Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom-Orange — H1 2012 Earnings Presentation
32 slides from Orange Sa's earnings presentation, Jul 26, 2012
Slide 1: France Telecom Orange H1 2012 results
France Telecom Orange H1 2012 results Stéphane Richard Chairman & CEO Gervais Pellissier CEO delegate & CFO July 26th, 2012 1
Slide 2: Cautionary statement
cautionary statement This presentation contains forward-looking statements about France Telecom-Orange. Although we believe they are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties, including matters not yet known to us or not current
Slide 3: Agenda
agenda 1 highlights & key milestones 2 financial performance 3 business review 3
Slide 4: Highlights & key milestones
1 highlights & key milestones Stéphane Richard Chairman & CEO
Slide 5: 1H12 performance in line with yearly guidance
1H12 performance in line with yearly guidance in France, mobile retail market share stabilised at 38.1%, customer losses divided by 4 in Q2 (-155k) vs. Q1 (-615k) − back to positive consumer contract net adds in June (+27k) with success of Sosh (367k customers), Open (2.1 million customers) and a ne
Slide 6: Implementation of our Conquests 2015 plan (1/2)
continuously moving forward through the implementation of our Conquests 2015 plan (1/2) networks network CAPEX continue to increase (+6% yoy) recent launch of 4G trials in Marseille, with 3 other cities planned in H2 followed by a commercial launch in early 2013 3G now commercially launched in 14 ou
Slide 7: Implementation of our Conquests 2015 plan (2/2)
continuously moving forward through the implementation of our Conquests 2015 plan (2/2) customers Open (2.1m customers), Sosh (367k customers) and new Origami offers driving commercial turnaround in mobile consumer contract net adds in France in June amena.com sub-brand launched in Spain to address
Slide 8: Financial policy focused on net debt to EBITDA ratio
financial policy remains focused on net debt to Ebitda ratio 2012 guidance OpCF close to €8bn* confirmed 2012 interim dividend 0.6€ 0.6€** per share paid on 12th of Sep 2012 2.11x at end ~2x net debt / EBITDA in the mid term of H1 2012 leverage target leverage adapted use of cash policy target flexi
Slide 9: 1H12 financial performance
2 1H12 financial performance Gervais Pellissier CEO delegate & CFO
Slide 10: Key financial achievements
key financial achievements 1H12 in €m 1H11 actual var. key points regulation impact: -€ 403m revenue cb 22,275 21,843 -1.9% H1 excl. regulation: -0.1% yoy restated EBITDA* cb 7,509 7,004 -6.7% regulation impact -€109m H1 provision of -60m€ for payments related to EC decision on in % of rev 33.7% 32.
Slide 11: Flat revenue excluding regulation despite pressure on some geographies
flat revenue excluding regulation despite pressure on some geographies similar trend in France as in 2H11, RoW back to growth ∆ vs ∆ vs 1H11cb trend vs 1H12 segment contribution to group revenue % of Group in €m 1H12 actual 1H11cb excl. reg. 2H11 yoy* evolution, excluding regulation, in €m revenue**
Slide 12: EBITDA suffering from pressure in France, Poland and Enterprise
EBITDA suffering from pressure in France, Poland and Enterprise, while Spain and RoW improve restated EBITDA* evolution in 1H12 1H11cb 1H12 ∆ vs in €m actual margin o/w exceptional items 1H11cb o/w rebranding in Poland -€30m Group restated 7,509 7,004 32.1% -1.6pts EBITDA* 7,509 France 4,416 4,020 3
Slide 13: EBITDA mainly impacted by revenue decrease
EBITDA mainly impacted by revenue decrease despite tight management of commercial costs 1H restated EBITDA* in €m -6.7% 7,509 +106 +47 7,004 -431 -158 -70 -€325m o/w -€60m for EC o/w - €109m decision on civil regulatory effects servants 1H11cb revenue interco costs commercial & labour opex*** IT&N,
Slide 14: €310m savings from Chrysalid efficiency plan in 1H
€310m savings from Chrysalid efficiency plan in 1H €780m cumulated since 2011, in line with ambition 31% of 2015 target achieved June 2012 2011 1H 2012 2013 2015 cumulated savings €310m incremental gross savings in 1H12 tangible results of efficiency plan: €310m of gross savings in 1H12 by cost doma
Slide 15: Chrysalid savings derive from improved operational efficiency
Chrysalid savings derive from improved operational efficiency illustrations efficiency initiatives impacts 2011 H1 2012 FY 2012e RAN Sharing site reductions thanks to sites 26% in Poland sharing with increased coverage of shared sites (from 6.2k to 5.0k sites) optimization of network management (JV
Slide 16: CAPEX: acceleration on strategic projects in France and Spain
CAPEX: acceleration on strategic projects in France (FTTH and LTE) and in Spain 1H12 network investments: > 50% of Group CAPEX, up +6.0% yoy var.vs in €m actual 1H11cb % of sales +6% Group 2,460 +1.0% 11.3% 1H11cb 1H12 France 1,246 +0.5% 11.5% Spain 210 +23.7% 10.6% +2% 1,345 Poland 208 +1.5% 12.3%
Slide 17: Decrease in adjusted net debt vs. year end 2011
decrease in adjusted net debt vs. year end 2011 allowing to stabilize net debt/EBITDA ratio in €m 1H11a FY11a 1H12 operating cash flow 1H12 5,144 9,313 4,544 restated EBITDA* – CAPEX licences & spectrum -136 -767 -220 prudent liquidity risk management net interest expense cash out -832 -1,078 -920 r
Slide 18: Refinancing of debt at best-in-sector conditions and strong liquidity
France Telecom Orange continues to refinance its debt at best-in-sector conditions and to enjoy a very strong liquidity Group liquidity position bonds*/bank loans/leases repayments end of June in €bn +15% in €bn bonds bank loans & other 16.1 14.6 19.6 12.7 4.1 4.4 7.5 7.4 7.8 3.0 3.0 18.9 8.6 7.2 3.
Slide 19: Business performance
3 business perfomance
Slide 20: 1H12 France financials
1H12 France financials EBITDA margin erosion under control in a tense market 1H12 key financials 1H revenues & margin defended thanks to (revenue -2.0% excl. regulatory impacts) network valorization & cost monitoring var in France revenue, in €m in €m 2Q12 var in cb 1H12 cb France rev. ex. reg -2.0%
Slide 21: 1H12 France personal KPIs
1H12 France personal KPIs back to positive consumer contract net adds in June volume: positive swing in net adds ARPU evolution (-6.1%) in line with anticipation Orangeofnet recovery adds,net contract adds in Q2… in thousand ARPU impacted by regulation and competitive pressure in 1Q12 in 2Q12 12m ro
Slide 22: 1H12 France home KPIs
1H12 France home KPIs slight commercial performance acceleration in Q2 and ARPU increase BB ARPU driven by better access mix & content ADSL market share PSTN line losses slowing down ADSL net adds market share ADSL market & conquest shares variance in thousands of lines +32k PSTN only -289 -257 PSTN
Slide 23: 1H12 Spain financials
1H12 Spain financials strong EBITDA growth driven by efficient mobile commercial spend and fixed broadband expansion 1H12 key financials insight (revenue +4.8% excl. regulatory impacts) Q2 mobile revenue +1.0% as per Q1, driven by data var in services and equipment, despite a slowdown in usage in €m
Slide 24: 1H12 Poland financials
1H12 Poland financials second quarter marked by improving revenue trend and commercial KPIs 1H12 key financials insight (revenue -1.1% excl. regulatory impacts) var in Q2 revenue performance boosted by ICT services, in €m 2Q12 var in cb 1H12 including the UEFA 2012 technical partnership cb revenue 8
Slide 25: 1H12 Rest of the World financials
1H12 Rest of the World financials mixed results in Rest of Europe while growth fuelled by emerging countries 1H12 revenue* : +1.6% (+2.8% excl. reg.) insight positive contract net adds and portability since May in €m 2Q12 var in cb. 1H12 var in cb. in Belgium, thanks to Animals offer dynamism back t
Slide 26: 1H12 enterprise financials
1H12 enterprise financials robust performance of mature and growing networks, not offsetting an accelerated decline of legacy solutions insight 1H12 enterprise revenue* : -2.6% • legacy networks: accelerated decline of PSTN solutions, and of data legacy partly due to end-of-life of some data in €m 2
Slide 27: Everything Everywhere
Everything Everywhere solid postpaid net adds in 2Q12, with 1H12 EBITDA margin stable following increased retention activity mobile service revenues +3.4% ex regulation, £m postpaid net adds -1.1% +3.4% -66 +74 -25 1,503 1,437 1,486 Orange T-Mobile Q2/11 regulation Q2/11 postpaid prepaid Q2/12 ex re
Slide 28: Orange
orange’
Slide 29: Appendix
appendix
Slide 30: Slight decrease in net income, stability on a comparable basis
slight decrease in net income, stability on a comparable basis 1H 11 1H 11 bc* 1H 12 in €m actual EBITDA reported 7,681 7,381 6,820 deceleration of amortization following depreciation & amortization -3,399 -3,309 -3,114 technology swap in France, Poland and Spain (€87m yoy) impairment of goodwill &
Slide 31: EBITDA by geographies and business lines
EBITDA by geographies and business lines 1H2012 2011 CB in €m actual % yoy % yoy excl.reg margin margin Group restated EBITDA* 7,004 -6.7% -5.3% 32.1% 33.7% France 4,020 -9.0% -7.0% 37.1% 39.0% personal 1,832 -5.6% -2.2% 34.0% 35.7% home 2,188 -11.6% -10.7% 35.3% 38.2% Spain 455 +19.4% +21.6% 22.9%
Slide 32: EBITDA restatements
EBITDA restatements in €m 1H11cb 1H12 EBITDA restated 7,509 7,004 litigation - 44 major litigations litigation EU TPSA -115 - labour related free share plan - -26 part-time senior plan -13 -178 other Orange Switzerland disposal - +92 OTMT indemnity - -116 EBITDA reported 7,381 6,820 32
France Telecom-Orange — H1 2012 Earnings Presentation on 6ix