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Orange (ORAN) Invests in VC Fund, Boosts European B2B Entities

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Orange S.A. (ORAN - Free Report) has partnered with Move Capital to invest in the ‘Move Capital I’ venture capital (VC) fund, part of the Kepler Cheuvreux group. The investment was made through Orange’s holding company, Orange Digital Investment, and is aimed at boosting Europe-based technology companies in the digital B2B sector.

Backed by resilient business models, Move Capital invests in Services & Solutions Technology companies to drive innovation on a global scale. It boasts an exclusive commitment toward strengthening the B2B technology while actively promoting a sustainable European Technology ecosystem with a strict ESG approach.

Its alliance with Kepler Cheuvreux Invest enables the investment team to rely on institutional support and promote growth and value creation in the long run. At a time when deployment of 5G solutions, cloudification of services, artificial intelligence and the need for sophisticated cyber-security solutions are at the peak, the move comes as a major boon to B2B tech entities.

The investment in Move Capital I VC fund will empower Orange Business Services, Orange’s subsidiary, to become an integral stakeholder with a recognized panel of European technology companies. This will not only bolster their innovation strategy but also facilitate the development and emergence of European technological sovereignty with adequate financing and assistance.

The combined synergies created from this partnership will allow European tech companies to reinforce their competitiveness and foothold in today’s digital economy, supported by a robust B2B technology ecosystem.

Driven by such diligent operational execution, the latest move is likely to solidify Orange Business Services’ position as a network-native digital services company and effectively cater to customer requirements by capitalizing on the new-age technology amid a dynamic B2B market landscape.

In December 2021, Orange Belgium announced its intent to acquire about 75% minus one share in VOO SA in association with Nethys. The buyout marks a step toward reinforcing Orange Belgium’s national convergent strategy, enabling the company to deploy a high-speed network infrastructure in Wallonia and Brussels.

The deal is based on an enterprise value of €1.8 billion for 100% of the capital. Post the integration, the agreement will generate considerable synergies related to the handover of VOO's MVNO (Mobile Virtual Network Operator) business to Orange Belgium's network. The EBITDA multiple will be 6.5x on account of the combined synergies.

As part of the transaction, Nethys will retain certain governance rights with a minority stake in VOO. In fact, it has also been given the option to convert its stake in VOO into Orange Belgium shares. The plan involves cable modernization and accretive fiber optic rollouts with multi-gigabit connectivity.

Driven by their high-complementary assets, the acquisition is expected to revamp the network infrastructure in Belgium and fortify Orange Belgium’s leadership in convergence in Europe. The transaction is subject to certain customary conditions and is expected to close in 2022, post the approval of the European Commission. It is yet to be seen how Orange sustains this growth momentum and whether the proliferating subscriber base can actually help it generate profitable revenues in the days to come.

Zacks Rank & Other Stocks to Consider

Orange currently sports a Zacks Rank #1 (Strong Buy). The stock has declined 14.2% compared with a 7.6% fall of the industry in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment ResearchImage Source: Zacks Investment Research

Vocera Communications, Inc. (VCRA - Free Report) is a solid pick in the broader industry, sporting a Zacks Rank #1. The Zacks Consensus Estimate for its earnings for the current year has been revised 6.2% upward over the past 60 days.

Vocera delivered a trailing four-quarter earnings surprise of 109.6%, on average. The stock has soared 54.1% in the past year. VCRA has a long-term earnings growth expectation of 18%.

Aviat Networks, Inc. (AVNW - Free Report) carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for its earnings for the current year has been revised 0.8% upward over the past 60 days.

Aviat Networks delivered a trailing four-quarter earnings surprise of 32.1%, on average. AVNW has rallied 91.9% in the past year.

SeaChange International, Inc. (SEAC - Free Report) also has a Zacks Rank #2. The consensus estimate for the current year has narrowed from a loss of 20 cents per share to a loss of 18 cents over the past 60 days.

SeaChange International delivered a trailing four-quarter earnings surprise of 37.2%, on average. The stock has gained 39.9% in the past year. SEAC has a long-term earnings growth expectation of 10%.

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