Slide 1: Orange Q3 2013 results
Orange Q3 2013 results Gervais Pellissier - Deputy CEO & CFO Q3 2013 results – October 23rd, 2013
Slide 2: Disclaimer
disclaimer This presentation contains forward-looking statements. Although we believe these forward-looking 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
Slide 3: Q3 performance supports full year guidance
Q3 performance supports full year guidance 3Q 13 var. 9m 13 var. in €m actual cb actual cb key points -€684m regulation impact over 9 months revenues 10,162 -4.0% 30,765 -4.3% 233m customers, +1.1m in Q3, with return to growth confirmed in France, Spain, excl. regulation. -2.4% -2.3% Poland rest
Slide 4: Acceleration of commercial momentum in our major geographies
acceleration of commercial momentum in our major geographies contract net adds (excl. M2M) convergent broadband base (in thousands) (in millions) 515 245 303 4.3 31 156 3.4 3.8 2.9 2.1 2.5 1.7 -32 -39 6 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 France Spain
Slide 5: Q3 2013 revenues
Q3 2013 revenues growth in Spain and emerging countries partly offsetting macroeconomic and competitive pressure in mature countries Q3 yoy revenue growth lighter regulation weight (-€173m in Q3 vs. -€511m in H1) Q3 13 +2.4% broadband revenues growth in €m % yoy % yoy cb improved fixed service
Slide 6: Delivering on cost efficiency
delivering on cost efficiency ongoing cost reduction with increased contribution from indirect costs yoy change in Group Opex base, in €m -37 -129 -182 -197 indirect costs -219 -312 -421 direct costs -441 -617 Q1 13 H1 13 9m 13 total Opex down €176m in Q3, compensating >40% of revenue erosion desp
Slide 7: Headcount evolution already leading to cost reduction
headcount evolution already leading to cost reduction cumulated change in Group* headcount since end of 2012 +0.1k 0.0k -0.8k -0.3k -1.8k -2.7k -1.0k -0.9k France -2.7k Poland -1.8k Others -0.2k -4.7k Q1 13 H1 13 9m 13 * figures by geographies Group headcount decreased by -2.8% over 9 months 7
Slide 8: 3Q 2013 Group EBITDA: ongoing reduction of direct and indirect costs
3Q 2013 Group EBITDA: ongoing reduction of direct and indirect costs mitigating pressure on revenues change in EBITDA* in €m ~41% of revenues erosion compensated by cost reduction -1.0pt 34.2% direct costs down (-4% yoy) – commercial costs down by €5m without impacting commercial performance +42
Slide 9: 9m13 CAPEX
9m13 CAPEX sustained investment in VHBB to consolidate network leadership in €m +2.6% compared with seasonality of previous year, 2013 +67 CAPEX is front-end loaded, as several programs -106 3,748 3,653 +134 are completed e.g. in Poland (agreement with UKE) +201 9m12cb 4G FTTH / VDSL other 9m13 as
Slide 10: 2013 guidance confirmed
2013 guidance confirmed 2013 OpCF guidance confirmation of at least €7bn excluding tax litigation, net debt / EBITDA around 2.2x end of solid balance sheet 2013 and closer to 2x by end 2014 i.e. 2.4x including tax litigation end of 2013 sustainable dividend policy €0.30 interim dividend for 2013 to
Slide 11: Appendices
appendices Q3 2013 results – October 23rd, 2013
Slide 12: Q3 2013 France financials
Q3 2013 France financials decreasing regulatory impact on revenues Q3 2013 revenues (-4.9% excl. regulatory impacts) mobile service revenues in line with expectations with var var ARPU at -12% yoy (-7.5% ex reg) decelerating in Q3 in €m Q3 13 in cb 9m13 in cb revenues 4,980 -5.6% 15,064 -6.4% fi
Slide 13: Q3 2013 France KPIs
Q3 2013 France KPIs better commercial momentum in mobile contract and fixed broadband mobile retail market share sustained improvement of broadband conquest share 46.4% 46.5% 46.0% 46.3% 46.4%* 41.3% 41.0% 40.9% 40.8%* 37.2% 37.3% 36.5% 35.8% 35.3%* 20.3% 27.9% ~27%* 15.8% Q3 12 Q4 12 Q1 13 Q2 13 Q3
Slide 14: Q3 2013 Spain
Q3 2013 Spain strong improvement of commercial momentum in both mobile and fixed driven by new portfolio of offers Q3 2013 revenues +6.9% revenue growth ex-reg. in Q3 13 vs. +4.6% in Q2 13 var and +3.3% in Q1 13 var in €m Q3 13 in cb 9M13 in cb best level of mobile contract net adds since Q4 10
Slide 15: Q3 2013 Poland
Q3 2013 Poland improving commercial momentum in mobile helps alleviate revenue erosion ex reg (-2.6%) Q3 2013 revenues improving commercial momentum in Q3 2013… – convergence strategy on track with +86k net adds in Open var var customers, adding to a 211k base in €m Q3 13 in cb 9M13 in cb – moment
Slide 16: Q3 2013 Rest of the World
Q3 2013 Rest of the World steady growth in emerging markets but increasing regulatory & pricing pressure in European countries Q3 2013 revenues Africa & Middle-East var var − mobile customer base at 84.6 million, up by +5.4 million yoy − performance driven by Côte d’Ivoire, Senegal, Mali & Guinea,
Slide 17: Q3 2013 Enterprise
Q3 2013 Enterprise focus on contract renewals as European (80% of revenues), macro-environment remains unfavourable Q3 2013 revenues legacy networks var var − ongoing pressure on prices in parallel to migrations to IP in €m Q3 13 in cb 9M13 in cb solutions total enterprise 1,558 -7.2% 4,855 -5.6%
Slide 18: 9m 2013 Group EBITDA ongoing reduction of direct and indirect costs
9m 2013 Group EBITDA ongoing reduction of direct and indirect costs mitigating pressure on revenues change in EBITDA* in €m regulatory pressure still weighting on -1.0pt profitability 32.8% ~44% of revenues erosion compensated by cost reduction +76 +56 31.8% +131 +355 direct costs down (-5% yo
Slide 19: Significant decrease of labour opex over 9m 13
significant decrease of labour opex over 9m 13 favourable volume effect 9m Group labour opex down -1.1% in €m volume down: decrease in average FTEs* -1.1% by 2.1%: – in France, net decrease of c. -2,200 average FTEs* yoy (-2,3%) moderate wage increase – +1.95% average salary increase in France –
Slide 20: EE: 4G base grows half million to c. 1.2m
EE: 4G base grows half million to c. 1.2m, with high single digit ARPU uplift for existing consumers migrating to 4G Q3 mobile service revenue -0.6% ex Solid postpaid net adds* regulation, £m -3.3% -0.6% -41 +40 -48 1,496 1,455 1,446 Q3/12 regulation Q3/12 postpaid prepaid Q3/13 * excluding MVNOs an
Slide 21: Details on revenues
details on revenues Q3 13 9m 13 in €m % yoy % yoy cb % yoy % yoy cb actual actual cb excl.reg cb excl.reg Group revenue 10,162 -4.0% -2.4% 30,765 -4.3% -2.3% France 4,980 -5.6% -4.9% 15,064 -6.4% -4.3% mobile services 2,079 -9.4% -8.1% 6,368 -9.7% -5.7% handset sales 123 -0.8% -0.8% 354 -4.8% -4.8%
Slide 22: Q3 13 EBITDA restatements
Q3 13 EBITDA restatements in €m Q3 12cb Q3 13 EBITDA restated 3,618 3,366 litigations -3 +5 labour related -24 -38 free share plan -13 - senior part time -11 -38 other Austria disposal +9 EBITDA reported 3,590 3,342 remarks on restated Q3 EBITDA – €11m of content provision used in Q3 13 vs. €0m us
Slide 23: 9m 13 EBITDA restatements
9m 13 EBITDA restatements in €m 9m 12cb 9m 13 EBITDA restated 10,560 9,783 litigations +41 +18 labour related -229 -116 free share plan -39 - senior part time -190 -116 other OTMT indemnity -116 - Austria disposal +74 EBITDA reported 10,256 9,758 remarks on restated H1 EBITDA – €31m of content pro