Orange S.A.

Overview Key strengths Key risks Large scale, leading fixed-line and mobile telecommunications positions, and a strong network with deep fiber penetration and fully owned mobile towers. Intense competition in its main markets against converged peers, marked by high capital intensity and fierce pricing pressure, including a fresh episode of discounted pricing seen in the domestic market. Incumbent in its French home market and No. 1 carrier in terms of revenue, subscribers, fiber coverage, and fixed-mobile convergence. Execution risks around the turn-around strategy for the challenging Business segment and some uncertainties from an increasing level of competition in the Belgian market. Supportive, predictable financial policy. Some exposure to emerging market country, currency, and regulatory risk. Geographic diversification in Europe and in

...Orange's new MasOrange joint venture (JV), combining its operations in Spain with those of Masmovil, will leave the company with reduced headroom, but metrics will remain commensurate with the ratings and regain some headroom from 2025 onward. Based on the company's 50% ownership in the non-consolidated JV, we intend to proportionally consolidate the JV in Orange's metrics from 2024 onward, because we believe that the company remains committed to operations in Spain. We also think it is likely to take control and consolidate the JV in the event of an IPO, but we acknowledge it hasn't committed to do so. There will likely be minimal headroom within the 3x maximum leverage commensurate with the rating in 2024, before Orange likely regains some leeway from 2025 onward, in particular due to the rapid deleveraging path expected at its Spanish JV. This deleveraging appears also in line with its long-standing 2x reported net leverage after lease target commitment. We think operations will remain...

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