PARIS (Reuters) – French telecoms operator Orange plans to add customers and boost profit margins through to 2020 by investing on its networks rather than buying foreign rivals or media content, it said on Thursday.
The announcement confirms the strategic plan presented two years ago by chief executive Stephane Richard, hours before a crucial investor day in London aimed at convincing the financial community that he is the right person to lead the group for a third mandate from spring 2018.
Orange has chosen to focus investments on the high-speed internet broadband fiber technology and bundled offers for fixed and mobile services in its two biggest markets – France and Spain.
The company is betting that this strategy would be the best way to retain or gain market share.
That strategy contrasts with those of other rivals, including troubled Altice’s SFR Group, which spent hundreds of million of euros on exclusive TV sports rights with the hope it would attract new customers.
“This investment on fiber, this conviction that the fixed-mobile convergence is what makes the difference,” said chief financial officer Ramon Fernandez. “It’s not this pseudo telecoms-content convergence that makes the difference.”
Orange also provided more detailed financial targets, with shares in the company flat in early session trading. Orange shares are down by around 1% so far in 2017.
Orange was targeting growth in its core operating profit of 2% in 2017, followed by an “acceleration of the growth rate in 2018” and further increases in 2019 and 2020.
It also said its annual dividend would amount to 65 euro cents for 2017-2020.
Group investments will reach a peak in 2018 of 7.4 billion euros ($8.7 billion) and start declining the following year. The magnitude of Orange’s capital expenditure was a key concern for analysts during the group’s last quarterly earnings.
($1 = 0.8482 euros)
(Reporting by Mathieu Rosemain and Gwenaelle Barzic; Editing by Sudip Kar-Gupta)
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