Orange Sa · EURONEXT:ORA
Orange Sa — Investor Day (February 2023)
46 slides from Orange Sa's investor day presentation, Feb 16, 2023
Slide 1: Capital Market Day 2023
Capital Market Day 2023 Lead the future 16th February 2023 Christel Heydemann CEO CMD 2023 11
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange's financial situation, results of operations and strategy. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to
Slide 3: Agenda
Agenda Lead the future through… Capital Strong allocation policy & fundamentals …a new guidance enterprise Monetise model Capitalise for sustainable Focus & Transform Value Creation value creation Grow & Cash Return Performance is the rule Excellence Trust Part 2 Part 1 Part 4 Part 3 CMD 2023 3
Slide 4: Agenda
Agenda Lead the future through… Capital Strong allocation policy & fundamentals …a new guidance enterprise Monetise model Capitalise for sustainable Focus & Transform Value Creation value creation Grow & Cash Return Performance is the rule Excellence Trust Part 2 Part 1 Part 4 Part 3 CMD 2023 4
Slide 5: Confirmed network superiority
1 Confirmed network superiority Starting with an undisputed lead in fibre roll out in Europe VHBB deployment as at end Q3 2022, in million lines 51 1 Other FTTH Multiple colours 28 39 30 42 45 21 28 16 12 7 9 7 ORA Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Sources: Companies reports & estimated figures For
Slide 6: France FTTH roll-out nearly completed…
1 France FTTH roll-out nearly completed… 99% coverage with VHBB solutions* FTTH deployment in France FTTH deployment by area in % and ‘000 of total premises, Q3 2022 Private areas: very dense area, 14% less dense area and AMEL 24% Total: 26m premises 18% 86% Orange FTTH 76% Orange FTTH connectable h
Slide 7: …with first-mover advantage bearing fruits
1 …with first-mover advantage bearing fruits FTTH monetisation in France Own fibre network fuelling sustainable commercial attractiveness monetisation BB market share 69% FY22 Maintained between +9 pts vs 2019 France 2019-2022 ARPO uplift FTTH frontbook Price +5€ vs xDSL 33.5m FTTH connectable homes
Slide 8: Optimised coverage in Europe
1 Optimised coverage in Europe Opportunistic case-by-case investment models of FTTH roll out … … fuelling sustainable commercial attractiveness ARPO uplift Spain 16.4m vs other FBB (1) FTTH connectable homes c.30% thanks to convergence and high-end offers Better churn with FTTH Poland 7.1m -6pts (1)
Slide 9: Outstanding mobile networks fuelling growth
1 Outstanding mobile networks fuelling growth & ready for traffic explosion 4G coverage(1) in Europe almost finalised and growing fast in MEA confirming network leadership >99% coverage(1) in Europe >90% in MENA and fast growth in other MEA countries ARPO premium vs 2G/3G in MEA Best mobile network
Slide 10: Increasing customer satisfaction since 2019
1 Increasing customer satisfaction since 2019 With Net Promoter Score and customer bases up and churn improvement Increasing NPS since 2019 Decreasing churns +20pts NPS in Europe(1) Mobile churn(3) -8pts Spain +11pts NPS in France (2) 2019-2022 -2pts Poland -3pts France Customer satisfaction Custome
Slide 11: Model's resilience & agility mitigating headwinds
1 Model’s resilience & agility mitigating headwinds Price elasticity Strict cost discipline Focus on customer satisfaction, premium networks while preserving Key mitigators to social offers. offset €700m cost efficiency programme achieved Priority to continued price increase in all countries inflati
Slide 12: A strong OCF ramp-up over 2019 – 2022
1 A strong OCF ramp-up over 2019 – 2022 OCF ramp up €3.1bn in 2022 3.1 Scale Up indirect cost programme (in €bn) €700m cumulative net savings 2022 vs 2019 2.3 MEA double-digit EBITDAaL growth 13.1% 2019cb*-22 CAGR 2019 2022 Convergent services revenues in Europe +1.6% 2019cb*-22 CAGR *CAGR calculate
Slide 13: Our call for public actions
1 Our call for public actions For a more supportive policy & regulatory ecosystem for Europe’s digital ambitions France wholesale Roll-out support Tariffs enabling us to recover our Subsidise complex/long/costly fibre roll out. costs and guarantee service quality Favour deployment commitments over p
Slide 14: Agenda
Agenda Lead the future through… Capital Strong allocation policy & fundamentals …a new guidance enterprise Monetise model Capitalise for sustainable Focus & Transform Value Creation value creation Grow & Cash Return Performance is the rule Excellence Trust Part 2 Part 1 Part 4 Part 3 CMD 2023 14
Slide 15: Part 2: A new strategic plan
2.4 2.3 Lead Grow the future 2.2 Orange Middle Focus & transform 2.1 Rework the Enterprise East & Africa highlight Capitalise segment business model Maintain infrastructure & accelerate Orange Monetise leadership and support Cyberdefense Build on leadership cash flow growth model and excellence A ne
Slide 16: Part 2.1: Refocus on core business
Lead the future 2.1 Monetise Refocus on core business Build on leadership Leading by excellence in customer service and excellence in our A new core business Pushing value strategy in France and Europe strategic plan Part 2 CMD 2023 16
Slide 17: 2.1 To become the market leader in customer relations
2.1 to become the market leader in customer relations Service strategy supported by digital experience and AI Reinvent phygital customer experience through excellence of digital channels and expertise of customer advisors empowered by AI to: Ensure 360° customer view Augment customer autonomy Transf
Slide 18: 2.1 Tailored price moves implemented across all Europe
2.1 Tailored price moves implemented accross all Europe Inflation pass-through • Widespread price move • Price adjustments throughout from February 2023 2022 • LiveboxMax offer in April • CPI clauses added on 2022 acquisitions from May 2022 General price increase in Poland General price increase sin
Slide 19: 2.1 Pricing power and market share protection
2.1 Pricing power and market share protection France: growth traction coming from Retail Customer satisfaction improvement 5G penetration FTTH penetration (NPS*) 41m FTTH connectable HH in 2025 +11pts 5G** penetration in mobile base x3 vs 2022 alternative solutions with 4G/5G & satellites to connect
Slide 20: 2.1 Growing cash flow over 2022-2025
2.1 Growing cash flow over 2022-2025 France: ongoing transformation of business model Wholesale decline Cost optimisation due to copper-to-fibre migration Retail growth • Significant headcount reduction linked to Wholesale revenues: -€1bn 2022-2025… + natural attrition and existing voluntary program
Slide 21: 2.1 Leadership and excellence in Europe boosting growth
2.1 Leadership and excellence in Europe boosting growth Accelerate VHBB strategy Price increases to offset inflation B2B fuelling growth Acceleration in EBITDAaL to increase with constant customer with connectivity growth & growth thanks to convergence satisfaction monitoring portfolio enrichment Sp
Slide 22: 2.1 Further consolidation and partnerships in European footprint
2.1 Further consolidation and partnerships to maximise value of our European footprint(1) Orange Spain & Masmovil Acquisition of VOO(2) Wholesale agreements 50-50 joint venture in Belgium between in Spain Orange Belgium & Telenet Agreement signed in July 2022 Agreement signed in December 2021 Signed
Slide 23: Part 2.2: Maintain infrastructure leadership
Lead The future 2.2 Technological leadership to maximise network 2.1 quality and customer satisfaction Capitalise Maintain infrastructure Network management to optimise our investments Monetise leadership and support Agile infraco model to create value Build on leadership cash flow growth model and
Slide 24: 2.2 Based on our expertise in technological breakthroughs
2.2 based on our expertise in technological breakthroughs New Group industrial model for networks 5 STEPS SLIDES Ambition: become the telecom reference for network agility, resilience and performance New Group industrial model thanks to networks softwarisation, automation & AI translating into Netwo
Slide 25: 2.2 Modernise our networks at the right pace
2.2 Modernise our networks at the right pace to adapt to customers’ needs Orange 2030 ambitions for network Legacy technologies Switch 2G/3G in Europe off & copper in France by 2030 Pursue sharing RAN Sharing, TowerCos, Opportu FibreCos nities Network maintenance Optimise disaggregation, virtualisat
Slide 26: 2.2 Creation of efficient vehicles when relevant
2.2 Creation of efficient vehicles when relevant Developing infrastructure to capture sustainable value 5 STEPS SLIDES 45m FTTH connectable homes by Orange as an infrastructure operator 70k mobile sites across the Group Orange Polish Conces- FibreCo otem sions c.27k sites in France & Spain 50/50 Joi
Slide 27: Part 2.3: Rework the Enterprise segment
2.3 Lead the future 2.2 Focus & transform 2.1 Rework the Enterprise Capitalise segment business model Maintain infrastructure & accelerate Orange Monetise leadership and support Cyberdefense Build on leadership CF growth model and excellence A new in our core business strategic plan Part 2 CMD 2023
Slide 28: 2.3 Must transform its operating model
2.3 and must transform its operating model as a consequence OBS becoming Orange Business is a network and digital integrator Orange Business Services today half of a telco business (56%) and half of a digital business (44%) Market vision networks and digital convergence Orange Business tomorrow lead
Slide 29: 2.3 Transformation of the operational model relying on 4 levers
2.3 Transformation of the operational model relying on 4 levers 5 STEPS SLIDES Simplify Focus Transform & digitalize Accelerate the core business in digital Efficient operational Pruning of products Next-gen connectivity Activate synergies execution portfolio leader virtualised networks Consolidate
Slide 30: 2.3 Necessary cost cutting program
2.3 necessary cost cutting program Enterprise EBITDAaL rebound in 2025 Transform & digitalise Fixed & Mobile* Simplify SG&A EBITDAaL rebound Accelerate & back to growth in 2025 22-25 IT&IS CAGR -8% 22-25 CAGR +8% Change in gross margin contribution between 2022 and 2025 2019 2020 2021 2022 2023 2024
Slide 31: 2.3 Organic and targeted bolt-on acquisitions
2.3 organic and targeted bolt-on acquisitions Continue to grow Cybersecurity Revenues increased x5 since 2015, … to be a leader in Europe Core business for Orange targeting €1.3bn revenue in 2025… At the heart of our products, 1.3 "Security by Design" principle for our Cybersecurity market is expect
Slide 32: Part 2.4: Grow Orange Middle East & Africa
2.4 2.3 Lead Grow the future 2.2 Orange Middle Focus & transform 2.1 Rework the Enterprise East & Africa highlight Capitalise segment business model Maintain infrastructure & accelerate Orange Monetise leadership and support Cyberdefense Build on leadership cash flow growth model and excellence A ne
Slide 33: 2.4 OMEA achieved strong performances…
2.4 OMEA achieved strong performances… Growth Inclusion Revenue (€m) EBITDAaL (€m) 143m mobile customers 1/10 African is an 53m 4G customer in 17 countries CAGR CAGR 2,584 Orange customer: 29m active O.Money cust. in 16 countries +7.7% 6,918 +13.1% 15 Orange Digital centres FY2022 5,543 1,785 ROCE >
Slide 34: 2.4 …and will pursue strong growth path
2.4 …and will pursue strong growth path Strong growth drivers 2022-2025 • Data • FBB +B2B • Orange Money EBITDAaL growth eCapex Revenues Balanced 4 growth cost growth disciplined footprint engines efficiencies increase high single >7% digit CAGR 22-25 CAGR 22-25 4 geographic clusters • Reduction of
Slide 35: Agenda
Agenda Lead the future through… Capital Strong allocation policy & Fundamentals …a new guidance enterprise Monetise Model Capitalise for sustainable Focus & Transform Value Creation value creation Grow & Cash Return Performance is the rule Excellence Trust Part 2 Part 1 Part 4 Part 3 CMD 2023 35
Slide 36: A New Enterprise Model
3 A New Enterprise Model to serve efficiency and rigorous execution • Redesign roles • New way of working • Intensify pooling and synergy • Empowered management • Improve operational efficiency • Chase cost of non quality • Customer focus • Automation New Enterprise Model for rigorous execution • In
Slide 37: ESG by design
3 ESG by design transforming ourselves and helping, as a trusted partner, our customers to transform Strong scoring ESG claims North star 2030 objectives « advanced » Moody’s ESG solutions Net Zero 2040 CO2 emissions all scopes 1 Driver of the environmental transition -45% vs 2020 « A- » Circular Ec
Slide 38: ESG by design
3 ESG by design 2025 milestones Progress as at end 2022 Ambitions Digital inclusion develop connectivity and inclusive services FTTH connectable homes 64.9 m 69m / 2023 Orange Digital Centers 18 25 / 2025 Beneficiaries of digital skills training 1m 2.5m / 2025 Environment reduce our CO2 eq. emission
Slide 39: Agenda
Agenda Lead The future through… Capital Strong allocation policy & Fundamentals …a new guidance enterprise Monetise Model Capitalise for sustainable Focus & Transform Value Creation value creation Grow & Cash Return Performance is the rule Excellence Trust Part 2 Part 1 Part 4 Part 3 CMD 2023 39
Slide 40: 4.1 Further €600m net cost savings
4.1 Further €600m nets costs savings Scale up target New efficiency plan exceeded -€600m Acceleration of existing initiatives… -5% -5% €13.8bn €13.1bn €11.8bn ... and a new Enterprise model €11.2bn Contribution per segment: France >60% Entreprise c.30% 2019 2022 2022 2025 new scope* Efficiency progr
Slide 41: 4.2 ~15% eCapex/sales reached from 2023
4.2 ~15% eCapex/sales reached from 2023 mainly thanks to FTTH peak passed in France Evolution of the share of reporting segments Decrease of Group’s eCapex/ sales over 2022-2025 in Group’s eCapex over 2022-2025 PEAK 18% 17% ~15% Double digit decline 47% down of FTTH gross Capex over 2022-2025 26% do
Slide 42: 4.3 Capital allocation policy
4.3 Capital allocation policy Focus on Asset Efficient Return to sustainable management capital shareholders value creation with no taboo structure ROCE improvement & Regular portfolio reviews resulting in • ROCE improvement 100-150 bp Dividend increase cash return for all decisions • exiting or res
Slide 43: 4.4 Cash flow ramp-up confirmed
4.4 Cash flow ramp-up confirmed Guidance 2023 2023 EBITDAaL yoy, cb Slight growth eCAPEX yoy, cb Strong decrease Organic Cash Flow (telecom) ≥ €3.5bn Net debt / EBITDAaL Around 2x (telecom) in the medium term Dividend* €0.72 payable in 2024 The guidance does not include any M&A transaction that has
Slide 44: 4.5 Guidance 2025
4.5 Guidance 2025 Value creation and cash return, is the rule continuous low single digit c.2x EBITDAaL growth growth telecom in the €4bn in 2025 2022-25 CAGR medium term new floor of discipline improvement €0.75 for 2024(3) The guidance does not include any M&A transaction that has not yet been fin
Slide 45: 4.6 Towards €4bn in 2025
4.6 towards €4bn in 2025 Solid trend of Organic Cash Flow growth Organic Cash Flow (in €bn) weight on Executive Team remuneration >2.6 * scheme : 50% Guidance >2 >2.3 >2.2 ≥ 2.9 achieved 4.0 ≥ 3.5 3.1 2.7 * 2.5 2.3 2.4 2019 2020 2021 2022 2023 2024 2025 *Before allocation of the tax refund received
Slide 46: Q&A
Q&A CMD 2023 46