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(Bloomberg) -- Orange SA will seek to extract greater value from its telecom infrastructure, joining rivals in selling stakes in mobile-phone towers and fiber-optic networks.In a first step, France’s largest phone carrier is selling 1,500 mobile towers in Spain to Cellnex Telecom SA for 260 million euros ($288 million), it said Wednesday in a statement unveiling a five-year strategic plan.Orange will set up separate companies to house its 40,000 cellular towers and look for partners to help finance the costly roll-out of fiber networks in France and elsewhere in Europe.Its shares fell as much as 4.8%, the biggest intraday drop in more than three years, after the company issued new forecasts for profits and dividends in the near term that were weaker than analysts had expected. Orange Slides to Almost 3-Month Low as Investor Day DisappointsThe carrier is a relative latecomer to an industry push to hive off network infrastructure into separate businesses to boost its value and bring in new investors. There’s big demand for those assets among funds seeking reliable investment returns. Their involvement could help Orange to cut investment costs and boost a share price that’s barely changed in half a decade, frustrating the government, which owns almost a quarter of the company. The company’s new financial targets see capital spending starting to decline from 2022 once it’s made investments in radio-access network sharing deals in Spain and Belgium and completed the bulk of a fiber-to-the-home fixed-line deployment in France. Ecapex, Orange’s term for capital spending, is expected to grow by around 200 million euros in 2020, then stabilize in 2021 before starting to decline the following year.Read more: Orange’s Midterm Outlook Ambition Hindered by Pressures: ReactMaking the most of infrastructure is key to a new target to increase Ebitdaal -- its measure for adjusted operating income -- by 2% to 3% for 2021-2023. That’s after slightly increasing Ebitdaal in 2019 and aiming for “flat positive” Ebitdaal in 2020.The extra profit may not go to shareholders for now: the company set a minimum annual dividend of 70 euro cents until 2023 and said any increase would depend on the amount of organic cash flow.“We believe the short-term guidance is underwhelming versus consensus expectations,” said Barclays analysts in a note. “As such we expect some profit taking after the recent strong stock performance.”Orange stock has gained 1.5% this year through Tuesday, in line with the wider Stoxx Europe 600 telecommunications index, while independent wireless tower company Cellnex has doubled in value.Red LineFor now, Orange’s infrastructure plans are relatively limited compared to those of rivals. While Vodafone Group Plc has set up a separate towers business for which it plans an initial public offering or stake sale, Orange is looking on a market-by-market basis to consider selling non-strategic towers, and will hold on to what it sees as the most valuable sites. While the new tower companies in Europe seek to demonstrate infrastructure value, monetization so far is “very limited,” Jefferies analysts led by Jerry Dellis wrote in a note.Orange will only go so far in separating assets that it still sees as key to its future. Chief Executive Officer Stephane Richard said it is a “red line” for Orange to “keep control” of the infrastructure, while conceding that its share price doesn’t reflect the value of the assets under the current structure.U.S. carriers have been more radical than their European peers in the past decade, selling overall control of their towers to create a large, independent tower industry. Those deals sometimes led to higher costs for the carriers when the tower operators cranked up mast leasing costs.Orange said it will share future fiber broadband deployment in Spain and Poland with other carriers and may find partners for its French fiber rollout. Richard also raised the prospect of a possible IPO for Orange’s Africa and Middle East business, as previously reported by Bloomberg News. (Adds analyst comment in tenth paragraph, detail on fiber plans at end)\--With assistance from Kit Rees.To contact the reporter on this story: Angelina Rascouet in Paris at email@example.comTo contact the editors responsible for this story: Rebecca Penty at firstname.lastname@example.org, Thomas Pfeiffer, Jennifer RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- European stocks were little changed on Wednesday as worries over global trade kept gains in check, while investors looked toward upcoming services data for the euro-area for clues on the state of the economy.The Stoxx 600 Index edged 0.2% higher by 8:04 a.m. London time. Among single stocks, Airbus SE climbed 0.5% after United Airlines Holdings Inc. placed a $7 billion order for some of the French company’s jets. Orange SA meanwhile fell 3.7% after the French telecoms company said that it plans to extract greater value from its network infrastructure.It’s been a bumpy start to the final trading month of 2019 as investor hopes that the trade dispute between the U.S. and China would find a resolution were dashed after President Donald Trump signaled there was no urgency to striking a deal. However, Europe’s Stoxx 600 Index had been trading at its highest level since April 2015 at the end of last month.“Generally, the market is, in our view, near a top,” Jeff Meyers, founder of Cobia Capital in New York, said in a phone interview. “We’ve had a rally since 2009, so it’s been a pretty long time, so that gets us a little nervous.” Meyers added that economic numbers from the U.S. and China have also shown some weakness, raising the possibility that a recession might be in store.To contact the reporter on this story: Kit Rees in London at email@example.comTo contact the editors responsible for this story: Celeste Perri at firstname.lastname@example.org, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Readers hoping to buy Orange S.A. (EPA:ORA) for its dividend will need to make their move shortly, as the stock is...
(Bloomberg Opinion) -- Xavier Niel is supposed to be the bad boy of French telecoms. He never finished college, once ran an online sex-chat service, and shook up incumbents like Orange SA with cheap pricing when he launched Free Mobile in 2012.That makes one element of his push to extend control over Free’s parent Iliad SA particularly surprising: the implicit admission that the Paris-based company is becoming just like any other boring telecom company. It's an overdue acknowledgement of market realities.It all comes down to the dividend. Mobile carriers have appealed to investors over the past decade not for their growth prospects but their generous dividend payouts. European telecommunications firms will have an average dividend yield of 5% this year, according to estimates compiled by Bloomberg. That compares with the 3.3% average of the broader Stoxx 600 Index of European companies.Iliad has differed from the crowd. Its 12-month yield has averaged 0.8% since 2009. That’s because it promised growth — the stock climbed almost three-fold between 2009 and 2017. But the past two years have been a different story. Before today, the shares had fallen 63% from their 2017 peak as French rivals reclaimed market share from the low-cost upstart.On Tuesday, Niel announced plans to boost his holding in the firm by as much as 20 percentage points. The complicated structure will see Iliad buy back up to 1.4 billion euros ($1.5 billion) of stock for 120 euros per share, then issue new shares of an equivalent amount that Niel has pledged to buy, in a rights issue to which other shareholders can also subscribe. At the same time, Iliad announced it would increase the dividend by a chunky 189% to 2.60 euros, bringing the yield to more than 2%. That’s still very much at the low end of its peers but a substantial change in policy, particularly at a time when the region’s giants — Vodafone Group Plc and Deutsche Telekom AG — are cutting their dividends as they anticipate increased spending on 5G networks.For Niel, it’s a canny way of using the company’s stronger balance sheet to extend his control. Iliad is expecting proceeds of more than 2 billion euros from the sale of infrastructure assets this year. If he increases his stake to above 70% from the current 52%, as the buyback and rights issue might allow, he can expect annual dividend proceeds exceeding 100 million euros. That can help him service the personal debt that he’s likely assuming to fund the rights issue. The move may also strengthen Niel's hand and his financial upside, should the perennial on-again, off-again efforts to consolidate the French market resume.The steps at Iliad don’t particularly disadvantage existing shareholders financially, even if they do seem to be very much in Niel’s interest. They’re under no obligation to sell, and have already benefited from a jump in the share price, which climbed 18% on Tuesday. Nor does the increased payout significantly weaken the firm’s finances: The dividend payout will top 154 million euros. Net debt of 3.7 times Ebitda will fall closer to 2.5 times Ebitda. And it’s far less outrageous than the self-interested efforts of fellow French billionaire Vincent Bollore and his family to extend control over Vivendi SA. The Bollores are simply carrying out a buyback of the media conglomerate’s shares, then canceling them, leaving the family with a bigger stake without increasing their financial risk.But for all of Niel’s assertions that the investment reflects his “confidence in the company’s industrial project,” he will likely need Iliad to continue the more generous dividend payouts to service his greater debt. That will gradually chip away at Iliad’s ability to engage in costly price wars to drive market share. Instead, it’s becoming more like its rivals, generating steadier, more predictable returns, rather than promising stratospheric stock growth.To contact the author of this story: Alex Webb at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Today I will examine Orange S.A.'s (ENXTPA:ORA) latest earnings update (30 June 2019) and compare these figures...
LONDON/BRUSSELS, Feb 20 (Reuters) - Britain is able to manage the security risks of using Huawei telecoms equipment and has not seen any evidence of malicious activity by the company, a senior official said on Wednesday, pushing back against U.S. allegations of Chinese state spying. Ciaran Martin, head of Britain's National Cyber Security Centre (NCSC), said Britain had yet to decide on its security policy for national 5G networks, but that Huawei equipment was subject to detailed oversight and strict government controls over where it was used.
The telecoms industry has called on European governments to join mobile operators in establishing a testing regime to protect network security without having to resort to the disruptive step of excluding vendors from the market. The initiative by the GSMA, which represents 800 operators worldwide, comes as the United States steps up pressure on its allies to ban China's Huawei Technologies on national security grounds. Operators warn that such a step would disrupt the supply of equipment, increase costs to them and their customers, delay the rollout of next-generation 5G services by years, and potentially hobble existing networks.
Italy has denied a report it will ban China's Huawei Technologies and ZTE Corp (Xetra: A0M4ZP - news) from playing a role in building its fifth-generation mobile phone network. "We have no intention of adopting any such initiatives," the industry ministry said in a statement. Huawei, the world's biggest producer of telecoms equipment, faces international scrutiny over its ties with the Chinese government and suspicion Beijing could use its technology for spying, something the company has denied.
Vodafone has suspended the use of Huawei equipment in its core networks, amid mounting security concerns about the Chinese firm's technology. The move by the mobile giant follows claims that Huawei's hardware could be used by Beijing for spying or to seize control of critical infrastructure. The US along with Australia and New Zealand have already banned Huawei from their faster 5G networks because of alleged links to the Chinese regime.
Vodafone has suspended the use of Huawei equipment in its core networks, amid mounting security concerns about the Chinese firm's technology. The US along with Australia and New Zealand have already banned Huawei from their faster 5G networks because of alleged links to the Chinese regime.
Vodafone, the world's second largest mobile operator, said it was "pausing" the deployment of Huawei equipment in its core networks until Western governments give the Chinese firm full security clearance. The United States and some allies, including Australia and New Zealand, have banned Huawei from 5G networks because of alleged ties to the Chinese government, while the firm has denied that its technology could be used by Beijing for spying. Vodafone's Chief Executive Nick Read said on Friday after reporting third-quarter results that the debate was playing out at a "too simplistic level", adding that Huawei was an important player in an equipment market which it dominates along with Ericsson Sweden's Ericsson (Hanover: ERCB.HA - news) and Nokia (Milan: 23568.MI - news) .
Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Julien Ponthus. Reach him on Messenger to share your thoughts on market ...
For days now, German Foreign Minister Heiko Maas has been niggling away at the idea that there can be new talks with Britain on Brexit. Late last night, Maas said "we need to talk" about whether the accord can be opened, and recalled that any change would require the assent of all 27 other EU states. Bear in mind that the default EU stance is that it can only review its stance on future ties if Britain changes its stance, for example if Britain says it wants a softer Brexit.
French telecoms group Orange is considering a bid for Spanish competitor Euskaltel, a move which would consolidate its market position as number two in Spain, according to a source with knowledge of the ...
French telecoms company Orange has hired Credit Suisse as an adviser to look into a potential bid for Spanish competitor Euskaltel, online newspaper TMT Finance reported on Thursday. "Orange Group ...
Two men working in the telecommunications industry have been arrested in Poland on suspicion of espionage. A Chinese employee of Huawei and a Polish man, who is reportedly a former counter-intelligence officer, have been taken into custody. The Polish national, named by TVP as "Pior D", was reportedly a former employee of Orange (LSE: 0OQV.L - news) .
European shares opened higher on Friday, surfing on a global recovery rally which has lifted stocks from the lows hit just after Christmas thanks to optimism on Sino-U.S. trade talks and a more dovish ...
** JP Morgan sees little justification for buying Telcos on fundamental grounds, with sector revenue growth still elusive and relative valuation unexciting ** However, brokerage says out-performance could ...