Declares investment priorities
FT Orange has said that its NExT programme of convergence and cost reduction will be rolled forward into a new scheme, called Orange 2012. It has hinted that investment in technology such as HSPA and LTE will proceed only in accord with the regulatory situation, and customer demand, rather than being rolled out on a Greenfield basis ahead of the market.
Orange 2012 will have three main priorities:
- Simplifying the customer experience;
- Enhancing the agility with which the Group carries out its business;
- Ensuring performance that is durable over time.
To address the first priority, FT Orange said it would focus innovation on design, as well as quality of service, as well as improving customer care and call centre procedures.
The Group will also look to rationalise its offers to "accelerate its time to market and seize new opportunities". This move to increase flexibility in the business will also entail initiatives to drive further the Group's transformation and optimise its cost structures.
The Group said it will invest to pursue new growth opportunities, in particular in the areas of content, online advertising and e-health. With regard to content, the Group's strategy will continue to be based on differentiating itself from other players in the ecosystem, capitalising for example on its expertise in technology and networks that allow interactivity and personalisation, or its ability to deploy multi-screen services across TV, PCs and mobiles.
With an acceleration in the number of employees retiring from the Group in France in the medium term, France Telecom-
Maintaining organic cashflow generation at 2008 levels in a testing economic environment
Orange 2012's financial ambition is to maintain annual organic cashflow over the 2009-2011 period at a level equivalent to that achieved in 2008 (8 billion euros), based on current macroeconomic forecasts before any acquisition of spectrum. This assumes that investment will remain steady at 12% to 13% of revenues. The Group's new action plans should generate up to 1.5 billion euros in terms of annual savings on costs or investments. This will facilitate the Group in achieving its Orange 2012 financial ambition by balancing the negative factors impacting margins linked in particular to the economic, the competitive or the regulatory environments.
Finally, with respect to its acquisitions policy, and with no transformational deal envisaged, the Group:
– Will support organic growth in markets where it is already present; and
– In new markets and territories, will pursue targeted transactions that allow it fully to capitalise on its expertise to create maximum value.
The Group will also continue dynamically to review its portfolio, it said.
Over the 2005-2008 period the Group said it had exceeded its targets for organic cash flow generation achieving 8 billion euros in 2008. Debt has been reduced from 48 billion euros at the end of 2005 to less than 36 billion euros at the end of 2008. At 1.85, the Group's debt-to-equity ratio is amongst the lowest in the sector today; during the same period its dividend has increased by 39%.