Orange Stays on Track with Retail Momentum and Africa Growth

France’s telecom giant Orange has delivered a resilient first-quarter performance, with core metrics aligning closely to expectations amid a challenging macroeconomic backdrop. The company’s focus on retail services, Africa’s explosive growth, and disciplined financial management remain key pillars of its “Lead the Future” strategy.

Retail Strength Drives Resilience
Orange reported Q1 2025 revenues of €9.91 billion, a modest 0.6% year-on-year increase, driven by robust retail services (+2.4%). This segment’s growth was fueled by convergence deals (combining mobile, broadband, and TV) and fiber expansion in France. Convergent customer ARPO rose to €77.8, reflecting higher-value service adoption. Meanwhile, wholesale services declined 3.1%, a trend the company has strategically accepted to prioritize higher-margin retail segments.

The star of the quarter was Africa & Middle East, where revenue surged 12.8% to €2.05 billion—the eighth consecutive quarter of double-digit growth. This region’s momentum stems from its “four engines”: mobile data (+21%), fixed broadband (+19%), Orange Money (+22%), and B2B services (+17%). Mobile customers expanded to 163.4 million, while Orange Money’s active user base hit 41.1 million. The region now accounts for 20.7% of total group revenue, up from 18% in 2024, solidifying its role as Orange’s growth engine.

Europe and France: Mixed Results, Strategic Focus
In France, revenue dipped 1.3% to €4.30 billion, as declines in fixed narrowband (-17.9%) and wholesale (-4.3%) offset retail gains. However, the company’s strategic focus on convergence and fiber paid off: fiber coverage reached 93% of French households, with 282,000 new lines added in Q1. Mobile churn improved to 12.2%, and ARPO rose 3% to €77.8.

Europe’s revenue was flat at €1.75 billion (-0.2%), with Poland leading growth (+2.4%) through 5G expansion and B2B wins. The segment’s IT/Integration services grew 17%, though legacy businesses like equipment sales dragged performance.

EBITDAaL Growth Confirms Guidance
EBITDAaL rose 3.2% to €2.48 billion, slightly outperforming the 3% annual target Orange set for 2025. This reflects operational discipline and cost savings, though a €1.64 billion provision for France’s GEPP labor agreement (part-time-for-seniors plan) weighed on margins. Capital expenditures grew 6.6% to €1.46 billion, with 93% of French households now covered by fiber—a critical step toward its 2025 network goals.

The company reaffirmed its full-year targets:
- EBITDAaL growth of ~3%
- Organic cash flow of at least €3.6 billion
- Dividend floor of €0.75 per share

MASORANGE: Progress and Synergies
The Spanish joint venture with MASMOVIL, MASORANGE, delivered 2.6% revenue growth, adding 51,000 fiber lines and 80,000 mobile customers. Synergies reached €80 million in Q1, bringing the year-to-date total to €200 million. With a target of €300 million in 2025, the venture is on track to reduce costs and bolster Spain’s leadership position. Separately, the planned FiberCo divestiture to Vodafone Spain—expected by summer—will further streamline operations.

Risks and Challenges
- Currency headwinds: Egypt’s currency devaluation impacted Africa’s margins, though growth remained resilient.
- Legacy segment declines: Fixed voice and mobile revenue fell 12.6% and 6.9% respectively in Orange Business, underscoring the need to accelerate IT/Integration services growth.
- Labor provisions: The GEPP agreement’s €1.6 billion hit to Q1 EBITDAaL highlights the trade-off between short-term costs and long-term workforce stability.

Conclusion: A Steady Hand in a Volatile Landscape
Orange’s Q1 results reaffirm its ability to navigate macroeconomic headwinds through strategic execution. The Africa & Middle East region’s double-digit growth, fiber expansion in France, and MASORANGE’s progress provide a solid foundation for its 2025 targets. With EBITDAaL up 3.2% and cash flow targets intact, investors can take comfort in the company’s financial discipline.

Crucially, the dividend floor of €0.75 per share and 2x net debt/EBITDAaL ratio signal management’s commitment to shareholder returns. While legacy segments and labor costs pose risks, the shift toward high-margin digital services and convergence deals positions Orange for sustained growth.

With Africa’s revenue contribution rising and fiber penetration hitting 93% in France, Orange is not just keeping pace—it’s setting the pace in European telecom. Investors looking for a defensive, cash-generative telecom play with growth catalysts in emerging markets should take note.