Orange (-2.87%, at 14.195 euros)

The stock of the historic telecom operator underwent expected profit-taking after three consecutive gains. During this period, Orange shares had rebounded by 3.25%.


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Key Points


- Business model agility combining volume and value:
 - priority on operational efficiency with the Efficiency program,
- boosting self-financing through the early retirement plan,
- retail customers: expanding the asset base, growth in convergent customers, now over 10 million in France, which are more value-generating,
                  - infrastructure: consolidation in France of passive infrastructure "high points" via Totem and monetization of Iberco in Spain (n° 1 via the creation of PripupFiber”) and Poland,

                  - Orange Business: 2025 target of 1.3 bn€ in revenue and reducing the decline in operational profitability (voluntary departures, reduction of over ½ the portfolio) and heavy investment in Industry 4.0, digital transformation, and generative AI,

- Strong momentum in the Africa-Middle East region (160 million mobile customers), the number one contributor to growth, with an anticipated increase of over 10% in operating surplus in 2025,
- rich innovation portfolio with over 9,000 patents, focused on network intelligence, automated via "Network integration factories", customer experience, and the sustainability of data and AI usage, strengthened by co-innovation, the Datavenue platform, and co-development of offers, funding over 500 start-ups (Orange Ventures endowed with 350 mn€);

Environmental strategy aiming for carbon neutrality by 2050:

- 30% reduction in scope 1 and 2 emissions by 2025 vs 2018, and 45% reduction in scope 3 emissions vs 2020 by 2030,

 - circular economy integrated throughout processes and uses, Orange Nature Carbon Fund and Padus Lab (energy efficiency of networks and data centers):
- Strategic partnership with Mistral AI - research, network optimization, expanding the offer to business clients - and vigilance regarding AI (anticipating short-term occupation of 50% of network traffic);
- Ability to increase customer value, with the highest ARPO on the market, at 78.6€;

- Controlled financial situation with debt leverage reduced to 1.8 and organic self-financing of 7.2 bn€.


Challenges


- Business model agility combining volume and value:
                  - priority on operational efficiency with the Efficiency program,
                  - boosting self-financing through the early retirement plan,
                  - retail customers: expanding the asset base, growth in convergent customers, now over 10 million in France, which are more value-generating,
                  - infrastructure: consolidation in France of passive infrastructure "high points" via Totem and monetization of Iberco in Spain (n° 1 via the creation of PripupFiber”) and Poland,

                  - Orange Business: 2025 target of 1.3 bn€ in revenue and reducing the decline in operational profitability (voluntary departures, reduction of over ½ the portfolio) and heavy investment in Industry 4.0, digital transformation, and generative AI,

- Strong momentum in the Africa-Middle East region (160 million mobile customers), the number one contributor to growth, with an anticipated increase of over 10% in operating surplus in 2025,
- rich innovation portfolio with over 9,000 patents, focused on network intelligence, automated via "Network integration factories", customer experience, and the sustainability of data and AI usage, strengthened by co-innovation, the Datavenue platform, and co-development of offers, funding over 500 start-ups (Orange Ventures endowed with 350 mn€);


Environmental strategy aiming for carbon neutrality by 2050:

- 30% reduction in scope 1 and 2 emissions by 2025 vs 2018, and 45% reduction in scope 3 emissions vs 2020 by 2030,

 - circular economy integrated throughout processes and uses, Orange Nature Carbon Fund and Padus Lab (energy efficiency of networks and data centers):
- Strategic partnership with Mistral AI - research, network optimization, expanding the offer to business clients - and vigilance regarding AI (anticipating short-term occupation of 50% of network traffic);
- Ability to increase customer value, with the highest ARPO on the market, at 78.6€;

- Controlled financial situation with debt leverage reduced to 1.8 and organic self-financing of 7.2 bn€.


Risks

- Share price sensitivity to revenue growth momentum in Africa, which contributes 8/10 th of the improvement in profitability;
- Investor reception of the medium-term plan to be presented in early 2026;
- Monitoring the joint Bouygues and Free bid to acquire Altice (SFR) activities in France, with the total offer of 17 bn€ rejected in October, as Altice values its French assets at 30 bn€;
- Masorange, joint venture, n° 1 in Spain with 37 million customers:
                  - 300 mn€ in expected synergies for 2025 (500 mn€ by 2028),
                  - full takeover via buyout of co-shareholders KKR, Cinven, and Providence;
- Awaiting external growth in Africa and Europe (33% market share);
- After a 0.8% rise in revenue and 3.7% increase in EBITDA in the third quarter, 2025 targets raised for the third time: 3.7% increase in EBITDA, sharply reduced Capex, and telecom self-financing of +3.6 bn€;
- 2024 dividend of 0.75€ and confirmation of at least the same payout for 2025.