Odido partners with Orchard Finance for hedge valuations

Telecommunications provider Odido is working with Orchard Finance on the periodic valuation of financial instruments, placing flexibility and accuracy at the heart of its financial risk management approach.

With approximately 8 million customers, Odido is the second-largest telecommunications provider in the Netherlands. Behind its services for both consumer and business customers sits a large organisation with complex financing structures.

One element of Odido’s financing structure involves loans from financial institutions. To manage the financial risks associated with these loans, the company uses interest rate derivatives that must be periodically revalued for financial reporting purposes.

When the need arose for a new external provider to perform these valuations, Odido sought a partner that could offer not only strong technical expertise but also the flexibility to adapt to practical business requirements. Following a market review, Orchard Finance emerged as the preferred choice. The Dutch consultancy was able to provide the required technical expertise at a competitive price while also demonstrating a high degree of flexibility.

Mark Layton, Manager in Odido’s Treasury department, explains: “What is especially important is having a party that understands what you have done, knows the instruments well, and can perform the valuations correctly. You need to be able to rely on that.”

A challenge where accuracy is essential
According to Layton, valuing hedge instruments requires precision and expertise. “The valuations must be accurate. We are dealing with amounts that can be material to financial reporting. In that case, it is important to trust the quality of the calculations and the party performing them.”

In addition to technical execution, understanding Odido’s specific circumstances also played an important role. “You are looking for a party that does not simply run a model, but also understands your circumstances and can think along with you about the instruments you use.”

Orchard Finance
One of the key differentiators of Orchard Finance compared to other consulting firms that pitched for the engagement is its pragmatic and focused approach. Where some firms offered broader, more strategic service packages, Orchard Finance was willing to focus precisely on what was needed.

“Other parties wanted to take on a much broader role, with a completely different cost structure. We were specifically looking for a party that could support us effectively with the valuations, without immediately attaching a full strategic advisory process,” says Layton.

Layton also appreciates that Orchard Finance provides additional analyses when needed. “For example, sensitivity analyses; a type of stress test to assess what happens when interest rate movements change. That kind of support may seem relatively small, but it is important. It is great that this can simply be included.”

Adapting to an evolving hedge strategy
Another important aspect of the collaboration, according to Layton, is that hedge portfolios are continuously evolving. Instruments mature, new ones are added, and structures can change. This requires a partner that not only follows a fixed process, but also remains operationally flexible. “It is not a static process. New hedges are regularly entered into and existing ones mature. Your system needs to be flexible enough to move along with that.”

According to Layton, Orchard Finance has demonstrated the ability to closely follow developments in Odido’s treasury strategy. “That is also part of flexibility: moving along with how our hedge strategy evolves.”

Critical thinking rather than mere execution
Layton further highlights Orchard Finance’s critical approach when processing documentation. After new transactions are completed, Odido shares the relevant documentation, which Orchard Finance reviews substantively and actively questions when something appears inconsistent.

“What I really appreciate is that Robbert and Alwin genuinely review things critically. They do not simply accept what is written but check whether everything is logical and consistent.”

In practice, this has also led to improvements in documentation. “If something is not entirely correct or looks different from what was expected, they flag it. That allows us to adjust documentation where necessary. Having that extra pair of critical eyes is genuinely very valuable.”

A collaboration without a fixed end date
As long as the need for hedge valuations remains, Layton expects the collaboration to continue. “In principle, it is open-ended. As long as the circumstances remain the same and the need exists, it simply continues.”

Alwin de Haas, Partner at Orchard Finance, comments: “The projects we enjoy most are those where we work as a team alongside the client to achieve the best solution, making use of each other’s knowledge and insights. That is what gives us energy. This was a typical example of such a project.”

Robbert Hettema, Senior Consultant at Orchard Finance, adds: “We are pleased with the trust that Odido has placed in us and look forward to continuing our successful partnership and delivering strong results in the future.”