The French group Orange announced this Thursday a cut to half the value of its subsidiary in Spain. Specifically, the company, which has presented its results for the first half of the year, has lowered the book value of Orange Spain from 6,800 million to just over 3,000 million. The company has justified this adjustment in its accounts to the “hyper-competitiveness” of the Spanish market with the push of low-cost operators and a delay in the economic recovery after the coronavirus pandemic.
Telefónica obtains the highest profit in its history thanks to the sale of the towers and the merger in the United Kingdom
Jean-François Fallacher, head of the operator in Spain, has pointed out that in this market there are “three operators that invest” (Telefónica, Orange and Vodafone) and “others that are using the networks and destroying margins”. “The competition is fine, but until the moment in which the three main players are going to have less investment capacity,” said the manager. The company has already justified in this market situation the ERE for more than 400 employees that was executed during the past quarter.
Orange has moderated its revenue drop to 2.7% with a turnover in Spain of 1,180 million euros in the second quarter. The company has entered 2,368 million euros until June, 5.2% less than last year on the same dates, mainly due to the drop in the retail business. Likewise, Orange has had a gross operating profit (Ebitda) of 610 million euros, 1.62% less.
Another of the doubts that the company had on the table in the presentation of the results this Thursday has also been cleared by Orange. The group will continue to offer soccer next season, which kicks off next month. After the withdrawal of Vodafone in 2018, Orange was the only company that competed with Telefónica in the broadcast of the different competitions in this sport. However, in recent months he had repeatedly criticized the price he had to pay for these rights and there was speculation in the sector that he might not participate next year.
Despite this, Fallacher has confirmed that Orange will broadcast football to its customers. For this, it has had to go to Telefónica, which is obliged to share premium content with its competitors in the wholesale market. The prices for this exchange are set by the CNMC and Orange had criticized the model to mark that cost, understanding that it should be based on the clients who contract football and not the accumulated clients that Orange has. Despite this, Orange will pay Telefónica again for this content, with a price “similar” to last year, which was around 300 million euros.
This decision, however, will mean an increase in the company’s prices. To date, accessing the contracts offered by football cost at least 89.90 euros. From now on it will be set at 95 euros. “We continue to have a very high price for football, hence the need to have to monetize it,” the company assured. “The cost of football has decreased in other countries, here they are very expensive and should be adapted,” Fallacher maintained. Last year, Orange posted a 40% gain on soccer customers.