Orange Cyberdefense and CS Group win a major contract with the Ministry of the Armed Forces

(AOF) – Orange Cyberdefense, leader in cybersecurity services in Europe, and CS Group, a major player in the design, integration and operation of critical systems, have announced the winning of a four-year contract to ensure the security of information and communication systems for the Ministry of the Armed Forces. Amount of this contract, awarded by the Dirsi (Joint Department of Infrastructure Networks and Defense Information Systems), as CIS operator for the entire Ministry of the Armed Forces: between 30 and 40 million euros.

AOF – LEARN MORE

Key points

– Telecom operator born in 1991 number 1 in Europe serving nearly 260 million customers including 47 million fixed broadband households and 214 million mobile subscribers;

– Activity of €45.5 billion, structured in 6 main branches: France for 44%, Europe (Spain, Belgium, Luxembourg, Moldova, Poland, Romania and Slovakia) for 25%, Africa-Middle East for 14%, business services for 18% then international operators and shared services as well as mobile financial services (Orange Bank);

– Economic model based on 3 pillars: “premium” positioning compared to the competition, deployment of convergent offers then growth of the IT offer, including cybersecurity, for B2B customers;

– Strong presence of the State in the capital (22.95% of the shares and 29.54% of the voting rights), Jacques Aschenbroich being chairman of the board of directors of 7 members and Christel Heydemann managing director from May 19 ;

– Controlled financial situation with €23.5 billion of net debt giving a leverage effect of 1.83.

Challenges

– “Engage 2025” strategy aimed at becoming the reference in 3 inclusive businesses -digital centers, social offers and smartphones at affordable prices: increasing connectivity with 5G and fiber, i.e. 68 million households connected and, as a progress report , 65 million in 2023 / accelerate growth in Africa-Middle East, at an annual rate of 5% including for Money Bank / put artificial intelligence and data at the heart of digitalization / €1bn cost reduction by 2023, operating margin up 2 to 3% per year;

– Innovation strategy focused on network intelligence, operational efficiency, customer experience and sustainability of data and artificial intelligence uses and rich in a portfolio of + 9,000 patents: implementation of the 5G technical infrastructure in Europe in 2022 and preparation of self-adaptive / co-innovation networks with + 60 accessible APIs, the Datavenue platform and dedicated support with Art Factory, Orange gardens… and co-construction of offers with customers in the Lab Orange / academic and industrial research partnerships in France and Europe / support for 500 start-ups in the Orange Fab network / Orange Ventures venture capital fund endowed with €350 million;

– Environmental strategy aimed at creating value and zero carbon from 2040 via: the circular economy throughout the process and uses (collection of mobiles, recovery of French waste market place for second-hand equipment, etc.) / the Orange nature carbon fund / the Padus Lab dedicated to the energy efficiency of networks and data centers / the launch of social and environmental impact loans;

– Enhancement of assets and strengthening of leadership in fiber infrastructure via Orange Concessions in France, TOTEM, a structure bringing together the operator’s “high points” in France and Spain and via Fiberco in Poland.

Challenges

– Continued market share gains in Europe and Africa, 1

er

engine of growth;

– Strong expectations of investors on the development of Orange Bank;

– Towards a merger of activities in Spain with those of Masmovil within a common company;

– Questions about the positioning of the ODS cybersecurity division within the group;

– 2022 objective of stable operating income, Capex of €7.7 billion, a debt/EBITDA ratio of around 2 and free cash flow of more than €2.2 billion.

End of the price drop

Thanks to the price war, French consumers have benefited from internet prices that are among the lowest in Europe. But gradually, subscription prices are increasing. According to the telecoms authority (Arcep), in 2021 they increased by 3.1% for mobile and 5.1% for fixed. If the current inflationary context can explain this rise in prices, it is not the only reason. All players are indeed seeking to restore their margins. They have already succeeded in outsourcing part of their capital expenditure related to the deployment of their fiber and mobile infrastructures (4G and 5G). Now they have to increase their income. This is an important issue in order to benefit from the development of their performance. Generating a satisfactory level of available cash (free cash flow) also allows them to benefit from attractive financing conditions, in a sector that requires substantial investments. Investments in the sector almost reached 15 billion euros in 2021, a historic level. The increase has reached almost 50% since 2017.

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Orange Cyberdefense and CS Group win a major contract with the Ministry of the Armed Forces


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