Orange S.A.

The stable outlook on Orange reflects our anticipation of the company's steady performance over the next 12 months, despite our conservative forecast for weaker French and Spanish markets arising from ongoing competitive pressure. We assume flat revenues in 2021, with a mid-single-digit decline in Spain offset by stability in France and growth in the rest of Europe and MEA, followed by modest growth of about 1% in 2022. We expect Orange will maintain credit metrics in line with our 'BBB+' rating, with adjusted debt to EBITDA of about 2.7x over the next two years, adjusted funds from operations (FFO) to debt remaining above 30%, and adjusted FOCF to debt before spectrum costs rising to about 10% in 2021 and 12%

...We think operations will remain stable in 2021, with modest growth in 2022 and 2023, after Orange delivered a relatively solid performance in 2020, despite the pandemic. We expect network utilization will continue to expand after traffic volumes increased across all Group networks in 2020. The Group is investing in its networks to meet demand and build revenue resilience among consumers and larger enterprises needing additional remote working capacity. Despite the effects of the health crisis remaining significant in the first nine months of 2021, we expect flat revenue growth driven in particular by strong performance in the Africa and Middle East (MEA) segment. This grew at about 9% (11.2% on a constant basis) because of strong retail service revenue in both 4G and fixed broadband. This growth was offset by declines in both the French and Spanish markets. We expect the group's top-line to remain almost flat in 2021 supported by continued growth in MEA, rising to about 1% growth in 2022...

Full Report