Alonside France, Spain will be one of the first countries to implement TowerCos projects. As part of these plans, Orange is selling 1,500 Spanish mobile sites to Cellnex for EUR 260 million.
Fibre concessions
There will also be changes in the ownership structure of Orange’s FTTP infrastructure. In France, the company plans to share ownership of the networks it's deploying in rural areas under public-initiative contracts with local authorities. These assets, which will cover 4 million premises, will be managed by a new subsidiary named Orange Concessions.
In Spain and Poland, Orange said that it plans to create FiberCos to share future FTTP deployments with other operators, potentially involving third parties.
The group expects to offer FTTH services to more than 65 million households in Europe by 2023. In the French market, copper decommissioning will start in 2023 and should end in 2030. In mobile, its core networks will transition to 5G from 2023, enabling lower latency with the implementation of innovative network architectures, such as slicing.
Africa & Middle East, financial services and B2B growth drivers
In the Africa & Middle East region, group revenues are expected to progress at a compound annual growth rate (CAGR) of around 5 percent in the 2020-2023 period. As recently announced, the group plans to launch Orange Bank Africa to strengthen is financial offering. This new initiative aims to reach nearly 10 million customers by 2023 with net banking income of about EUR 100 million.
Orange Bank should achieve break-even in Europe towards the end of 2023, with nearly 5 million customers and around EUR 400 million in net banking income.
In addition, the group wants to become more B2B-orientated, and its cybersecurity operations will be increasingly important to support growth, exceeding EUR 1 billion in revenues by 2023.
Annual growth in EBITDAaL of 2-3% per year in 2021-2023
Orange expects to report slightly increasing EBITDA after Leases (EBITDAaL) in 2019, moving to a “flat positive” EBITDAaL for 2020 and growth of between 2 and 3 percent per year in the 2021-2023 period.
Organic cash flow from telecoms activities should increase organically between 2020 and 2023, with a target of EUR 3.5-4 billion in 2023, compared to over EUR 2 billion in 2019. The group is also guiding for a net debt/EBITDAaL ratio for telecoms activities of around 2x in the medium term.
Looking at the outlook in its main markets, Orange said that French service revenues will experience moderate growth in 2020-2023, while Spain should return to growth in 2021. The group’s ambition across Europe is to achieve a growth rate higher than the market average in each of its six countries.
