David Driscoll Orange SA ORAN-N SELL Oct 04, 2017

Has done very well on this. Pays a nice dividend. The biggest telco player in France, but also plays in many other countries too. He never averages up on a stock, so wouldn’t do so on this one either. Thinks the stock can go a lot further.

A lot of investors and managers are getting out of telcos and chasing more growthier names, because they are slow dividend growing stories with no revenue growth. However, that isn’t the case in Europe. The fibre to the home strategy in Europe, from a regulatory point of view, is about 15 years behind. Regulators are now allowing higher and higher mobile phone bills, which is allowing the carriers to put in fibre to the home and fibre to the curb. Europe is one of the few markets where telcos are actually growing revenues and earnings. He can see quite a bit of upside in the European telco market. This one is just fine.

This is a decent company. He has owned it but does not now because he doesn’t see much upside at this time. Cost containment would improve their margins and would therefore improve their value. He doesn’t see room for a lot of growth of this company in Europe. The dividend will probably be safe but only modest growth. (Analysts’ price target is 17€, the stock trades at 14€)

Hold or sell? In line with Euro GDP, so not getting above average growth. Everyone’s discounting, so margins are under stress. OK in Africa, Middle East, France, Spain. But inflation is wiping out any growth in the dividend. Capital’s not growing. This is a blanket commentary for most of the European telecoms.

Probably the number one reason why it's down is currency. The Euro used to be at 1.60-1.65 and at the moment it's a 1.45-1.46. If you were to buy European stocks at this time you are getting a sizable discount. The second thing is that on a relative basis Orange dividend is quite slim, in the similar ranges to Canadian stocks. A good company. If you want a good yield he would look in AT&T.