPO: average revenue per customer from convergent offers (Average Revenue Per Offer, ARPO) for the period are calculated by dividing (i) the revenue from retail convergent offers invoiced to customers (excluding the effect of spreading the equipment subsidy pursuant to IFRS 15) over the period in question, by (ii) the weighted average number of customers of retail convergent offers over the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Convergent ARPO is expressed in monthly revenue per convergent offer customer.
Convergent services: see Revenue.
Data on a comparable basis: data with comparable methods, scope of consolidation and exchange rates are presented for the preceding period (see Section 1.5.1 Data on a comparable basis). The transition from data on a historical basis to data on a comparable basis consists of keeping the results for the period ended and then restating the results for the corresponding period of the preceding year for the purpose of presenting, over comparable periods, financial data with comparable accounting principles, scope of consolidation and exchange rates. The method used is to apply to the data of the corresponding period of the preceding year the methods and the scope of consolidation for the period ended, as well as the average exchange rates used for the Consolidated income statement in the Consolidated Financial Statements for the period ended. Changes in data on a comparable basis reflect organic business changes. Data on a comparable basis is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
Data on a historical basis: data for past periods as reported in the Consolidated Financial Statements of the current financial period.
EBITDAaL (or "EBITDA after Leases"): operating income (i) before depreciation and amortization of fixed assets, effects resulting from business combinations, reclassification of translation adjustment from liquidated entities, impairment of goodwill and fixed assets, share of profits (losses) of associates and joint ventures, (ii) after interest on lease liabilities and interest on debts related to financed assets, and (iii) adjusted for significant litigations, specific labor expenses, the fixed asset, investment and businesses portfolio review, restructuring program costs, acquisition and integration costs and, where appropriate, other specific items that are systematically specified in relation to income or expenses (see Note 1 to the Consolidated Financial Statements). EBITDAaL is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
EBITDAaL - eCAPEX: EBITDAaL (see definition of this term) minus eCAPEX (see definition of this term). The "EBITDAaL - eCAPEX" indicator is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
eCAPEX or "economic CAPEX": investments in intangible assets and property, plant and equipment excluding telecommunication licenses and financed assets, less the proceeds from sales of property, plant and equipment and intangible assets (see Note 1.4 to the Consolidated Financial Statements). e-CAPEX is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
Economic CAPEX: see eCAPEX.
Equipment sales: see Revenue.
External data: data after elimination of internal flows between the consolidation scopes taken into consideration.
External purchases: external purchases include the following operating expenses, excluding leases falling within the scope of application of IFRS 16:
− Commercial and equipment expenses and content rights: cost of handsets and other equipment sold, retail fees and commissions, advertising, promotional, sponsoring and rebranding expenses, and content costs;
− Service fees and inter-operator costs: network expenses and interconnection costs;
− Other network expenses and IT expenses: outsourcing expenses for operations and technical maintenance, IT expenses; and
− Other external purchases: overheads, real estate fees, purchases of other services and service fees, purchases of equipment and other supplies held in inventory, call center outsourcing expenses and other external services, net of capitalized goods and services produced.
Financial investments: acquisitions of investment securities (net of cash acquired) and changes in ownership interest with no gain of control in subsidiaries.
Fixed only broadband ARPO: average revenue per customer of fixed only offers (Average Revenue Per Offer, ARPO) for the period is calculated by dividing (i) the revenue from fixed only broadband services invoiced to customers (excluding the effect of the spreading of the equipment subsidy pursuant to IFRS 15) over the period in question, by (ii) the weighted average number of customers of fixed only broadband offers over the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Fixed only broadband ARPO is expressed in monthly revenue per fixed only customer.
Fixed only services: see Revenue.
Investments in intangible assets and property, plant and equipment: see eCAPEX.
IT & integration services: see Revenue.
Labor expenses: wages and employee benefit expenses (net of capitalized costs), employee profit-sharing expenses, and expenses relating to share-based compensation.
Mobile only ARPO: average revenue per customer of mobile only offers (Average Revenue Per Offer, ARPO) for the period is calculated by dividing (i) the revenue from mobile only services invoiced to customers (excluding Machine-to-Machine and excluding the effect of spreading the equipment subsidy pursuant to IFRS 15) over the period in question, by (ii) the weighted average number of customers of mobile only offers (excluding Machine-to-Machine) over the same period. The weighted average number of customers is the average of monthly averages over the period in question. The monthly average is the arithmetic average of the number of customers at the beginning and end of the month. Mobile only ARPO is expressed in monthly revenue per mobile only customer.
Mobile only services: see Revenue.
Net financial debt: net financial debt as defined and used by Orange does not incorporate Mobile Finance Services activities, for which this concept is not relevant. It consists of (i) financial liabilities excluding operating payables (translated into euros at the year-end closing rate) including derivative instruments (assets and liabilities), (ii) less cash collateral paid, cash, cash equivalents and financial assets at fair value. Furthermore, financial instruments designated as cash flow hedges, included in net financial debt, are set up to hedge in particular items that are not included therein, such as future cash flows. As a consequence, the portion of these components related to unmatured hedging instruments recorded in other comprehensive income is added to gross financial debt to offset this temporary difference (see Note 8.3 to the Consolidated Financial Statements). Net financial debt is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
Number of employees (active employees at end of period): number of employees working on the last day of the reporting period, including both permanent contracts and fixed-term contracts.
Operating taxes and levies: taxes and levies including the Territorial Economic Contribution (CET) and the Flat-rate Tax on Network Enterprises (IFER) in France, fees for the use of spectrum and levies on telecommunication services.
Organic cash flow from telecom activities: within the scope of the telecom activities, net cash generated by the operating activities, minus (i) repayments of lease liabilities and of debts related to financed assets, and (ii) purchases and sales of property, plant and equipment and intangible assets, net of change in the fixed assets payables, (iii) excluding effect of telecommunication licenses paid and significant principal litigations paid or received (see Note 1.7 to the Consolidated Financial Statements). Organic Cash Flow from telecom activities is not a financial indicator defined by IFRS and may not be comparable to similarly-titled indicators used by other companies (see Section 1.5 Financial indicators not defined by IFRS).
Other external purchases: see External purchases.
Other network expenses and IT expenses: see External purchases.
Other operating expenses: see Other operating income and expenses.
Other operating expenses: see Other operating income and expenses.
Other operating income and expenses: other operating income net of other operating expenses. Other operating income and expenses include:
− Other operating income: primarily other income related to collection of trade receivables, net banking income (NBI, net balance of income and expenses from banking operations), site rentals and franchises, tax credits and subsidies, income from universal service, brand royalties and management fees invoiced to certain unconsolidated entities, rebilling of network sharing costs, income relating to line damage; and
− Other operating expenses: mainly impairments and losses on trade receivables from telecom activities, litigation expenses, universal service charges, acquisition and integration costs, operating foreign exchange gains/losses and the cost of bank credit risk (see Note 5.1 to the Consolidated Financial Statements).
Other revenue: see Revenue.
Retail services: aggregation of Convergent services, Mobile only services, Fixed only services and IT & integration services.
Revenue: revenue (see Note 1.1 to the Consolidated Financial Statements) includes:
− Convergent services: revenue of convergent services includes revenue invoiced to retail customers of convergent offers (excluding equipment sales, see the definition of this term) defined as the combination of at least a fixed broadband access (xDSL, FTTx, cable, 4G fixed) and a mobile contract;
− Mobile only services: revenue of mobile only services includes revenue invoiced to customers of mobile offers (incoming and outgoing calls: voice, SMS and data), excluding convergent services and equipment sales (see the definitions of these terms);
− Fixed only services: revenue of fixed only services includes revenue invoiced to customers of fixed services excluding convergent services and equipment sales (see the definitions of these terms). It includes conventional fixed telephony, fixed broadband services, business solutions and networks; (with the exception of France, for which most business solutions and networks are supported by the Enterprise segment). For the Enterprise segment, fixed-only service revenue includes sales of network equipment related to the operation of voice and data services.
− IT & integration services: revenue of IT & integration services include the unified communication and collaboration services (Local Area Network and telephony, consultancy, integration, project management, video-conference offers), hosting and infrastructure services (including cloud computing), applications services (customer relations management and other applications services), security services, services related to Machine-to- Machine activities (excluding connectivity), as well as sales of equipment related to the above products and services;
− Wholesale services: revenue from other carriers includes (i) mobile services to carriers, which groups together in particular incoming mobile traffic, visitor roaming, network sharing, national roaming and virtual mobile network operators (MVNO), and (ii) fixed services to other carriers, which include in particular national interconnection, services to international carriers, high-speed and very high-speed broadband access services (fiber access, unbundling of telephone lines, xDSL access sales), and sales of telephone lines on the wholesale market;
− Equipment sales: sales of fixed and mobile equipment, with the exception of (i) sales of equipment related to the provision of integration services and information technology, (ii) sales of network equipment related to operation of voice and data services in the Enterprise segment, and (iii) equipment sales to external distributors and brokers; and
− Other revenue: other revenue includes equipment sales to dealers and brokers, revenue from portals, on-line advertising revenue and corporate transversal business line activities of the Group, and other miscellaneous revenue.
Service fees and inter-operator costs: see External purchases.
Statutory data: data before elimination of internal flows between the consolidation scopes taken into consideration.
Wages and employee benefit expenses: see Labor expenses.
Wholesale services: see Revenue.