Orange’s performance has been “impressively resilient” in the French and Polish markets and the company is well paced to withstand the impact of COVID-19, despite ongoing weakness in its Spanish operation, according to analysts from Jefferies.
According to the analysts, conversations with management ahead of the company’s Q2 results on July 30 indicated confidence that Orange’s core French operation will have benefited from improved pricing and revived subscriptions in the second quarter, while cost control in Poland should offset problems caused by the lockdown in that country.
In Spain, Jefferies sees a problem caused by “escalating promotions…coming out of lockdown” that leave Orange’s Spanish operation exposed because it had made the “strategic mistake of not being sufficiently exposed the growing discount end of the market” .
Jefferies predicts that Orange will report a slowdown in the decline of its subscriber base in France for the quarter, and argues that lockdown-induced working from home should benefit the company’s retail fibre numbers “given its superior geographic presence” while increased demand from competitors may also bolster its wholesale revenue.
Jefferies positive assessment comes amidst new tensions between Orange and French telecom regulator ARCEP over the pace of fibre deployment in France.
ARCEP president Sébastien Soriano told financial daily Les Echos last week that the job of rolling out fibre in the country had “only been half done” and pointed to the examples of Clermond-Ferrand and Lille, where fewer than 55% of homes had access to fibre. Soriano said that it was possible that Orange wanted to continue to sweat its copper network “a little longer than necessary”.
Orange executives have said that France is one of the most densely-fibred nations in Europe and accused ARCEP of bias.
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