Orange Telecoms Group Loss Grows
British mobile telephone group Orange Plc yesterday reported a jump in first-half pre-tax losses to £125.2 million ($193.6 million), almost half as much again in the first half of 1995.
But Orange, whose shares have fallen well below the level at which they were floated in March, said the losses were as expected.
The company pointed to steady gains in its subscribers and turnover as proof of the underlying health of the business.
Our net growth has increased dramatically...all the key drivers of the business, we are succeeding on, group managing director Hans Snook said in an interview.
Shares in Orange gained 4 pence to 191 pence.
after the results, which compared with a loss of £88.8 million a year earlier.
But the stock is still well short of the 205 pence level of its flotation, which valued the group at some £2.5 billion and propelled it into the FTSE-100 index of leading British shares.
Orange said its turnover more than doubled over the first half of the year to 256.5 million from 100.0 million as it added a further 194,000 subscribers to take its total customer base to 573,000.
Snook said the figure had since increased to more than 600,000, giving it 10 per cent of a market led by Vodafone Group and British Telecom's 60 per cent-held Cellnet.
Orange, whose major shareholder is still the Hong Kong-based Hutchison Whampoa Ltd group which, along with joint venture partner British Aerospace, brought it to market, is not expected to turn a profit or offer a dividend until 1998.
Asked to explain the fall in Orange's share price since March, Snook said it had suffered from a knock-on effect of weakness in quoted US technology stocks.
The share also suffered from what he considered misplaced concern about the British mobile market.
A lot of people do not understand what this transition process in our market place is all about, he said, referring to fears that growth in new subscribers was now slowing down.
Orange's growth in new subscribers was up on the second half of last year and churn "� the rate at which customers cancel their subscriptions after a year "� had now fallen to 17.6 per cent, offering more secure revenues.
Snook added that Orange was one of the few mobile networks in the world that was managing to boost the average amount of revenue it gained per subscriber, with a small rise to £446 per head from £444.
Our job as the management is to keep on working on those fundamentals and we are confident that they will be reflected in the share price, he said.
Analysts said the results were in line with expectations and the fall in the churn rate was particularly encouraging.
It's a good set of figures...some of the fears we've had in the past weren't justified, James Ross, an analyst at brokerage ABN Amro Hoare Govett, said.