Orange's 'Lead the Future' Strategic Vision: Navigating the Digital Horizon

In a rapidly evolving telecommunications landscape, Orange has unveiled its ambitious strategic plan, 'Lead the Future'. This comprehensive roadmap aims to leverage the company's established strengths, particularly in its core business, while charting a course for sustainable growth across its key operational regions: Europe, Africa, and the Middle East. The plan underscores a significant repositioning of its Enterprise activities, focusing on next-generation connectivity solutions and a bolstered presence in cybersecurity. At its heart, 'Lead the Future' is built upon a foundation of operational excellence and a deep commitment to social and environmental responsibility, signalling Orange's intent to not just participate in, but to actively shape the future of digital services.

Pillars of Growth and Innovation

The 'Lead the Future' plan is structured around four fundamental pillars, each designed to reinforce Orange's market position and drive future success:

1. Valuing Our Core Business: Enhancing Excellence and Service Quality

Orange is doubling down on its core telecommunications offerings, building upon its renowned expertise and infrastructure. As a pioneer in fibre optics, with a significant footprint of 46 million FTTH (Fibre to the Home) connections deployed across Europe by the end of 2022, Orange is committed to continued investment and innovation in leading technologies. The focus remains on delivering unparalleled reliability, security, and resilience for its customers. To achieve this, Orange is integrating Data and Artificial Intelligence (AI) more deeply into its operations, aiming to provide highly personalised and seamless customer experiences across both digital and physical touchpoints. Beyond fibre, Orange is enhancing its satellite offering with next-generation commercial solutions in mainland France, partnering with Eutelsat to provide improved High-Speed Broadband to the most isolated customers. In Spain, the planned merger with MásMóvil is set to create a financially robust entity capable of continued infrastructure investment and fostering competition, ultimately benefiting consumers and businesses alike. These initiatives are geared towards improving the Average Revenue Per Offer (ARPO), even amidst challenging macroeconomic conditions and intense competition. Furthermore, Orange is actively investing in its innovation capabilities, with dedicated researchers and teams focused on developing future services, including on-demand enterprise networks and enhanced home Wi-Fi solutions.

2. Capitalising on Infrastructure Across All Operating Countries

Orange is committed to responsible financial management while continuing to invest in the deployment of its fixed and mobile networks. Strategic partnerships, such as RAN Sharing agreements and joint ventures, will be crucial in sharing financial burdens and securing investments. On the fixed network front, Orange plans to deploy an additional 5 million fibre lines in Europe, where peak investment phases are largely concluded, and 2 million lines in the Africa and Middle East region by 2025. In the mobile sector, Orange aims to maximise the value of its passive infrastructure by increasing the third-party operator rental rate on its mobile sites, managed by its European TowerCo, TOTEM. TOTEM is positioned to be a key player in the sector's consolidation in Europe. The Group is also progressing with the modernisation of its fixed and mobile networks towards Very High Speed Broadband, including the decommissioning of copper networks in France and 2G/3G networks across Europe by 2030. In Africa, Orange will continue to invest in fixed and mobile networks (4G and 5G) to support the continent's robust economic and social development. To further enhance infrastructure value, Orange will leverage technology, specifically data and AI, to implement a more efficient, resilient, and high-performing industrial network management model. 'Network Integration Factories' will accelerate network automation and virtualisation, facilitating the introduction of new services.

3. Transforming Orange Business Services: Accelerating Enterprise Segment and Cybersecurity

The digital transformation, driven by the internet, cloud, and collaborative software, has fundamentally altered enterprise needs, leading to a decline in traditional services like fixed telephony and private networks. This shift necessitates a new approach for B2B (Business-to-Business) operators. 'Lead the Future' involves a deep transformation of Orange's B2B model to align with a market where network and digital services are increasingly intertwined. Orange will leverage its unique expertise in connectivity, security, and resilience. Orange Business Services is evolving into Orange Business, a rebranding that signifies a commitment to simplification and closer alignment with customer needs. The ambition is to become a leader in next-generation connectivity solutions, underpinned by globally recognised expertise in secure and trusted connectivity. This transformation includes a refined offer portfolio, an updated business model, and a significant cost optimisation programme, with the aim of returning to profitability (EBITDAaL) by 2025. In the rapidly growing cybersecurity market, Orange aims to be a European leader, targeting €1.3 billion in revenue by 2025. Orange Cyberdefense will pursue organic growth and targeted acquisitions, expand into the SME (Small and Medium-sized Enterprises) market, and explore opportunities in the B2C (Business-to-Consumer) segment.

4. Continuing Growth in Africa and the Middle East

The Africa and Middle East region has long been a significant growth engine for Orange, and it remains central to the Group's strategy. As an operator serving one in ten Africans, Orange will continue to invest in network deployment to solidify its position as a leading digital partner. The Group aims for an average annual revenue growth of +7% between 2022 and 2025, coupled with strong profitability growth in the same period. Orange will accelerate the transformation of Orange Money into a digital platform offering a wider range of services beyond transfers and payments, accessible to all consumers, whether they are Orange customers or not. By the end of 2022, Orange Money had already seen revenue growth, driven by an active user base exceeding 29 million and transaction values surpassing €100 billion annually. Orange will reinforce its local presence and multi-service operator status in Africa and the Middle East by continuing to invest in infrastructure and digital inclusion through its 'Orange Digital Centers'.

A New Business Model: Responsibility and Efficiency

'Lead the Future' introduces a new business model guided by an ambitious social and environmental responsibility policy. Orange is committed to reducing its carbon footprint, targeting a decrease of over 30% in Scope 1 and 2 emissions by 2025 (compared to a 2015 baseline) and a further commitment to reduce Scope 1, 2, and 3 emissions by 45% by 2030 (compared to a 2020 baseline). The Group will also accelerate its mobile phone recycling programme in Europe, increasing participation from 23.1% to over 30% by 2025, while maintaining its long-term goal of achieving Net Zero Carbon by 2040. Success will also hinge on evolving the Group's business model to be simpler, faster, and more efficient, with a strong emphasis on human capital, organisational agility, and process simplification. This transformation aims to improve operational efficiency and foster a culture of excellence. Recognising the importance of adapting to technological shifts, Orange will invest in training and proactive skills management, facilitating employee transitions into new roles in data, cloud, cybersecurity, and AI. Cost control remains a priority, with a target of an additional €600 million in savings by 2025, building on the €700 million saved through the 'Scale up' plan between 2019 and 2022. Capital expenditure (Capex) is expected to decrease from its 2022 peak to approximately 15% of revenue from 2023 onwards, particularly in France and Europe, where fibre deployment is largely complete. Orange will continue to invest strategically to maintain its network leadership.

Financial Ambitions and Objectives

By 2025, Orange has set clear financial ambitions, focusing on return on investment and long-term value creation, with the goal of increasing its Return on Capital Employed (ROCE) by 100 to 150 basis points. The Group will maintain rigorous asset portfolio management and a disciplined approach to acquisitions and partnerships, alongside prudent debt and balance sheet management. Key financial objectives for 2025 (excluding ongoing or future acquisitions) include:

• A slight growth in EBITDAaL (CAGR 2022-2025).
• Increased discipline in Capex.
• Continued growth in organic cash flow from telecom activities, aiming for €4 billion by 2025.
• Net debt maintained at approximately 2x EBITDAaL in the medium term.
• A progression in ROCE in 2025 compared to 2022.

In line with the strong growth in organic cash flow and subject to shareholder approval, Orange plans to increase its minimum dividend to €0.72 for the 2023 financial year (payable in 2024) and to €0.75 for the 2024 financial year (payable in 2025).

Key Takeaways and Outlook

Orange's 'Lead the Future' plan represents a significant strategic pivot, focusing on strengthening its core competencies, embracing digital transformation, and expanding its reach in key growth markets. The emphasis on operational excellence, customer experience, and sustainability positions Orange to navigate the complexities of the modern telecommunications industry and to capitalise on emerging opportunities. The company's commitment to innovation, particularly in fibre, 5G, and cybersecurity, along with its strategic focus on Africa and the Middle East, demonstrates a clear vision for sustained growth and value creation in the years to come.

Frequently Asked Questions (FAQ)

What is the primary goal of Orange's 'Lead the Future' plan?

The primary goal is to leverage Orange's core business excellence and achieve sustainable growth across Europe, Africa, and the Middle East, while repositioning its Enterprise activities and accelerating in cybersecurity.

Which technologies is Orange prioritising for investment?

Orange is prioritising investments in fibre optics, 5G technology, and cybersecurity solutions.

How is Orange addressing environmental responsibility within its strategy?

Orange is committed to reducing its carbon footprint, increasing its use of renewable energy, accelerating mobile recycling programmes, and achieving Net Zero Carbon by 2040.

What is the outlook for Orange Business Services?

Orange Business Services is transforming into Orange Business, focusing on next-generation connectivity solutions and aiming to become a leader in this segment, alongside accelerating its cybersecurity offerings.

What are Orange's key financial objectives by 2025?

Key financial objectives include slight growth in EBITDAaL, disciplined Capex, growth in organic cash flow to €4 billion, maintained net debt at 2x EBITDAaL, and an increase in ROCE.

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