Press Release

Taking stock of 2008 – Orange increases profit and secures jobs

• Number of customers 2008 has increased by 6.4 percent to 2.054 million
• 10 percent increase in the post-paid customer segment
• 15.5 million euro net profit – biggest profit in company history
• Despite revenue drawbacks owing to sales promotion activities – optimum outset for 2009

The launch of Orange in Austria in September 2008 exceeded all expectations. This is now also proven by the company financial results for last year. The number of Orange customers has increased by 6.4 percent to 2.054 million customers from the end of 2007 to the end of 2008. In the valuable post-paid customer segment, the number of customers even increased to 10 percent. “Last year has substantially taken us forward in the long term. We do not only look back on a successful brand change, but also the most profitable year in company history“, says Orange CEO Michael Krammer.

Regulatory measures and sales promotion such as the six-month waiving of the basic monthly fee for new “Hello Europe“ customers have burdened the revenue a little. Consequently earnings decreased from 624 to 592 million euro. Krammer views this as an investment into the future: “We used our solid results, put up with short-term decreases in revenue and thus won new, satisfied customers. Thus we promote growth this year and in the years to come.“

Despite expenditure for the brand change and for various sales promotion activities, Orange with 15.5 million euro (2007: 4.2 million euro) achieved the biggest net profit in company history and thus was the most successful telecommunications company of the year in Austria. “Ten years after the company launch, we have now crossed the critical threshold and reached a sustainable profit zone“, says Krammer. The earnings before interest, taxes and depreciation (EBITDA) have decreased from 180 to 167 million euro due to one-off expenses for the brand change. At a comparable level, EBITDA would rise by nearly 4 percent to 187 million euro.

“The life of a company does not end at the end of the fiscal year. We are not concerned with a short-term optimization of the operating profit from quarter to quarter. We want to substantially and sustainably develop Orange in Austria, for the sake of the company, its employees and its customers“, explains Krammer the strategy. With its operating profit for last year, in terms of costs Orange has created an optimum outset for more success in the years to come.

Krammer confirms his statement that despite a difficult economic environment in 2009, he will dispense with redundancies due to business operations. “We extend unfailing support to our staff so that they can fully concentrate on customers, service and new, useful and simple solutions. With this approach we want to secure the No. 1 position in customer service in the long term“, emphasizes Krammer.

The top performance of Orange employees is also supported by research results: The probability to wait for more than three minutes on the Orange hotline amounts to only 2 percent, shows a study conducted by Kreutzer, Fischer & Partner. As many as three in four Austrians would recommend Orange according to an Integral survey. Thus Orange has managed to climb to the top of the popularity scale. Also when it comes to subsidized publicity the new mobile communications brand has also claimed the top spot with more than 70 percent.

In 2009, Orange as one of the biggest international mobile communications brands, will once again launch new mobile phones, services and tariff schemes on the Austrian market. The objective of the company is stable profitability and revenue development above market average. Above all, the mobile internet promises high growth rates. Orange more than sextupled mobile internet customer numbers in two years.

Krammer argues for a regulation across Europe which allocates frequencies which fall vacant due to the transition from analogue to digital tv to mobile communications. “Allocating these “digital dividends‘ to mobile telephony would massively accelerate the nation-wide broad band roll-out in Austria, and consequently significantly strengthen rural areas as well as Austria as a business location.“ Krammer: “This would make more sense than yet another end customer price regulation for roaming. This would only help a few people and very much impede innovation, investment and growth in economically difficult times.”