Orange Sa · EURONEXT:ORA

Orange Sa — France Telecom-Orange — Debt Investor Presentation (November 2011)

33 slides from Orange Sa's debt investor presentation, November 2011

  1. Slide 1: France Telecom Orange fixed income roadshow in Tokyo

    France Telecom Orange fixed income roadshow in Tokyo Jean-Michel Thibaud, Group Treasurer Hervé Labbé, Group Treasury, Head of dealing room and chief economist Amélie Laroche-Truong, Investor Relations November 2011

  2. Slide 2: Cautionary statement

    cautionary statement this presentation contains forward-looking statements about France Telecom’s business, in particular for 2011, 2012 and 2013. Although France Telecom believes these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and

  3. Slide 3: Agenda

    agenda 1 company highlights 2 strategic directions 3 3Q11 results 4 debt management 3

  4. Slide 4: France Telecom-Orange is a convergent telecom operator

    France Telecom-Orange is a convergent telecom operator with a diversified footprint and portfolio of activities 45.5 billion euros revenues in 2010 per geographic area per line of business international enterprises carrier & shared 14.8% services home 2.4% 33.6% rest of the World personal 17.3% Fran

  5. Slide 5: 8th worldwide telecom operator

    8th worldwide telecom operator Orange in the world Orange in Europe 2010 revenues in €bn* #1 93.7 pay IPTV operator 92.6 79.4 #1 VoIP operator 62.4 60.7 #2 ADSL operator 53.0** 46.7 #3 mobile 45.5 operator * exchange rates as of 31/12/2010 from Datastream ** Reuters consensus estimates as of March 2

  6. Slide 6: 221 million customers worldwide

    221 million customers worldwide United Kingdom Poland Belgium Luxembourg Slovakia Austria Moldova France SwitzerlandRomania Spain Armenia Iraq MoroccoTunisia Jordan Egypt Mali Niger Senegal Dominican Republic Guinea-Bissau Central African Republic Guadeloupe Ivory Coast Martinique Guinea Cameroon U

  7. Slide 7: Innovation is part of our DNA

    innovation is part of our DNA expertise  7,892 patents in our portfolio  327 patent applications filed in 2010  3500 people working on Japan innovation on the Group Tokyo investments  €845 m invested in 2010  1.9% of revenues rewards  2011 award for Best Mobile Technology for Emerging Markets

  8. Slide 8: A responsible governance support

    a responsible governance support Stéphane Richard, Chairman and CEO shareholding structure Gervais Pellissier, CEO delegate and CFO 27.1% board of directors 68.0% 4.9% 15 board members* 3 board committees 30th of September 2011 French state (and affiliated) 7 independent members audit committee empl

  9. Slide 9: Agenda

    agenda 1 company highlights 2 strategic directions 3 3Q11 results 4 debt management 9

  10. Slide 10: Conquests 2015

    Conquests 2015 our strategic and industrial project, co-constructed by over 2,000 of our staff, aims at combining economic performance and social progress for the benefit of all stakeholders our people our networks  management empowered for best execution at  increase bandwidth and coverage to mee

  11. Slide 11: Capturing new growth opportunities

    capturing new growth opportunities drive data monetization new territories  tiered data pricing schemes  payment and contactless (incl. NFC**,  differentiated classes of service to customers Orange Money…)  yield management  smart networks for wholesale (incl. CDN***, network as a service…)  e

  12. Slide 12: Adapt to conquer: our Conquests 2015 ambition

    adapt to conquer: our Conquests 2015 ambition* OpCF (EBITDA – CAPEX) revenues adapt conquer adapt conquer ∑ 2011-2013 2013-2015 2010-2013 2013-2015 ~€27bn guidance (excl. 0.6% CAGR 2.7% CAGR 9% CAGR exceptional items) EBITDA CAPEX adapt conquer adapt conquer ∑ 2011-2013 ∑ 2014-2015 ∑ 2011-2013 2013-

  13. Slide 13: 2011-2013 cumulated OpCF guidance is supported by underlying trends

    2011-2013 cumulated OpCF guidance is supported by underlying trends… revenues trend 2010-2013 CAGR +0.6% 10 11e 12e 13e 14e 15e EBITDA trend EBITDA stabilised in 2013 at a higher level than 2011 10 11e 12e 13e 14e 15e CAPEX to sales trend 13.4% CAPEX to sales on average over 2011-2013  14% CAPEX to

  14. Slide 14: Focus on performance programs to improve operational efficiency

    … and by strong focus on performance programs to improve operational efficiency main initiatives and ambitions 3Q first achievements Chrysalid 2011-2015  FY 2011 savings expected between 15-20% of 2015 2015 annual savings 2015 average target planned vs. 2010 cost obj. % of base, in €bn achievement*

  15. Slide 15: Agenda

    agenda 1 company highlights 2 strategic directions 3 3Q11 results 4 debt management 15

  16. Slide 16: Sustained commercial performance in 3Q while protecting EBITDA

    sustained commercial performance in 3Q while protecting EBITDA confirmed sustained commercial performance throughout the Group with customer base up by 8.6%* to over 221 million customers new steps in offers segmentation implemented in France driving successful momentum share of broadband net adds a

  17. Slide 17: Key financial achievements

    key financial achievements 9m11 9m 3Q11 3Q in €m 9m10cb actual var. cb actual var. cb key points  regulation impact: -€567m, revenue 34,393 33,848 11,280 o/w -€188m in 3Q -1.6% -2.1%  VAT impact:-€105m, excl. +0.1% -0.5% o/w -€29m in 3Q regulation  as anticipated, slowdown in 2H  regulation impa

  18. Slide 18: 9m11 Group revenue stability excluding regulation

    9m11 Group revenue stability excluding regulation 9m10cb 9m11 3Q11 ∆ vs ∆ vs 9m10cb ∆ vs ∆ vs 3Q10cb in €m actual actual 9m10cb excl. reg. 3Q10cb excl. reg. Group revenue 34,393 33,848 -1.6% +0.1% 11,280 -2.1% -0.5% France 17,411 16,873 -3.1% -1.3% 5,569 -4.6% -2.8% Spain 2,858 2,982 +4.3% +6.9% 1,0

  19. Slide 19: Commercial costs stabilizing allowing to contain margin erosion in 3Q11

    commercial costs stabilizing allowing to contain margin erosion in 3Q11 EBITDA* evolution insight in millions of euros 9m11 - 1.4 pts 12,275 +230 +85 11,611  EBITDA* impacted by regulation -€171m and VAT episode -€129m -545 -105 -329  labour opex increase, mainly due to price effect in France 9m11

  20. Slide 20: CAPEX acceleration to enhance customer satisfaction and future growth

    CAPEX acceleration to enhance customer satisfaction, network evolution and future growth CAPEX evolution insight  increased CAPEX/sales ratio by +0.9pt in in millions of euros in % of revenues 9m11 at 11.0%, in line with 2011 indication of +8% ~13% of revenue  France +262 3,731 – increase of CPE*

  21. Slide 21: Guidance

    guidance guidance 2011-2013 FY 2011 operating  2011-2013 cumulated cash flow ~€27bn guidance (restated (excl. exceptional items)   increased to slightly above EBITDA-Capex)  €9bn in 2011 €9bn in 2011 10 11e 12e 13e 14e 15e dividend  €1.40 dividend payment for 2011  dividend confirmed and 2012

  22. Slide 22: Agenda

    agenda 1 company highlights 2 strategic directions 3 3Q11 results 4 debt management 22

  23. Slide 23: Debt management virtuous circle

    debt management virtuous circle enabling FT-Orange to constantly improve its credit profile FT-Orange’s debt management virtuous circle robust cash flows stable balance sheet policy  €5.1bn operating CF  medium term net debt / 1H11 EBITDA ~ 2x  op CF increased slightly  net debt / EBITDA 1.91x a

  24. Slide 24: Robust credit profile and strong liquidity position

    France Telecom Orange continues to enjoy a robust credit profile and a strong liquidity position group liquidity position insight in €bn  strong and stable liquidity position, reinforced with the 12.4 12.7 competitive new back up facility of €6bn (renewed until 2016) credit lines 7.5 7.8  continui

  25. Slide 25: Strong deleverage with increased average maturity and lower cost of debt

    a strong deleverage combined with an increase in net debt average maturity and a reduction in cost of debt average maturity and net debt evolution 68.0 8.5 8.2 63.4 7.5 7.3  TDIRA: € 1.8bn 6.8 61.0 7.1 6.4 6.7 outstanding of perpetual 6.0 5.6 convertible bonds, not 4.6 included in average maturity

  26. Slide 26: Very smoothly spread bond debt schedule

    France Telecom Orange has designed a very smoothly spread bond debt schedule regular bond repayments scheduled up to 2050* 3.500 in million of euros 3.000 HKD 2.500 USD 2.000 JPY 1.500 GBP EUR 1.000 CHF 500 CAD 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2025 2028 2031 2033 2034 20

  27. Slide 27: Net debt is 105% fixed and highly euro denominated

    net debt is 105% fixed and highly euro denominated net debt allocation: fixed, floating and by currency (after derivatives) 46% 38% 61% 63% 65% 60% 59% 75% 73% 70% 83% 86% 83% 81% 91% 98% 105% 54% 62% 39% 37% 35% 40% 41% 25% 27% 30% 9% 17% 15% 17% 19% 2% -5% 1995 1996 1997 1998 1999 2000 2001 2002 2

  28. Slide 28: Illustration of these principles on deals execution

    illustration of these principles on deals execution main debt raising transactions since June best in class credit profile used to capture longer 2010 term maturities and better pricing than peers 2010 June  JPY52.3bn first Samurai euro-denominated bond issues since Q2 2009 September spread (bp) &

  29. Slide 29: Appendix

    appendix

  30. Slide 30: EBITDA restatements

    EBITDA restatements in €m 1H10cb 1H11 3Q10cb 3Q11 9m10cb 9m11 EBITDA restated 8,056 7,613 4,219 3,998 12,275 11,611 litigations DPTG 266 266 EU fine on TPSA 115 115 labour related free share plan 23 23 part-time senior plan 37 13 33 19 70 32 other Emitel disposal (197) (197) EBITDA reported 8,019 7,

  31. Slide 31: France marketing: segmentation preserves value

    France marketing: segmentation preserves value 2007/2008 2011 basic offer: premium offer: Orange internet triple-play: Livebox Zen Livebox Star Fibre 3 offers internet triple play: 1 offer Net/Formule convergence quadruple play commitment/loyalty commitment/loyalty subsidized Orange Intense subsidiz

  32. Slide 32: 5 years CDS evolution of main European telcos

    5 years CDS evolution of main European telcos 450 400 350 300 250 200 150 100 50 0 01- 03 05 07 09 11 01- 03 05 07 09 11 01- 03 05 07 09 11 01- 03 05 07 09 11 01- 03 05 07 09 2007 2008 2009 2010 2011 Telefonica (Baa1/BBB+) Deutsche Telekom (Baa1/BBB+) Vodafone (A3/A-) France Telecom (A3/A-) 32

  33. Slide 33: Net debt/EBITDA ratio within mid term target

    net debt/EBITDA ratio within mid term target confirming Group debt financial policy in €m +31,840 o/w Sonatel Group +€ 159m o/w Emitel disposal -€ 410m o/w ECMS +€ 95m o/w Dailymotion acquisition +€ 60m o/w Mobistar +€ 82m o/w Jordan Telecom +€ 47m net debt/ +391 net debt/ Ebitda* -3,648 Ebitda** 1.

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