Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Debt Investor Presentation (April 2008)
41 slides from Orange Sa's debt investor presentation, April 2008
Slide 1: France Telecom Roadshow Canada April 2008
France Telecom Roadshow Canada April 2008
Slide 2: Cautionary statement
cautionary statement this presentation contains forward-looking statements and information on France Telecom's objectives, in particular for 2008. Although France Telecom believes that its objectives are based on reasonable assumptions, these forward-looking statements are subject to numerous risk
Slide 3: France Telecom Team
France Telecom Team : Stéphane Pallez : Directeur Financier Délégué Deputy Chief Financial Officer Jean-Michel Thibaud : Trésorier Groupe Group Treasurer Hervé LABBE Directeur de la Salle des Marchés Head of Dealing Room Maï De La Rochefordière Relations avec les Investisseurs Investor Relation Mana
Slide 4: France Telecom-Orange today
France Telecom-Orange today 1 a transformed group 2 distinctively positioned on attractive markets 3 guidance and cash policy 4 debt 4
Slide 5: Introduction: group positioning
introduction: group positioning
Slide 6: A transformed leader with strong momentum
a transformed leader with strong momentum from 2004… …to 2007 subscribers outside 63 million > 100 million France more international number of countries 19 countries 28 countries of presence, consumer subscribers with 48 million 115 million Orange brand more unified global products not
Slide 7: €52.96 bn group revenue split in 2007
€ 52.96 bn group revenue split in 2007 2007 group revenue split 2007 group revenue split by segment by country / activity Personal France 53% 43% Enterprise (World wide) 14% 12% 14% UK 15% 7% Enterprise 33% Rest of the World 9% Home Spain Poland the Personal communication services (PCS) segment cons
Slide 8: Home serves 37 million retail customers in 13 countries
home serves 37 million retail customers in 13 countries* Central Africa, Middle East and Americas Western Europe and Eastern Europe (AMEA) mobile only countries Jordan Egypt #1 Telco UK Poland in Europe Mali Niger Belgium Senegal in wireline Luxembourg Central African France Slovakia Guinea-Bissau C
Slide 9: Mobile presence in 27 countries with 110 million customers
mobile presence in 27 countries with 110 million customers Central Africa, Middle East and Americas Western Europe and Eastern Europe (AMEA) Jordan Egypt UK Poland Mali Niger Belgium Senegal FT/Orange Luxembourg Central African is solid #2 France Slovakia Moldova Guinea-Bissau Cameroon Republic in E
Slide 10: A transformed group
1 a transformed group
Slide 11: Strong 2007 performance above initial commitments
strong 07 performance above initial commitments 2006 2007 commitment target achievement target achievement upgraded -1.4 pt +0.2 pt from “near GOM rate -1/-2 pts vs 2005 vs 2006 stabilization” GOM rate* GOM rate* to ”stabilization” CAPEX around 13% 13% around 13% 13.2% to sales ratio upgraded from o
Slide 12: Strong 3Q and 4Q led to a FY07 growth of 2.8%
strong 3Q and 4Q led to a FY07 growth of 2.8% group quarterly revenue growth* in million of euros in % 3.5% 3.6% +2.8% 2.1% 52,959 2.0% 1.8% 51,541 1.2% 1.0% 0.5% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 2006* 2007 12 * comparable basis
Slide 13: Gross Operating Margin stabilized after 2 years of decline
Gross Operating Margin stabilized after 2 years of decline evolution of GOM rate quarterly GOM rate evolution YoY in % + 0.6 pt + 0.3 pt +0.1 pt -0.1 pt 1Q 2Q 3Q 4Q 38.2% 37.6% insight higher growth in 3Q and 4Q in France, UK mobile and Enterprise 37.3% 36.1% labor opex : 75% of headcount 06- 08
Slide 14: Net debt target achieved one year in advance
net debt target achieved one year in advance thanks to a strong organic cash flow generation in 07 organic cash flow generation net debt evolution in billion of euros in billion of euros net debt / GOM +13% 4.56 7.8 7.5 68 6.9 2.78 2.27 50 1.99 42 38 2005* 2006* 2007 2002* 2004 2006 2007 S&P’s ratin
Slide 15: Almost all activities posted growth in 2007
almost all activities posted growth in 2007 enterprise : +0.4%* 2007 France : +1.1%* group revenue split resilience of legacy activities high net adds in internet BB by country / activity thanks to “Net” offerings transformation towards services is under way contained PSTN line losses mobi
Slide 16: Distinctively positioned in attractive markets
2 distinctively positioned in attractive markets
Slide 17: France Telecom-Orange markets: showing solid growth
France Telecom-Orange markets: showing solid growth Western Europe market revenue* € billion +1-2% 112 117 2007 2010e new usages higher ARPUs +2-3% Eastern Europe market revenue** Middle East and Africa market revenue*** € billion +5-7% € billion 15 2007 2010e +15-19% 10 13 6 resilient growth 20
Slide 18: Positioned on distinctive growth drivers among geographical footprint
France Telecom-Orange is positioned on distinctive growth drivers among geographical footprint … fixed broadband continuous penetration Western Europe mobile broadband penetration % of households 76% million SIM cards 72% +1.3% 60% 194 202 France 55% 9% 2G 51% 16% UK 44% 35% 2.5G Spain 63% 56% 3G Po
Slide 19: To capture growth beyond the core business
… to capture growth beyond the one of its core business core business growth on Orange footprint steady growth relies +2-3% mainly on core business 2007 2010e group revenue split and evolution by business progressive benefits of 45% 25% addressable new revenue 4% 11% 55% streams 6% 45% 9% 2002 2007
Slide 20: Guidance and cash policy
3 guidance and cash policy
Slide 21: 2008 guidance in line with momentum
2008 guidance in line with momentum group revenue should keep pace with market growth in the footprint* GOM rate stability CAPEX to sales around 13% organic cash flow higher than € 7.8 bn 21
Slide 22: Mid term ambition
mid term ambition main business trends strong increase of new usages (content, services, ...) mobile voice revenue increase in emerging markets revenues improved growth trend broadband access will continue to grow enterprise should reach its inflexion point additional growth mainly comin
Slide 23: M&A: dynamic management of our business portfolio
M&A dynamic management of our business portfolio to support growth M&A flows in 2007 acquisition in billion of euros of VOXmobile disposal of (Luxembourg) +1.8 Orange Netherlands restructuration of ONE in Austria acquisition of -1.1 Ya.com in Spain divestments acquisitions acquisition of 51% of Telk
Slide 24: Dividend policy
dividend policy an attractive shareholder remuneration Group dividend evolution in euros per share 1.30 43.3% of 07 organic cash flow will 1.20 1.00 be allocated to dividend (48% w/o minorities) 0.48 dividend yield in 2007*: 5.9% payment date proposed**: June 3rd, 2008 2004 2005 2006 2007 cash
Slide 25: NExT is delivering solid results
NExT is delivering solid results and France Telecom- Orange is well positioned on its future challenges momentum thorough execution on 5 operational and strategic and 2006/2007 priorities results comfort – innovation the strategy – customer service – brand – cost efficiency – disciplined M&A imp
Slide 26: Debt profile
4 debt profile
Slide 27: Net debt: 2008 target achieved thanks to high organic cash flow
net debt: 2008 target achieved thanks to high organic cash flow generation and divestments net debt changes (in million of euros) 42,017 1,117 757 627 37,980 3,117 -1,808 -29 o/w TP €271m -7,818 o/w Mobistar €142m o/w Netherlands €1.3Bn o/w tower part (TDF) €254m o/w Sonatel €88m o/w ECMS €75m o/w B
Slide 28: Net debt allocation: fixed, floating, by currency
Net Debt Allocation: Fixed - Floating - by Currency (after derivatives) 100% 9% 17% 14.5% 35% 25% 27% 30% 80% 39% 37% 40% 41% 54% 62% 60% 91% 83% 85.5% 40% 75% 73% 70% 61% 63% 65% 60% 59% 20% 46% 38% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 fixed debt flo ating debt Majori
Slide 29: France Telecom SA debt distribution as of 31-12-2007
France Telecom SA Debt Distribution as of 31-12-2007 5 000 4 610 3 974 4 000 3 500 3 403 2 907 3 000 2 333 2 282 2 000 1 697 1 500 1 000 1 000 614 682 500 477 341 242 138 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2020 2022 2025 2031 2033 2034 2037 euro usd gbp cad chf other 29
Slide 30: S&P, Moody's and Fitch ratings
S&P, Moody’s and Fitch Ratings A2 / A A3 / A- Baa1 / BBB+ Baa2 / BBB Baa3 / BBB- Ba1 / BB+ mar-02 jul-02 may-03 dec-03 feb-04 jan-05 feb-05 oct-05 dec-07 Moody's Fitch S&P 30
Slide 31: Net debt evolution
Net Debt Evolution €bn 63.4 68 Years 61 12 60 49.8 47.8 10 44.2 42.0 38.0 6.8 8 40 6 14.6 6.4 6.7 7.1 4 20 6 5.6 4.6 4 2 2 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year end net debt Average Maturity of net debt €m 7.05% 6.79% 6.46% 6.46% 5 000 5.74% 5.82% 5.90% 5.91% 5.43% 6% 3 000 4 041 3 6
Slide 32: 5yr CDS evolution of main European telecom companies
5yr CDS Evolution of main European Telecom Companies 300 250 200 150 100 50 0 1/1/07 1/3/07 1/5/07 1/7/07 1/9/07 1/11/07 1/1/08 1/3/08 Telecom Italia (Baa2/BBB) Telefonica (Baa1/BBB+) Deutsche Telekom (A3/A-) Vodafone (Baa1/A-) France Telecom (A3/A-) 32 Source: Markit
Slide 33: Group appendices
group appendices
Slide 34: Glossary (1)
glossary (1) ADSL market sum of France Telecom ADSL access on the retail market (excluding monoplay usage without share high-speed Internet access), the unbundling and ADSL wholesale offers sold to third party operators and Internet access providers (IAPs). ARPU for HCS segment: average monthly
Slide 35: Glossary (2)
glossary (2) Net Financial gross financial debt (converted at the year end closing rate), less (i) derivative instruments debt carried in assets for trading, cash flow hedges and fair value hedges, (ii) cash collateral paid on derivative instruments, (iii) cash and cash equivalent and financial as
Slide 36: Sustained revenue growth in Personal and good performance of Home France and Enterprise
sustained revenue growth in Personal and good performance of Home France and Enterprise change 2007/2006* in million of euros 2006* 2007 €m % group revenues 51,541 52,959 +1,418 2.8% total personal 27,538 29,119 +1,582 5.7% personal France 9,885 9,998 +112 1.1% personal UK 5,863 6,217 +354 6.0% pers
Slide 37: GOM increased by 3.4% driven by most mobile operations and Home France
GOM increased by 3.4% driven by most mobile operations and Home France in %of in % of U in % in million of euros 2006* 2007 U% revenues revenues pts group GOM 18,486 35.9% 19,116 36.1% 3.4% +0.2pt total personal 9,433 34.3% 9,977 34.3% 5.8% - personal France 3,742 37.9% 3,861 38.6% 3.2% +0.7 pt pers
Slide 38: Main items of the cash-flow statement should improve on the mid term
the main items of the cash-flow statement should improve on the mid term main trends 2008-2010 gross operating margin (GOM) increase with a stable GOM rate net interest expense cash out* ongoing debt reduction, average rate around 6% income taxes cash out between € 0.8-1.0 bn early retirement plan c
Slide 39: Home 2008: incumbent business resilient
home 2008: incumbent business resilient stability in France thanks to Internet and new services development revenues decrease in Poland contained thanks to new product lines related to broadband and content increase for Rest of the World operations nearly stabilized in France GOM rate expe
Slide 40: Personal 2008: continuation of profitable growth
personal 2008: continuation of profitable growth France: slight increase due to new usages in spite of lower MTR and roaming revenues continued improvement in Spain and the UK solid growth in Poland and Rest of the World although at a slower pace full year effect of roaming tariff decrease
Slide 41: Enterprise 2008: connectivity business still faces large transformation
enterprise 2008: connectivity business still faces large transformation limited decrease thanks to containment of voice legacy decline strong service revenue growth (1.5 higher than market trend) revenues active development in high-growth countries (Russia, Middle East, India, etc.) margin i
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