Orange Sa · EURONEXT:ORA
Orange Sa — FY2018 Earnings Presentation
29 slides from Orange Sa's earnings presentation, Feb 21, 2019
Slide 1: Orange financial results #FY_2018
Orange financial results #FY_2018 21 February 2019 Stéphane Richard Chairman and CEO Ramon Fernandez Deputy CEO, Finance, Performance and Europe
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there c
Slide 3: Section one: FY 2018 highlights
Section one FY 2018 highlights
Slide 4: 2018 Key achievements
2018 Key achievements Network Enriched services Average customer 33m Fixed Mobile VHBB connectable lines data speed (+22% yoy) O/W 29m FTTH +32% +24% #1 Best mobile network in France for 8 consecutive years Content 2.9m Customers 4G Mobile Finance 248k 39m 12 countries in MEA Services Customers Cust
Slide 5: Solid commercial momentum driven by Convergence
Solid commercial Convergence momentum driven by Convergence, 10.9m +6% yoy Leader in Europe €7.1bn +10% yoy customers revenue VHBB and 4G VHBB 1st in conquest 6.3m +33% yoy Leader in Europe share every quarter in 2018*, in France customers in FTTH and Spain VHBB > 100 Mbps Details on convergence on
Slide 6: Investment efforts maintained to preserve competitive edge in connectivity
4G coverage Investment Population covered in % efforts Poland 99.8% maintained to Belgium France 98.6% 99.7% preserve Moldova 98.0% competitive edge Spain 96.9% in connectivity Romania Slovakia 94.0% 96.9% VHBB connectable homes* Group Telecom yoy +3.9% FY 2018 CAPEX Spain 13.8m +16% +€275m €7.4bn y
Slide 7: 2018 guidance achieved
2018 Revenue Adjusted EBITDA* Operating Cash Flow* € 41.4bn € 13.0bn € 5.6bn guidance ePresse ePresse achieved Audio Book Audio Book +1.3% +2.7% +1.7% +1.2% +2.1% +1.0% +1.1% +1.9% +0.5% +1.7% 2017 2018 2017 2018 2017 2018 Revenue +1.4% yoy Q4 Adj. EBITDA +1.4% yoy Net debt / Dividend CAPEX Adj. EBI
Slide 8: Section two: Financial results overview
Section two Financial results overview
Slide 9: Revenue kept growing
Revenue kept Group revenue growth (yoy in %) +2.0% growing +1.4% +1.6% Total growth Growth excl. ePresse/audio books +1.4% +1.4% +1.2% +0.6% +0.2% Q1 18 Q2 18 Q3 18 Q4 18 Q4 2018 FY 2018 FY18 revenue growth by segment FY18 revenue growth by activity yoy yoy FY 2018 MEA +5.1% Convergence +10.0% +1.4%
Slide 10: Telecom adj. EBITDA growth fuelled by revenue and cost optimisation
FY Adjusted EBITDA (Telecom) growth per segment yoy, in m€ Telecom adj. +3.4% ePresse 13,151 EBITDA growth Audio Book 48 -61 31 82 158 fuelled by 132 revenue and cost ePresse Audio Book 197 optimisation 12,721 12,993 47 12,674 FY 2017 France Spain MEA Europe Enterprise Others FY 2018 cb Q4 2018 FY 2
Slide 11: Our operational efficiency plan Explore 2020 exceeded our ambition
Our operational efficiency plan Explore 2020 exceeded our ambition reaching 3.5bn€ Cumulated gross savings in €bn (opex + capex, telecom) Operating indicators evolution over 2015-2018 (non exhaustive) 3.5 €3bn initial target 2.6 Call Rate Digital interactions Customer 78% OPEX relation -35% +22pts t
Slide 12: OpCF is growing even as FTTH accelerates
OpCF is growing Group CAPEX FY18 Capex to Sales (telecom, in %) 17.9% 17.5% even as FTTH 17.1% 7.4 bn 16.1% FTTH CAPEX accelerates € CAPEX 14.3% +3.5% yoy 13.9% 14.1% 14.2% excl. FTTH 2015 2016 2017 2018 Group OpCF Evolution Operating ROCE** evolution (telecom) EBITDA 5.6 bn +0.6pt € +0.3pt Value Cr
Slide 13: Net income grew +5.8%
Net income +5.8% 2,158 grew +5.8% 32 128 2,040 321 -468 105 2017 Reported Financial result D&A, income Impairment BT shares 2018 Net income EBITDA cb (excl. BT) tax paid & of goodwill Net income from others & assets from consolidate consolidated d Group Group 1 2 3 yoy 2018 +5.8% Net income +€118m 1
Slide 14: Net debt – telecom activities
Net debt to Net debt* – telecom activities Net Debt / Adjusted EBITDA Telecom Net debt increase reflecting our investment strategy, including notably : Adjusted EBITDA ▪ the increase of capex ▪ selective acquisitions in Enterprise ratio in line with €23.8bn €25.4bn segment the medium term guidance 1
Slide 15: Section three: Business review
Section three Business review
Slide 16: Q4 2018 France
Q4 2018 France 2nd consecutive year of total revenues growth, driven by growth in convergent services in €m Q4 18 yoy cb FY 18 yoy cb Revenues 4,687 +0.1% 18,211 +0.9% Retail services 2,735 -0.8% 10,973 +1.6% FY 18 total revenues Convergent services* 1,136 +4.6% 4,458 +10.2% +0.4% growth excl. ePres
Slide 17: Q4 2018 France commercial performance
Q4 2018 France commercial performance Strong net adds in mobile and broadband despite a very competitive environment Mobile contract net adds (in ‘000s) and churn rate Fixed BB net adds (in ‘000s) net adds excl M2M quarterly churn rate in % FTTH ADSL and others 13.7% 13.8% +71 +212 +85 +68 +57 +36 +
Slide 18: Q4 2018 Spain
Q4 2018 Spain Another quarter of positive fixed Broadband net-adds supported by FTTH and football offers in €m Q4 18 yoy cb FY 18 yoy cb Revenues 1,375 +2.4% 5,349 +2.2% +3.3% Q4 Revenue growth Market leader in terms Retail services Convergent services* 962 539 -0.4% +1.9% 3,855 2,143 +1.2% +3.1% yo
Slide 19: Q4 2018 Europe
Q4 2018 Europe Convergence drove better trends in retail services, while cost optimization fuelled improvement in profitability Revenue evolution (in €m) in €m Q4 18 yoy cb FY 18 yoy cb 1,502 Revenues 1,502 +2.8% 5,687 +1.7% +10 Retail services 900 +2.7% 3,516 +2.1% -16 +1 Convergent services* 132 +
Slide 20: Q4 2018 Africa & Middle East
Q4 2018 Africa & Middle East Continued revenue growth sustained by solid Retail dynamic in €m Q4 18 yoy cb FY 18 yoy cb Revenues 1,355 +5.2% 5,190 +5.1% Retail services 1,117 +7.2% 4,265 +7.5% Mobile only services Fixed only services 987 117 +6.3% +4.9% 3,809 435 +7.6% +3.1% 16.7m 4G customers** +50
Slide 21: Q4 2018 Enterprise
Q4 2018 Enterprise Business transformation still ongoing, now bearing fruit with revenue stabilizing in €m Q4 18 yoy cb FY 18 yoy cb Revenues 1,977 +1.2% 7,292 -0.2% +12% yoy Fixed only services 1,008 -1.6% 3,996 -2.4% Cybersecurity Voice 345 -4.8% 1,385 -4.1% YTD revenue growth Data 663 +0.1% 2,612
Slide 22: Section four: 2019 guidance
Section four 2019 guidance
Slide 23: IFRS16 and new performance indicators impact
IFRS16 and new performance indicators impact Previous New Difference indicators indicators in 2018 Adj. EBITDA EBITDAaL Approx. ̶ €0.3bn CAPEX eCAPEX (1) Approx. ̶ €0.2bn Operating Cash Flow Operating Cash Flow (2) Approx. ̶ €0.1bn Net Debt / Adj. EBITDA (telecom) Net debt (3) / EBITDAaL (telecom) N
Slide 24: Guidance
Guidance IFRS 16 2019 EBITDAaL Slight growth eCAPEX (1) Slight decrease from 2018 peak Operating Cash Flow (2) Growth Net debt (3) / EBITDAaL (telecom) Around 2x in the medium term Dividend (4) Floor of €70 cent (1) Economic CAPEX (2) EBITDAaL – Economic CAPEX (3) Excluding IFRS16 lease liabilities
Slide 25: Appendices
Appendices
Slide 26: Convergent B2C customer base in million
Convergent B2C customer base in million Convergence, % of broadband B2C customer base France Spain Poland the bedrock of 6.12 6.13 3.08 3.14 3.13 3.12 3.12 1.24 our strategy 6.10 1.18 6.04 1.14 57% 60% 85% 1.09 83% 5.98 1.03 59% 50% 7.1 bn Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
Slide 27: EBITDA adjustments
EBITDA adjustments in €m Q4 17 cb Q4 18 FY 17 cb FY 18 Adjusted EBITDA 3,288 3,334 12,660 13,005 restructuring and integration (92) (123) (166) (200) litigations (210) 5 (271) (33) labour related (287) (697) (374) (812) o\w Senior Part Time (288) (697) (394) (812) portfolio review and others 0 18 0
Slide 28: Change in net income
Change in net income 2017 2017 2018 (in millions of euros, on a historical basis) historical cb actual Adjusted EBITDA 12,680 12,660 13,005 Adjustments* (817) (811) (1,028) Reported EBITDA 11,863 11,849 11,977 Depreciation & amortization (6,846) (7,047) Impairment of goodwill & assets (210) (105) Sh
Slide 29: Change in net debt
Change in net debt 2017 historical 2018 actual (in millions of euros, on a historical basis) Adjusted EBITDA - CAPEX (telecom activities) 5 593 5 745 Change in working capital requirements 82 (199) Change in CAPEX payables 307 (19) Licences and spectrum paid (617) (422) Net interest paid (including