Orange Sa · EURONEXT:ORA
Orange Sa — Debt Investor Presentation (September 2014)
28 slides from Orange Sa's debt investor presentation, September 2014
Slide 1: Orange hybrids issuances roadshow materials
not for distribution Confidential in the United States Orange hybrids issuances roadshow materials September 2014 1
Slide 2: Disclaimer
disclaimer By attending the meeting where this presentation is made, or by reading the attached presentation, you agree to be bound by the following limitations. All statements in this presentation other than historical statements are forward- looking statements. Although we believe these forward-lo
Slide 3: Agenda
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 3
Slide 4: Agenda: Orange at a glance
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 4
Slide 5: Orange has a diversified portfolio of activities and a footprint with complementary dynamics
Orange has a diversified portfolio of activities and a footprint with complementary dynamics FY 2013 €41.0 billion revenues €12.6 billion EBITDA* €5.6 billion capital expenditure €7 billion operating cash flow 6 months 2014 €19.6 billion €6.1 billion €2.5 billion €3.6 billion revenues EBITDA* capita
Slide 6: Balanced geographical diversification with strong market positions
balanced geographical diversification with strong market positions 1 2 2 2 1 1 1 3 3 3 3 2 2 2 1 1 2 2 1 2 1 1 2 1 1 4 4 2 1 2 N° 1 or N° 2 in 15 out of 20 countries of AMEA and in 7 out of 9 countries in Europe 6
Slide 7: Governance framework
governance framework Stéphane RICHARD Shareholding structure Chairman and CEO As of September 18, 2014 Gervais PELISSIER CEO Delegate in charge of UK JV and Operations in Europe (excluding France) Board of Directors 14 board members 3 board committees 6 Independent members Audit committee 3 Employee
Slide 8: Agenda: recent commercial and financial performance
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 8
Slide 9: Solid Q2 mobile commercial performance across the Group
solid Q2 14 mobile commercial performance across the Group 179m mobile customers with network quality as key driver launched in Poland, Belgium 4G coverage in % of pop. and Romania in H1 14 and Slovakia early July 3G coverage in Africa & Middle East Orange Money investments France 69% # 3G countries
Slide 10: Fixed broadband driven by FTTH and convergence
fixed broadband driven by FTTH and convergence 57m Group fixed customers at the end of June 2014 convergence FTTH homes connectable as % of BB customers & qoq evolution investments +2pts France 3.0m France 41% in Q2 14 +3pts Spain 75% in Q2 14 Spain 0.8m +4pts Poland 18% in Q2 14 QoS ÷4 failure rate
Slide 11: H1 2014 revenues
H1 2014 revenues better revenue trend in France, Poland & strong growth in Africa and the Middle-East Q2 2014 H1 2014 by segment yoy yoy -3.4% -3.6% H1’14 ex.reg yoy cb yoy cb €0.9bn Group -0.5% €19.6bn -2.3% -2.6% €3.1bn IC&SS ex. reg. ex. reg. -2.7% Enterprise France by activity €2.1bn €9.6bn yoy
Slide 12: EBITDA pressure more than halved, EBITDA rate stabilized
EBITDA pressure more than halved, EBITDA rate stabilized EBITDA down -€221m vs. -€526m in H1 2013 yoy change in Group Opex base change in EBITDA* in €m in €m indirect costs direct costs stable margin rate 31.3% direct costs indirect costs** +83 31.3% +74 +130 -733 +180 193 178 +144 -26 -119 6,362 -1
Slide 13: Decrease of labour expenses confirmed
decrease of labour expenses confirmed with a positive volume effect offsetting the salary policy and other effects Group labour expenses down €130m Group average FTE** down -4% in 1 year in €m (in ‘000s) -4.0% -2.9% 160.0 153.6 France 96.4 92.6 International 63.6 60.9 -31 -35 +145 H1 13 cb H1 14 -66
Slide 14: Increased CAPEX on 4G and FTTH to support future growth
increased CAPEX on 4G and FTTH to support future growth investment in very high speed networks as of H1 2014 (4G, FTTH and VDSL) up +64% yoy 6,505 4G sites, covering 69% of population, up 19pp from 50% end CAPEX evolution in €m of 4Q13, with Orange providing best throughput, above 20Mbps. % CAPEX as
Slide 15: Agenda: Jazztel transaction
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 15
Slide 16: Creating a key convergent player in Spain
creating a key convergent player in Spain positive macro outlook 1 2 close to 10% of Group revenues restored business environment Spain is a key 11% EBITDA CAGR between 2008 and appropriate timing telecom market transformation well successful asset 2013 to increase advanced for Orange group top perf
Slide 17: Combination of the two Spanish market outperformers aiming to become #2
combination of the two Spanish market outperformers aiming to become #2 fixed BB subscriber mobile subscriber revenue market-6 share market-4 share market-6 share 2% 12.5% 8.0% 2% 4% 4% +2pp 3.1% 12% Yoigo 28.2% 16% 15.6% 24.6% 27.7% +4pp 24% Jazztel market share 21.7% 24% gains 29.1% Orange 60% 52%
Slide 18: Significant cost synergies with limited integration costs expected
significant cost synergies with limited integration costs expected NPV* increased full ULL footprint network cost optimization gross cost synergies advertising and G&A c. +€0.8 bn larger distribution capabilities of Jazztel offers through the Orange shops customer service optimisation through volume
Slide 19: Orange group financing strategy
Orange group financing strategy offer not subject to any financing condition Orange group to preserve its balance sheet and financial strength issuance of a combination of financial instruments, sized so that equity credit as granted by rating agencies will equal the equity consideration paid to Jaz
Slide 20: Agenda: managing a sound balance sheet
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 20
Slide 21: Continued deleveraging and high liquidity combined with a smooth repayment profile
continued deleveraging and high liquidity combined with a smooth repayment profile bonds*/bank loans/leases repayments end of June 2014 in €bn high liquidity position of €12.7bn as of June 30, 2014 including €6.2bn in cash bonds bank loans &others 18.3 3.2 issuances early 2014 at attractive conditio
Slide 22: Bond diversification
bond diversification well spread bond debt maturities €m matured 3 500 EGP 3 000 JPY 2 500 HKD 2 000 CHF 1 500 CAD 1 000 GBP 500 USD - EUR 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2028 2029 2031 2032 2033 2034 2038 2042 2044 2050 A diversified investor base (debt by curr. bef
Slide 23: Agenda: key take-aways
agenda 1. Orange at a glance 2. recent commercial and financial performance 3. Jazztel transaction 4. managing a sound balance sheet 5. key take-aways 23
Slide 24: 2014 guidance
2014 guidances net debt / EBITDA** 2014 restated EBITDA* €12.0bn - €12.5bn closer to 2x by year- end 2014 stabilised EBITDA* margin rate around 2x in the medium term 2014 dividend €0.60, subject to 2014 shareholder approval selective M&A policy, focus on existing footprint interim payment €0.20 guid
Slide 25: Steady dividend payment track record
steady dividend payment track record steady dividend payment track record mitigating interest deferral risk (DPS, in €) Paid Expected 1. 3 1. 4 1. 4 1. 4 1. 4 1. 2 1. 0 1. 0 1. 0 1. 0 1. 0 0,78 0. 8 0. 5 0. 6 0. 3 0. 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2
Slide 26: Summary of the proposed hybrid capital offering
summary of the proposed hybrid capital offering Issuer (M/S/F) Orange (Baa1 Stable / BBB+ Neg / BBB+ Neg) Expected Instrument Ratings [●] (M/S) Maturity PerpNC 7 PerpNC 12 PerpNC long-8 Currency / Size EUR Benchmark EUR Benchmark GBP Benchmark Issuer Call Option [●] 2021, and every 5 years thereafte
Slide 27: Structural comparison
structural comparison Pricing Date [●]-Sept-14 05-Feb-14 15-Jan-14 17-Mar-14 22-May-14 27-Jun-14 Issuer Orange Orange EDF Volkswagen GDF SUEZ Bayer Currency and Size EUR [●] EUR [●] GBP [●] EUR 1.0bn EUR 1.0bn GBP 650m EUR 1.0bn EUR 1.0bn GBP 750m EUR 1.25bn EUR 1.75bn EUR 1.0bn EUR 1.0bn EUR 1.75bn
Slide 28: Thank You
Thank You Questions & Answers 28