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Orange, Europe's fifth-largest telecom operator
by market value, also said that it would take until 2018 for its
sales and core operating profit to exceed 2014 levels.
The investment push, much of which will go into fiber broadband
in France, follows similar moves by Deutsche Telekom and
Britain's Vodafone, which leads the pack with its 19 billion
pound ($28.1 billion), two-year investment plan dubbed Project
Spring.
"We want to clearly set ourselves apart from others by offering
customers better connectivity," said Chief Executive Stephane
Richard as he unveiled a 2020 strategy plan.
In France, Orange is still coping with the fall-out from the
entry of low-cost player Iliad into the mobile market in 2012,
which sent prices down by more than a third and left rivals
Numericable-SFR and Bouygues Telecom scrambling to revise their
own offers.
To help it attract customers who are willing to pay more, Orange
plans to triple its investment in fiber broadband by 2020 to
connect 12 million homes by 2018 and 20 million by 2022. Orange
is aiming to triple average data speeds on mobile and fixed
lines by the end of 2018.
CEO Richard said he thought the low point for group sales would
come next year, while earnings before interest, tax,
depreciation, and amortization (EBITDA) would bottom out this
year.
"Our revenues have been falling for five years. We've been
through a major re-set in France and the impact is still being
felt, although most of our customers have passed over to the
lower prices," he said.
Orange pledged to pay a dividend of at least 0.60 euros per
share from 2015 to 2018, unchanged from 2014 levels, adding that
the payout could increase if operating profit was better than
expected.
Orange's dividend yield is 3.9 percent compared with 4.1 percent
for the European stock index overall, while Telefonica and
Vodafone both offer 5.5 percent yields.
Deutsche Telekom's dividend yield stands at 2.9 percent but it
has said its dividend will rise in the coming years.
Orange will also keep up its cost cutting with a further 3
billion euros in gross savings targeted through 2018, on par
with an earlier plan that was lauded by investors.
($1 = 0.9454 euros)
($1 = 0.6763 pounds)
(Reporting by Leila Abboud and Gwenaelle Barzic; Editing by
Astrid Wendlandt and Keith Weir)
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