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Orange Sa — France Telecom — Debt Investor Presentation (April 2007)

19 slides from Orange Sa's debt investor presentation, Apr 5, 2007

  1. Slide 1: France Telecom Roadshow Obligataires

    France Telecom Roadshow Obligataires April 5th, 2007 cautionary statement this presentation relates to France Telecom’s results for 2006 which are still in the process of being reviewed by the statutory auditors. This presentation contains forward-looking statements and information on France Telecom

  2. Slide 2: 2006: financial commitments achieved

    2006: financial commitments achieved organic ƒ more than 7 Bn euros FY06 targeted cash EUR 7.15 Bn (6.95 Bn euros including Pages Jaunes flow until sale closing) EUR 18.54 Bn, ƒ in line with guidance (-1/-2 points versus GOM 35.9% GOM rate 2005 GOM rate) -1.4/-1.6 point* EUR 6.73 Bn, capex ƒ in line

  3. Slide 3: A confirmed leadership on innovation and convergence

    a confirmed leadership on innovation and convergence 658k Business Everywhere 4.1 million end users Livebox in Europe # 1 worldwide 1st incumbent to deploy FTTH in Europe N°1 IPTV provider in Europe with 590k clients (N°2 worldwide) 64k Unik phones sold in France in 2 months sources: Canalys, DittBe

  4. Slide 4: 2006: financial commitments achieved

    2006: financial commitments achieved Actual* FY05 Actual % Comparable FY06 change Basis % chg in million of euros FY05 Comp. Basis revenues 48,082 51,105 51,702 +7.5% +1.2% Gross Operating Margin 17,953 19,039 18,539 +3.3% -2.6% -1.4pt as a % of revenues 37.3% 37.3% 35.9% / -1.6 pt** Operating Incom

  5. Slide 5: Headcount evolution on track with our forecast

    headcount evolution on track with our forecast labour costs, in million of euros group headcount, end of period & as a % of revenues 200,397 * 8,596 8,592 191,036 82,942 82,148 16,8% 16,6% 107,875 99,902 FY05 CB FY06 FY05 CB FY06 FTSA French Subsidiaries International ƒ headcount down by 9,361 peopl

  6. Slide 6: Increase in commercial costs mostly driven by intense competition

    increase in commercial costs mostly driven by intense competitive environment in mature countries commercial expenses in million of euros +28 +392 +25 7,780 +92 -14 7,258 emerging countries: 16% of total mature countries: 84% of total 15.0% of 14.2% of revenues revenues FY05 CB Home Personal Enterpr

  7. Slide 7: Average cost of debt decreased from 6.46% to 5.91%

    average cost of debt decreased from 6.46% in 2005 to 5.91% in 2006 2005 2006 in million of euros financial result -3,367 -3,251 ow financial gain 194 163 ow interest expenses -3,238 -3,063 ow financial assets depreciation -14 -255 ow foreign exchange gain (losses) -147 26 ow discounting expenses -16

  8. Slide 8: Organic cash flow ahead of objectives

    organic cash flow ahead of objectives in million of euros 2005 2006 net cash provided by operating activities 13,374 13,863 purchase of tangible and intangible assets, net of change in fixed asset vendors - 6,108 - 6,811 ow capex -6,033 -6,732 proceeds from sale of tangible and intangible assets 215

  9. Slide 9: Net debt reduction at the end of 2006

    net debt reduction at the end of 2006: on track to reach 2008 target net debt changes in million of euros 68,019 * 56,685 *** 49,822 47,846 +132 +505 +643 42,017 +2,602 +143 -7,157 -2,697 ** o. 06 d ks al * ow s 03 04 05 s 02 en in al er os ac 20 20 20 20 m os Fl 20 th id sp yb r iv o O sp h of of o

  10. Slide 10: Our key business priorities

    our key business priorities (1) ƒ maintain ADSL market share and pursue leadership on mobile thanks to partnerships and MVNO strategy France ƒ strengthen leadership in convergence and content ƒ decrease opex base ƒ pursue the increase of shared broadband and mobile customer base UK ƒ accelerate LLU

  11. Slide 11: 2007 transformation objectives

    2007 transformation objectives continuous focus on cost reduction headcount 49% of 06-08 forecast achieved in 2006 reduction commercial stabilization in % of revenue expenses between EUR500-800 m IT & networks savings over 07-08 integration reduce field operation costs 21 fuelling today’s & tomorrow

  12. Slide 12: Capex decrease in mature markets fuels new growth areas; 2007 guidance

    capex decrease in mature fixed & mobile markets allows to fuel new growth areas Evolution of capex split ( base 100) ƒ capex intensity in emerging 14% 14% countries will reduce as markets mature 41% 42% ƒ lower requirements for 3G coverage plus network sharing will reduce 46% 44% capex in mature mob

  13. Slide 13: Overall use of cash policy confirmed

    overall use of cash policy confirmed debt ƒ debt / MBO ratio below 2 by the end of 2008 reduction ƒ distribution target for the coming years: shareholders – between 40% and 45% of organic cash flow – FY 2007 dividend : indication that dividend per share remuneration will be maintained at the same le

  14. Slide 14: Operational trends: Personal Spain 2006

    operational trends 2006-2007 personal Spain 06: strong customer base growth personal Spain 2006 revenues: EUR3,353m / +4.1% on a comparable basis in million of euros + 301 3,353 3,222 -90 -28 -24 -27 2005 on a Customer Base CTR Impact Voice Revenues* Non-voice revenues Equipment & others 2006 compar

  15. Slide 15: Home Spain and Personal UK 2006

    home Spain 2006: accelerated migration from PSTN to ADSL and LLU Home Spain revenues: -13.7% actual / strong increase of LLU clients -15.2% on a comparable basis as a % of Orange ADSL base ƒ a customer base increasingly 68% broadband, multiplay and subscription 63% 63% 64% based 58% 55% ƒ 640k ADSL

  16. Slide 16: Home UK in 2006

    home UK in 2006: broadband revenues grew despite a tough market revenues: +0.4% actual / +0.1% LLU customers as a % of ADSL base on a comparable basis ƒ broadband revenues grew 27% 36% year on year (decline of narrowband revenues offset despite falling market prices) 24% ƒ deployment of unbundling i

  17. Slide 17: Personal France and Home France 2006

    personal France 06: increase of network revenue personal France 2006 revenue: EUR9,882m / +1.1% actual / +1.0% on a comparable basis in million of euros + 402 + 109 9,882 9,780 +4 - 405 -8 Revenues excl. MVNO and equipment**: +1.2% yoy +5.9% excl. CTR 2005 on a Customer base CTR Impact Voice revenue

  18. Slide 18: Home France access lines and revenues

    home France in 2006: total number of lines stabilized with an increase in total access revenues* (retail + wholesale) access lines total access revenues million in million of euros + 0.8% + 4.1% 4,652 + 171 + 150 27.50 27.57 27.51 27.74 4,468 27.53 0.6 0.9 1.2 1.6 2.3 ** - 137 26.9 26.6 26.3 25.9 25

  19. Slide 19: Home France broadband 2006: Orange market share

    home France broadband 2006: Orange market share stabilizing around 49% ADSL Broadband market share 66,0% 55,7% 50,0% 49,7% 49,7% 49,6% 49,3% 47,9% 48,6% 50,3% 48,0% 47,4% 45,1% 2002 2003 2004 4Q05 1Q06 2Q06 3Q06 4Q06 Net adds MS Market Share ƒ Orange growth on ADSL customer base : +33% yoy ƒ 4Q perf

France Telecom — Debt Investor Presentation (April 2007) on 6ix