Orange Sa · EURONEXT:ORA

Orange Sa — Non-Deal Roadshow (June 2012)

57 slides from Orange Sa's roadshow presentation, Jun 15, 2012

  1. Slide 1: France Télécom Orange roadshow in Tel Aviv

    France Télécom Orange roadshow in Tel Aviv Gervais Pellissier CEO Delegate & CFO June 2012

  2. Slide 2: Agenda

    Agenda 1 introduction to France-Telecom Orange, one of the global leaders in Telecoms 2 a clear strategic and industrial vision 3 « conquest 2015 » strategic plan: a path to shareholder value creation 4 latest results and main financials 2

  3. Slide 3: France Telecom-Orange: key highlights

    France Telecom-Orange : key highlights A Global Leader in Telecoms 226m customers, 35 countries One of the Most Solid Capital Structure in the Sector 2x net debt/EBITDA Attractive Yield Supported by Fundamentals 40-45% OCF payout / OCF 2012 guidance: €8bn Clear Strategic and Industrial Vision in Cha

  4. Slide 4: Introduction to France-Telecom Orange, one of the global leaders in Telecoms

    1 introduction to France-Telecom Orange, one of the global leaders in Telecoms 4

  5. Slide 5: France-Telecom Orange is one of the major telecom companies around the world

    France-Telecom Orange is one of the major telecom companies around the world Subscribers Reported sales in € billions (actuals) m YoY 95,0  88 -0,4% 161 +2,7% 91,1 141 +10,1% 79,7 62,8 307 +6,6% 58,7 180 -0,3% 650 +11,2% 58,4 398 +10,9% 53,6  226 +8,0% 45,3 38,5 300 +8,4% 140 +34,3% 30,0 FY 2011 F

  6. Slide 6: It serves 226 million customers in 35 countries

    it serves 226 million customers in 35 countries … United Kingdom Poland Belgium Luxembourg Slovakia Moldova France SwitzerlandRomania Spain Portugal Armenia Irak MoroccoTunisia Jordan Egypt Mali Niger Senegal Dominican Republic Guinea Bissau Guinea Central African Republic Guadeloupe Ivory Coast Mar

  7. Slide 7: 172k employees delivering key business lines

    … with 172k employees delivering 4 key business lines mobile businesses  3,750 multinationals  2.7 million professionals and small, medium  35 countries and large businesses in France  157 million customers worldwide  28 dedicated customer service centres internet and fixed-line networks  400,

  8. Slide 8: Diversified portfolio of activities and footprint

    the Group has a diversified portfolio of activities and a footprint with complementary dynamics €45.3 billion €15.1 billion revenue restated EBITDA €5.8 billion €9.3 billion capital expenditure operating cash flow Overview on 2011 financials By geography By business 45,3 €bn 45,3 €bn 4% 15% 15,1 €bn

  9. Slide 9: Managing strong market positions across the footprint

    managing strong market positions across the footprint #1 #2 #1 #1 #1 #1 #1 #3 #3 #3 #2 #2 #2 #1 #2 #2 #1 #2 #2 #1 #1 #1 #2 #5 #3 #1 #4 Vanuatu #1 #1 #2 Countries where we provide services for # mobile market position Main listed 9 residential customers subsidiaries

  10. Slide 10: Since market opening to competition in 1998, France Telecom has kept growing

    since French market opening to competition in 1998, France Telecom has proactively kept growing in an increasingly global context 1988  domestic telecommunication operations called France Telecom after being grouped under the name “PTT” (Post, Telegraph, Phone) since 1971 1991  France Telecom sepa

  11. Slide 11: In 15 years, France Telecom has expanded globally

    in 15 years, France Telecom has expanded globally and built leading positions over a balanced footprint Jun 2005  French State stake decrease to 35%  Sep 2005  France Telecom capital increase to acquire 80% of the capital of Spanish mobile operator Amena. French state stake at 33% percent 2006 

  12. Slide 12: Major telecom group listed in Paris and New York

    France Telecom is now a major telecom group, listed in Paris and New- York* and benefiting from a robust and diversified shareholders base Geographical breakdown of institutional investors Dec-11 shareholder base 67,7% free float RoW 7% (institutional + individual shareholders) North America 26% (US

  13. Slide 13: Since 2002, restored a strong balance sheet

    since 2002, France-Telecom Group has managed to restore a strong balance sheet while maintaining investment and remunerating shareholders 1 Debt divided by two 2 Increased maturity 3 Equity doubled € bn Years X2,5 strengthening /2 9,0 € bn X2 68,0 30,0 balance sheet 32,3 4,0 14,0 2002 2011 2002 2

  14. Slide 14: Secured a solid liquidity position at very attractive conditions

    France Telecom has secured a solid liquidity position at very attractive conditions insight main debt raising transactions in 2011 and early 2012  €6.1bn debt raised since January 2011(1) with a wide diversification: 10 different markets tapped in total June  €1bn 10-year bonds at 3%  very attrac

  15. Slide 15: A clear strategic and industrial vision

    2 a clear strategic and industrial vision 15

  16. Slide 16: Telco operators' central position: from competition to co-opetition

    telco operators benefit from a central position between OTT players, hardware and software providers : convergence calls for shift from competition to “co-opetition” with telcos optimization of asset base with OTTs alliances & partnerships with content providers aggregation strategy with device manu

  17. Slide 17: Demonstrated ability to adapt to a rapidly changing environment

    France Telecom-Orange has demonstrated its ability to adapt to its rapidly changing environment 2010 + 2005 + 2000 + Internet 1995 + of things Internet on the move Internet at home mobile  NFC, M2M … voice  mobile BB offers  very high broadband  Fixed VoIP  IPTV  IPO  international developmen

  18. Slide 18: Booming appetite for data traffic generates monetization opportunities

    booming customers appetite for data traffic generates significant monetization opportunities… connected usage data traffic terminals(1) per mobile broadband video(2) subscriber(4) +104% p.a. = 4,150,000 TB 118,000 TB +6% p.a. 2010 2015 +43% p.a. social networks (3)… 1600 7.1 5.3 billion +10% p.a. bi

  19. Slide 19: New business territories translate into new business models

    … as new business territories translate into new business models innovate in our current activities innovate in emerging growth opportunities products and services monetization safety, communication cloud internet services of data security services and privacy services of things 20 million 10 millio

  20. Slide 20: Conquest 2015 strategic plan: a path to shareholder value creation

    3 « conquest 2015 » strategic plan: a path to shareholder value creation 20

  21. Slide 21: Four key levers to tackle today and tomorrow's challenges

    four key levers to tackle today and tomorrow’s challenges segmentation RAN customers sharing convergence growth efficiency market data Chrysalid share quality of service buyin spectrum Democratic Republic auctions of Congo investment portfolio Iraq fibre submarine Orange cables Switzerland conquests

  22. Slide 22: France: best customer offering to defend leadership

    france: best customer offering to defend leadership growth efficiency best offers best networks best service investment cross selling best mobile network following 1,200 shops nationwide ARCEP new segmentation/price flagships in large cities mix strategy 98% 3G+ coverage of population by end of 2011

  23. Slide 23: Europe, AMEA & Enterprise: attractive growth prospects

    europe, AMEA & Enterprise: attractive growth prospects growth strong be n°2 in Spain fixed broadband efficiency prospect triple our mobile data revenues by 2015 +12% subscribers (2010-13 CAGR) in Europe double our fixed broadband revenues by 2015 double our revenues by 2015 growth in be the n°1 or n

  24. Slide 24: At least €3bn in annual savings by 2015

    focus on operational perfomance: at least €3bn in annual savings by growth 2015, boosted by the procurement JV performance program and procurement JV 2011-2015 performance levers benefits (€bn) efficiency annual France  customer experience improvement 2010 actual vs. 2015 planned vs. operational ex

  25. Slide 25: Quasi-stabilisation of workforce in France and at group level by 2015

    quasi-stabilisation of workforce in France and at group level by 2015 growth an acceleration of retirements in France group headcount evolution (FTE)** group pyramid ageing est. natural attrition in France, in thousands +0.2% +786 efficiency outside France part time senior plan to +647 165,533 antic

  26. Slide 26: Capex under control and focused on growth

    capex under control and focused on growth: customer satisfaction growth and next generation network invest in customer satisfaction CAPEX evolution in € billion IT, networks capacity & modernisation, 5.6 6.2 0.3 front-line 0.1 priorities efficiency proactive leadership in VHBB networks with expectat

  27. Slide 27: Fixed and mobile networks: our main asset to generate value

    fixed and mobile networks : our main asset to generate value growth deploying networks in the AMEA zone developing infrastructure to extend coverage of fixed and mobile networks across the footprint accelerate 2G and 3G mobile coverage +12% 2G sites per year (CAGR 2010-2013) population coverage Euro

  28. Slide 28: Highly selective and flexible M&A policy

    highly selective and flexible M&A policy (2011 achievements) growth acquisitions disposals  Congo: 100% stake in CCT, efficiency  Orange Switzerland, €1.6bn core 21st AMEA country, price: €153m enterprise value business  Iraq, partnership with Agility to take a 44% stake in Korek Telecom,  Febru

  29. Slide 29: Latest results and main financials

    4 latest results and main financials 29

  30. Slide 30: Strong set of results in 2011 despite challenging environment

    FY11 strong set of results in 2011 despite most challenging environment var. FY10 FY11 comp in €m cb actual basis key points  regulation impact: -€748m revenue 46,020 45,277 -1.6%  FY excl. regulation: +0.0% yoy  regulation impact -€227m restated EBITDA* 15,846 15,083 -4.8%  impacts from VAT in

  31. Slide 31: Resilient group revenue thanks to international portfolio

    1Q12 resilient group revenue thanks to international portfolio contribution & strong commercial dynamics in a transforming French market  sustained mobile and fixed broadband acquisitions in a transforming French market – high level of mobile gross adds (+1% yoy) – data-only revenues at 20.7% of mo

  32. Slide 32: Summary of 1Q 2012 achievements

    1Q12 summary of 1Q 2012 achievements 1Q12 achievements 1Q11 1Q12 var. comp in €m cb actual basis key points  regulation impact: -€195m revenue 11,124 10,922 -1.8% Q1 excl. regulation: -0.1% yoy vs -0.2% in Q4 11 restated EBITDA* 3,689 3,432 -7.0%  regulation impact -€54m in % of rev 33.2% 31.4% -1

  33. Slide 33: Flat revenue ex. regulation thanks to international portfolio

    1Q12 flat revenue ex. regulation thanks to international portfolio contribution ∆ vs % of 1Q12 ∆ vs 1Q11cb 1Q12 segment contribution to group revenue Group in €m actual 1Q11cb excl. reg. yoy* evolution, excluding regulation, in €m revenue** yoy* ∆ France 5,401 -4.2% -1.7% -93 47.4% -1.0pt Spain 981

  34. Slide 34: Pressure on EBITDA mainly coming from revenue decrease

    1Q12 pressure on EBITDA mainly coming from revenue decrease restated EBITDA* evolution in 1Q12 in €m -7.0% o/w -€30m due to phasing 3,689 effect, to be reversed in the course of the year +56 33.2% -6 3,432 -201 -86 -20 31.4% 1Q11 cb revenue interco costs commercial & labour opex*** IT&N, property, 1

  35. Slide 35: Focus on France: commercial counter-attack & wholesale hedge

    1Q12 focus on france : successful commercial counter-attack & wholesale hedge ramping-up commercial success wholesale: 2G/3G roaming agreement of our reactive offers… Trading up from prepaid to postpaid  a strategic and pragmatic financial decision: x4 in March yoy it represents a partial hedge vs.

  36. Slide 36: Focus on France: portability requests back to pre-4th entrant level

    1Q12 focus on france : portability requests back to pre-4th entrant launch level contract churn impacted impact of 4th mobile entrant on net adds by massive portability requests in January & early Feb. Orange net adds 800 from the 1st of January to the 15th of February 2012 700 portability processin

  37. Slide 37: CAPEX to sales ratio at 10.0% in 1Q12

    1Q12 CAPEX to sales ratio at 10.0% in 1Q12, up +0.4pt yoy investing for differentiation & value en route towards new generation access in insight France for a new customer experience LTE 100 - 150 Mbit/s  Spain 4G – higher investments due to RAN renewal H+ HSPA+ Dual carrier 42 Mbit/s  Poland 3G+

  38. Slide 38: 1Q12 France financials

    1Q12 1Q12 France financials mobile revenue down as anticipated, but successful counter-attack 1Q12 France revenue*: -4.2% insight (-1.7% excl. regulatory impacts)  as anticipated, personal revenue down -1.1%*, in a strong competitive market – increasing regulation weight (up 29%*) only partially co

  39. Slide 39: 1Q12 France home KPIs

    1Q12 1Q12 France home KPIs good commercial performance confirmed insight ADSL market & conquest shares  strong commercial performance with +60 k net adds; ~19% share of net adds thanks to churn ADSL market share ADSL net adds control 45.5% 45.3% 45.2% 45.1%  strong contribution of Open (+312k net

  40. Slide 40: 1Q12 France personal KPIs

    1Q12 1Q12 France personal KPIs robust mobile gross adds insight network market share growth  marketing strategy to protect value-customer base – strong commercial performance in a very active active network market share* retail market share market led by Open, limited editions and Sosh offers – -1.

  41. Slide 41: 1Q12 Spain

    1Q12 1Q12 Spain top line growth driven by commercial performance despite economic environment 1Q12 Spain revenue*: +2.3% insight (+4.5% excl. regulatory impacts)  mobile revenue up +3.5% ex-reg. driven by contract customer base increase & data revenue in €m 1Q11 cb 1Q12 var cb – contract churn down

  42. Slide 42: 1Q12 Poland

    1Q12 1Q12 Poland revenue driven by mobile and promising commercial indicators in BB 1Q12 Poland revenue*: -3.4% insight (-2.3% excl. regulatory impacts)  mobile revenue up +2.6% ex-reg. with a +1.3% increase in the customer base – focus on defending our #1 value market share position in €m 1Q11 cb

  43. Slide 43: 1Q12 Rest of the World

    1Q12 1Q12 Rest of the World growth fuelled by emerging countries including IC & Egypt 1Q12 revenue* : +2.0% (+3.1% excl. reg.) insight  European countries: revenue up +0.4% excl. reg. – Belgium: revenue up +2.3% ex-reg in €m 1Q11cb 1Q12 var cb  following aggressive competition total ROW revenue 2,

  44. Slide 44: 1Q12 enterprise

    1Q12 enterprise 1Q12 solid IPVPN and growing networks performance but impending phasing-out of some legacy networks 1Q12 enterprise revenue* : -3.1% insight  legacy networks: sharper decline in legacy data as some products (e.g. x25 product) are about to be in €m 1Q11cb 1Q12 var cb phased-out total

  45. Slide 45: EE: solid share of postpaid net adds and industry leading churn

    1Q12 EE: solid share of postpaid net adds and industry leading postpaid churn Insights Mobile service revenues +2.9%* ex regulation, £m  Underlying mobile service revenue driven by growth in postpaid base, 886k net adds in last 12m -2.5% +2.9%  Postpaid, focus on retention as market slows after ve

  46. Slide 46: Financial objectives summary

    financial objectives summary 46

  47. Slide 47: Strict financial policy to preserve its balance sheet

    France Telecom-Orange will continue to implement a strict financial policy in order to preserve its balance sheet France Telecom Net debt / EBITDA ratio (1) and average maturity(1) 2,63x 2,30x 2,15x 2,09x … has a debt ratio 1,77x at the lowest and a debt maturity at the 5,9 years 7,3 years 6,5 years

  48. Slide 48: Credit quality reinvested into longer maturity and lower cost of debt

    the Group has reinvested credit quality into the extension of the average maturity and the reduction in cost of debt insight Bonds(3)/bank loans/leases repayments end of 2011  debt raised since January 2011 with 11.7 years average maturity in €bn bonds bank loans & other 17.6  emblematic series of

  49. Slide 49: 2012 will remain the low point in terms of OpCF

    adapt to conquer phasing reiterated: 2012 will remain the low point in terms of OpCF 2012 2013 close to €8bn* update will be given OpCF in 2H12 (re-scoped) guidance re- scoped for (mainly) re- scoping impact of ~0.4bn€ Switzerland, Emitel, CCT and compared to initial guidance forex. total impact of

  50. Slide 50: Shareholder return policy has become flexible

    the shareholder return policy has become flexible to preserve a strong balance sheet 2011 2012 2013 guidance met uncertain environment leverage 2.09x priority to financial structure return confirmed variable return based on performance 40 to 45% 40 to 45% 1.4€ DPS dividend OpCF pay-out OpCF pay-out

  51. Slide 51: Appendix

    appendix 51

  52. Slide 52: France-Telecom Orange – Investors' Checklist

    France-Telecom Orange – Investors’ Checklist Potential Concerns Mitigants FT-Orange specifics  France has proven resilient since 2009 with no quarter of GDP contraction(1)  No more than 50% of revenues from France « France »  Strong consumer defensive characteristics: France Telecom Orange is mor

  53. Slide 53: Benchmark on guidance and shareholders' remuneration

    benchmark on guidance and shareholders’ remuneration 2011 2012 Dividends / OpCF • £6.0-6.5 bn FCF • £5.5 – 6.5 bn FCF 2011a 52% • £6.8bn share buy back (on £15bn • 7% growth in DPS China Mobile and SFR disposals) • special £2bn dividend (re. Verizon • 7% growth in DPS Wireless) 2012e 81% • adj. EBIT

  54. Slide 54: French state stake ranks lowest among European operators

    stake owned by French state in the Group ranks lowest among European operators stake owned by domestic state (domestic state & domestic sovereign fund) Dec. 1998 (63% ) 57% 54% 54% 51% Sept. 2004 (42% ) Jun. 2005 (35%) 32% 28% Jun. 2007 27% 5% Month. Year (xx%): sale of FT stake by the French stake

  55. Slide 55: France Telecom-Orange share main features on the stock market

    France Telecom-Orange share main features on the stock market Market Cap Top 5 m arket cap in the Stoxx Telecom index 2009 45,783 Vodafone 32,35% 2010 40,426 Telefonica 13,16% 2011 37,594 Deutsche Telekom 10,26% BT Group 8,84% 2012 29,725 France Telecom 8,03% Index Weight Position CAC 40 3,20% 10 St

  56. Slide 56: A responsible governance

    a responsible governance support shareholding structure Stéphane Richard, Chairman and CEO French state 26,9% (and affiliated) Gervais Pellissier, CEO delegate and CFO 68.0% 4,8% employees board of directors others 15 board members* 3 board committees insight 7 independent members audit committee 3

  57. Slide 57: Thank you

    thank you 57

Orange — Non-Deal Roadshow (June 2012) on 6ix