Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Q1 2005 Earnings Presentation
69 slides from Orange Sa's earnings presentation, Apr 28, 2005
Slide 1: Form 6-K France Telecom
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 April 28, 2005 Commission File No. 1-14712 FRANCE TELECOM (Translation of registrant’s name into English) 6, place d’Alleray, 755
Slide 2: 1Q 2005 Revenues & Key Operational Indicators
1Q 2005 April 28thRevenues , 2005 & Key Operational Indicators
Slide 3: Cautionary Statement
Cautionary management’s expectations anticipated forward-looking integrated upon Telecom’s uncertainties found The events This 2 forward-looking presentation exchange in orthe circumstances operator 1Q events Statement Document are relating 2005 confidence rate based statements contains will model)
Slide 4: Agenda
Main figures and key messages 1Q 05 revenues Key operational indicators Conclusion Agenda 3
Slide 5: Good trends confirmed
Key YoY 1Q2004 (actual) 11,230 279 11,509 +1.0% 11,621 Gross Euro + 4 Capex 10.0% 1Q Good Balance * 306 See 3.5% 3.3% 2005 04 figures revenue millions glossary underlying 4Operating 1Q04 1Q to 7.9% (pro-forma) 376 between sales 0447.8% PF PF trends 236 ratio 41Q 1Q Margin* growth trends 05 05 and pr
Slide 6: Key messages
Key products Good trends Focus Continuous new Acceleration Fully transformation 5 messages on underlying on impacted track customer successful and toby achieve strengthening base specific launch investment fullitems year ofof objectives Group for all divisions 2005 Guidance reiterated
Slide 7: 1Q 05 key messages: underlying trends
1Q 05 keyLeap Calendar Regulation Underlying 6 messages Cut trends year—Early in mobile and(1)comparability termination Easter year rateson year impacted by specific items
Slide 8: 1Q 05 key messages: retail and broadband
1QPro-forma retail 49% 5.9 Broadband 64.4 mobile Over Business 134k Focus * 05 mm ADSL 340k IP-VPN on key customers Everywhere customer messages customers net 7 access adds (+base (2) 14%* (+72%) market end (+investment 91% users yoy) share yoy)infor France all divisions
Slide 9: 1Q 05 key messages: innovation and research
1Qmain 3 Research 94 72 new 35 January Ma VoIP Lille ADSL2+ E-Photo Business New Continuous 8 05 ligne patents anticipation development Wanadoo inkey Axes the February Spain Everywhere TV Anticipate Lille messages UK, successful filed forbrowser Netherlands Innovation projects March projects Develop
Slide 10: 1Q 05 key messages: gross operating margin
1QCompared Gross + 49.7% 1Q04 Improvement IT&Networks: Sourcing: Acceleration * 0.7 05pt 1Q04 operating key 48.9% cc.€600 messages PF to and of 49.6% continue 2002 1Q05 margin commercial strengthening M*(4) figure savings before data9 (1014) center end commercial of Group of consolidation &March tec
Slide 11: Key messages: 2005 guidance reiterated
1Q 05 Pro +3% CAPEX Upper Gross Over Net Below 2005 Fully *IFRS forma debt to 18.5 guidance on Operating Key range 2.5 guidance 5% to track tobn Revenue end sales message Gross of euros to of reiterated* 10% 10 Margin achieve 2005 Operating growth (5) to 12% fullMargin year objectives
Slide 12: Agenda
Main figures and key messages 1Q 05 revenues Key operational indicators Conclusion Agenda 11
Slide 13: Consolidated revenues by segment
1Q3.5% Euro -1 4,894 5,594 2,079 183 11,230 5,065 5,728 2,053 186 11,509 1Q04 + -1, 5,328 5,581 1,943 200 11,621 Actual % 1Q05 Home Personal Adverse eliminations 12 ,520 actual 524 432 05millions PF -0.2% Group cut +8.9% %PF in-2.6% Consolidated DIrectories mobile +5.2%termination +9.1% Revenues +7.
Slide 14: Personal: continued growth
Personal: Continued France (excl. Turnaround UK Contract 108k Increase Poland on 67.5% Strong ROW + in 64.4 * Cut 6.6% 28% customer contract million in CTR*) increase Termination of net 1Qrobust Centertel net continues base customers, adds 05adds in Key pro-forma revenues rate market Messages – up S
Slide 15: Personal: France positive trends
Personal: France 1,328 -2,217 + 1,892 Positive 1Q04 1485 5.9% 8.7% 75 182 201- 17 Bill -1,300 2,093 (million 31—27 yoy trends 1Q &underlying -Keep 05 2.1% offset euros) Pro-forma Exit yoybyUK growth 1Q04 CTR (million Network PF cuts + Cut 5.6% and euros) Revenues incalendar yoy Termination underlyin
Slide 16: Personal France revenues and ARPU
Personal €2,328M ARPU* 415** +3.5% 591 179 Contract Voice 164 14.8% 1Q04 Non Orange below Continous * See168 591 186 voice glossary—** 1Q05 2Q04 and 11% 430 13.2% France (Euros) 169 Prepay France / Non network % +Increase 3Q04 5.2% 161 of 13.2% Voice 1Q05 rev 156 4Q04 pro-forma revenue Annual Voice
Slide 17: Personal UK revenues
Personal €1,361M 84 54 77 128 38 6 Contract 1Q Multi-quarter Good 108k Prepay New Turnaround * 1Q04 See 273** 49 03 118 high net glossary—** performance 51 2Q still 1Q05 Net Prepay UK additions 574 /270 value 03 -2.4% under continues Adds 3Q 574 turnaround prepay 03 pro-forma pressure ARPU ARPU* on
Slide 18: Personal Poland customer base
Personal € Customer K 8,021 54% 1Q Prepay penetration Growth adds Dynamic * 357M See customers 2004 57% market glossary 55.2% Contract of /Poland 1Q revenue +base* the 10.8% market share 2005 +33.4% 60.3% mobile 17Penetration growth 1Q04 in pro-forma share 64.1% Q1 market 2Q04 056,011 (67.5% rate by
Slide 19: Personal rest of world revenues
Personal € Euro Revenues* 316 -338 +10.9% 122 Romania Strong Dynamism Customer * 1.1% 1,325M See1Q 115 millions glossary +46.2% growth 04PF +27.4% 127 ROW Belgium base / of +120 13.3% 1Q Romania +7.1% of 18 up +23.3%211 146 94 05 customer 28%, Slovakia pro-forma 148revenues revenues base 205 Egypt 2
Slide 20: Mobile broadband offers
Mobile EDGE offer Growth 52k France Strong UK A 19unique key customers through growth launched sales Broadband: continues mobile continue, Business driver atin broadband the on France for end plan initial Everywhere the of future March, offer signscovering are delivering encouraging 85%premium of th
Slide 21: Home: regained momentum
Home: Regained France market 49% Resilience Poland on 96% Strong ROW Broadband 20 localincrease 1Q share calls momentum of 2005 confirmed of market of net Key ADSL adds: share messages on as ADSL the customer +in 10 key apoints new retail driver base competitive yoy for + 168% futureenvironment grow
Slide 22: Home revenues
Home Euro 633 -4,512 1Q04 610 4,407 % 1Q05 Other Carrier Consumer Impact 21 2.3% actual 1,382 1,376 millions Services France (actual) of Services subscription 2,497 2,422 Serv.-3.7% -3.0% -0.4% fees increase phasing and calendar
Slide 23: Home Consumer revenues
Home Consumer -Euro 2,497 With 1Q04 Underlying 22 3.0% 1.2% 17 -millions a28 Calendar France full yoy - 30 Services: quarter underlying business Impact subscription €2,422M affected growth Fixed to by /2,422 -3.0% fees Mobile subscription impact pro-forma Underlying , underlying fees increase busine
Slide 24: Home Consumer number of lines
Home Consumer Number (in 9.2 9.5 8.8 1Q04 One of Full * Without lines millions) 27.6 8.4 impact month 2Q04 France 8.2 stabilized 27.5 ofunbundling Service—Subscription access subscription of 3Q04 (in 27.4 subscription millions) related 4Q04 27.52327.4 fees 1Q05 services fees on expected mass fees: N
Slide 25: Home Consumer voice
Home Consumer—Voice 70.9% Local 245 3Q LD 1Q04 Unlimited Improvement Success Negative Launch 24 042Q04 France 4Q 150 of ofimpact 04 Offers promotional VoIP 75.2% 3Q04 1Q of Consumer (+ France of 05 create 73.9% 4Q04 Market 95k Fixed offers customers Telecom value: 1Q05 Services 73.8% toShare Mobile
Slide 26: Home ADSL
Home ADSL 49.6% 49.0% 6.3 35.0% 1Q04 Net Increase With at New * Incl. theadds momentum high end 2Q04 France—Consumer MaLigne market 47.8% 5.3 0.7 of MSof value 2.0 1.8 coverage: 3Q04 March Market 47.2% 41.7% 0.5 share customers TV on 1.8 4Q04 (+78% retail and & 46.5% Share 43.7% 92% 1.7 MaLigne 1Q05
Slide 27: Multiplay offers and usage
Abundance VOD Multiplay VoIP Home 26.9 4Q04 VisioTelephony Music More * See26.7 and glossary 1Q France: France Games 05 more Offers @Offers towards Offers 26 services Usage on“Home per voice ARPU* customer Networking” incompensate € decrease in market share
Slide 28: Home Carrier Services
Home Carrier Domestic 1383 16 84 1Q04PF Growth Increase 27 -291376 -78 France Services: services in of Domestic Others unbundling unbundling €1,376M Services &revenues IP/ ADSL to -O.4% Operators access (actual) Fixed in–0.6% Domestic to Mobile (pro-forma) Carrier OtherServices Revenuesoffset 1Q05by
Slide 29: Home Poland
Home €789M Number 11,3 1Q04 ADSL 793 1Q Fixed Negative Innovative Dynamic Strong +19% Towards 28 04 631 11,4 2Q04 voice in Poland 2Q customers* Increase / 453 of -8.2% Internet the impact broadband 11,3 04 tariff Fixed revenue 3Q04 integrated 270 3Q 11,4 pro-forma in plans of 04 164 revenue Lines 4Q
Slide 30: Home European broadband
Home €419M European 13.9 8.9 485 UK** UK 1Q Total Spain: Growth On-going * See 04 8.7 Spain 479 717 ROW glossary, ROW Spain** 1Q Strong /in 350 +7.4% 12.4 Broadband successful 05 Netherlands Jordan, broadband 192 1Q04 success 10.2 ** Netherlands pro-forma 204 internet Senegal 10.2 1Q05 European cust
Slide 31: Enterprise: technology transformation
Enterprise: Technology of +72% Evolution + in A 30 20% dual Services IP-VPN transformation ofaccess 1Q Revenues shift customer 2005 towards yoy Key yoy of needs the messages DSLbusiness from andcapacity IP-VPN modelto together services Strong increase of Nomadism
Slide 32: Enterprise revenues
-5.3% Enterprise 2,079 563 149 542 704 131 768 677 -106 1Q04 % Global Oth Business -3.9% Fixed -8.2% Negative Eliminations France Transformation 31 actual 537 146 704 768 Bus. -102 1Q04 2,053 line (pro-forma) -3.9% -8.2% -12% Services 705 %PF Serv. Networks volume -111 Tel PF 1,943 in -9.9% inIn 1Q0
Slide 33: Enterprise transformation: access
Transformation Enterprise Access Nomadic 29% Oléane 28% IP 99% Migration 44% 56% Q1 DSL First Ethernet Technology * See VPN 2004 62% 38% Quarter LL glossary access growth access MAN Q1 end towards shift 2005 05 users 32 (excluding in on of key towards volume—France, 10 the DSL initiatives cities bus
Slide 34: Enterprise transformation: total services
Enterprise Transformation Total 18 +20% 1Q0 ToIP/ revenues +26% Outsourcing Strong PSA P&O Towards Unaxis * 33See 7 415 :Services Nedlloyd VoIP glossary IP Preferences portfolio 5FVPN more yoy 1Q0 – (France Network Revenues services 5of ofthe offers and business including (million (E-telephony Globa
Slide 35: Directories revenues
€ 200M Directories PagesJaunes.fr 32.2 March 44.3 Number 318.9 End Ongoing New (« Launch Actions Strong *Source: 34 Enof offers Savoir 279.5 04 05 Growth March of towards /of recruitment Nielsen +7.4% the on-line development +service 04 »audience ofregulated pro-forma websites, End NetRatings Direct
Slide 36: Agenda
Main figures and key messages 1Q 05 revenues Key operational indicators Conclusion Agenda 35
Slide 37: Top line and operating margin, capex: key messages
TOP &operating Capex: Acceleration Between Balancing Gross 36 10.0% TOP-LINE 10growth toofof 12% Personal margin revenues and programs: (upper profitability before at –network Capex 37.7% range) key commercial on (+0.3 (launch capex messages track pttovs ofsales expenses EDGE 1Q 04PF) ratioinattarge
Slide 38: Gross operating margin before commercial expenses
TOP Actual 49.7% 37.7% 1Q04 Gross * +O.7 37See& pt glossary 1Q04 operating 48.9% 37.4% figures TOP-LINE of Gross PF37.7% 49.6% 1Q05 margin Operating programs: before Margin Increase commercial rateinbefore operating expenses* commercial margins Grossexpenses operating margin*
Slide 39: 1Q05 Capex
1Q05: CAPEX* Euros pro Total % 263 access o/w Full * 38See offorma ADSL 2G 374 IT year revenues Group glossary in CAPEX network 220 -+42.1% millions 3G capex by actual 52 230 CAPEX and key 42 7.8% analysis targets +4.6% pro radio item -18.2% 1Q04 10.0% forma 894 maintained 1Q05 1,157 1Q05/1Q04 +29.4
Slide 40: 1Q05 Group OPEX
1Q05: Group 1Q04 Euros actual Labour Non External commercial Other Total % * Investment 39net of Labour revenues of OPEX* 1Q04 Charges in Pro OPEX key Costs* capitalized millions purchases forma OPEX* on 1Q05 expenses Costs analysis 6,994 customer 62.3% 3,334 2,310 actual 1Q05/1Q04 4,684 1,350 items
Slide 41: 1Q05 Labour costs
1Q05: Labour 2,310 -1.0% 1Q04 Headcounts, 211,299 110,231 1Q FTSA Volume Mix -Total -9,206 + Headcounts FT -3.5% Decrease * 404.4% See 0.7% SA: 04 effect: effect: glossary 1Q04 2,327 French yoy 2Q OPEX FTE costs*, + France: effect: 208,798 108,968 in 2.7% 04 pro Price headcounts labour PF trends: 2,
Slide 42: 1Q05 External purchases
1Q05: External 11.5% 1,350 3,557 1Q04 Focus 81% Other Commercial * 41Seeofglossary 1Q04 1,319 3,552—0.1% non on OPEX 12.0% commercial purchases growth: labour PF 1,390 expenses analysis—non 1Q05 costs, costs commercial commercial 3,334 expenses commercial support in m%euros of labour relates expense
Slide 43: Group transformation programs
Group Description Set Define integrated Excellence 1Q 30 6 2Q 5 Launching CRM: Innovation Marketing Customer 42convergent integrated Exploration Achievements Expectations up new roadmap atransformation FT new Facing loyalty Group & of Everywhere of CRM & group exploration offers Branding first the O
Slide 44: Group transformation programs: service and support
Description Service Define 1Q Single Group Specific 2Q Deployment Organise Action IT Support 43 convergent &Achievements Expectations Network transformation Core development aplan platforms Functions programme target sourcing & to for Components ofapplications Objectives be organisation, SPAC thedef
Slide 45: On track to fulfill full year commitments
On track to fulfill full year commitments 1Q 05 revenues Key operational indicators Conclusion Agenda 44
Slide 46: Fully on track to achieve 2005 objectives
Fullyforma Pro +3% CAPEX Upper 2005 Gross Over Net Below 45 debt to 18.5 IFRS on Operating range 2.5 5% to track tobn Revenue end sales guidance Gross of euros to of 10% Margin achieve 2005 Operating growth to reiterated 12% fullMargin year objectives
Slide 47: Towards Investor Day, June 29, 2005
Towards Day Keeping objectives Investor 46 Ambition the Use lead scheduled of on cash 2008 thetofor integrated 2008 June 29,operator 2005 inmodel Paris Broadband and Innovation everywhere to support growth Transformation Programs to enhance profitability Roadmap supporting our strategic
Slide 48: Slide 48
Slide 49: Glossary
Glossary Contributive Pro calculation Ligne into MaLigne Network Mobile the year increase some Internet period. opening HOME twelve closing 48 average forma the basis. other ADSL” months The ARPU: Network customer France packages ARPU: and in Revenues (1) Visio figures: Since Orange based market, of
Slide 50: Glossary
Glossary Mobile average Churn, involuntarily churn but connections upgrades the handsets 49 last dodiffers not the AUPU: three number via (2) orimpact measure the are an months. between (excluding Monthly indirect removal not ofoverall Orange included ofFor Personal customers channel. of money-back
Slide 51: Glossary
Glossary Gross include Capex: Labour Commercial 50 operating acquisitions Costs: employee (3) expenses: Labour margin profit of costs intangible includes (GOM): sharing presented commissions, and Revenues andshare-based tangible in GOM minus assets, advertising dopayment. external notexcluding inclu
Slide 52: Key figures
Key EUR Revenues Gross Margin GOM CAPEX In 51 %figures of Millions margin Operating (GOM) revenues 884 11,230 5,141 37.7% 1Q04 4,236 7.9% 46,158 894 2004 38.8% 17,923 11.1% 1,157 11,509 1Q04 37.4% 4,306 7.8% 11,621 PF37.7% 4,376 1Q05 10.0%
Slide 53: Key figures
Key figures EUR Revenues Labour Non costs GOM 52 labour Millions 4,684 4,236 costs 11,230 19,385 -17,923 2,310 Costs 1Q04 46,158 4,876 8,850 4,306 200411,509 4,942 2,327 4,376 1Q04 2,303 11,621 PF 1Q05
Slide 54: Group revenues by segment
Group EUR Personal Home ow Enterprise Directories Inter Eliminations Total Revenues 53 UK France Poland ROW segment Millions consolidated 5,594 Consolidated 1,422 4,894 1,228 393 11,230 2,079 2,013 4,512 272 725 183 22,440 -1,520 5,833 1,584 1Q04 20,564 1,247 3,011 978 5,290 8,235 8,365 18,002 46,15
Slide 55: Personal: customers
Personal: 000 Personal ow Excluding 54 Belgium Romania Slovakia Switzerland Netherlands Egypt other** customers France UK Poland ROW subscribers 1,739 MVNO; 3,240 2,359 1,767 2,377 13,313 1Q03 13,507 988 1,037 1,826 19,231 4,739 3,488 2,418 1,852 2,590 ** 1,003 13,258 2Q03 1,057 1,984 including 5,08
Slide 56: Personal: revenues
Personal: EUR Personal ow 55 Belgium—IFRS Belgium—French Romania—IFRS Romania—French Slovakia—IFRS Slovakia—French Switzerland—IFRS Switzerland—French Netherlands—IFRS Netherlands—French Egypt—IFRS Egypt—French Millions France—IFRS France—French UK—IFRS UK—French Poland—IFRS ROW—IFRS ROW—French Reve
Slide 57: Personal: network revenues
Personal: EUR Personal ow 56 Belgium Belgium—French Romania Romania—French Slovakia Slovakia—French Switzerland Switzerland—French Netherlands Netherlands—French Egypt Egypt—French Millions France—IFRS France—French UK—IFRS UK—French Poland—IFRS Network - IFRS -- IFRS 1Q03 IFRS - 89 IFRS Revenues Ga
Slide 58: Personal: non-voice revenues
Personal: Non-voice % Personal ow 57 1Q03 Belgium—IFRS Belgium Slovakia—IFRS Slovakia Switzerland—IFRS Switzerland Netherlands—IFRS Netherlands 2Q03 France—IFRS France UK—IFRS UK Poland—IFRS Non revenues -French -French voice 3Q03 -French -French as 16.2% 11.5% revenue 4Q03 17.2% Gaap Gaap %16.9% 16
Slide 59: Personal: annual rolling churn
Personal: Annual % Personal Overall Contract Prepaid * 58See 1Q03 glossary rolling churn 2Q03 churn churn** France UK Churn* 21,1% 19,0% 29,8% ** 3Q03 churn 13,9% 23,1% in including key 4Q03 20,4% 19,9% in 29,2% 22,6% 13,2% % markets 22,7% 1Q04 migrations 19,6% 20,6% 29,0% 23,7% 12,4% 22,8% 2Q04 18,
Slide 60: Personal: voice minutes
Personal: Voice Minutes Personal Overall Contract Prepaid * 59See glossary. AUPU* AUPU per AUPU France UK Usage month in 142 140 47 56 220 322 in minutes 48 56 Key 1Q03 145 141 223 323 47Markets 56147 142 48 55 226 324 2Q03 48 54 151 142 230 323 48 54 3Q2003 156 143 237 325 50 143 54 161 50 53 242 3
Slide 61: Personal: ARPU
Personal: 1Q03 Personal Overall Contract Prepaid Voice Data * 60SeeARPU glossary. ARPU 2Q03 ARPU ARPU France UK France 3Q03 - -in IFRS French IFRS French -£-in IFRS French and IFRS French 4Q03 Euros 57 45 372 228 Gaap UK Gaap 415 273 179 128 48 591 574 Gaap 1Q04 373 221 Gaap ARPU*s 428 274 188 122 3
Slide 62: Personal: ARPU in euros
Personal: Euros Belgium—IFRS Belgium—French Romania—IFRS Romania- Slovakia—IFRS Slovakia- Switzerland—IFRS Switzerland- Netherlands—IFRS Netherlands- Egypt—IFRS Egypt- * 61See glossary. 1Q03 French ROW French French 2Q03 French 166 Gaap ARPU*s 440 206 147 Gaap Gaap Gaap 162 3Q03 673 348 271 Gaap 446
Slide 63: Home: total revenues
Home: EUR Total ow Home 62 Consumer Carrier Other Millions Home France Poland Rest Revenues revenues Services of 5,594 4,512 725 the Services 1Q04World 859 5,728 633 4,515 1,382 1Q04PF 789 2,497 635 393 5,581 4,407 1,383 610 390 1Q05 2,497 1,376 419 2,422
Slide 64: Home: France local lines
Home: France Local—Home Long Number In Consumer Home * 63Including millions % 1Q03 of Distance France* Poland France 79.1% Number total ofwith lines 1Q03 2Q03 full customers 63.3% 28.9% 10,880 77.8% -28,178 packages unbundling of -2Q03 3Q03 Lines, 63.3% 31.3% 76.7% 10,948 28,051 3Q03 1Q03 4Q03 Marke
Slide 65: Home: broadband customers
Home: 000s France* UK Spain Netherlands Poland Total * 64Including 681Q03 1,713 120 91 Number 130 1,240 123 131 2Q03 145 1,964 MaLigneTV 184 158 1,394 148 of 173 203 3Q03 2,243 broadband 192 190 238 1,564 235 316 204 4Q03 2,690 244 monoplay 289 1,816 442 235 340 1Q04 customers 350 3,113 569 253 2,12
Slide 66: Enterprise: total revenues
Enterprise: EUR Total Business Other Global 65 Millions Enterprise business Services Fixed networks Revenues 1Q04 services line 563 2,079 intelephony 537 1Q04PF France 2,053 in542 France 1,943 704 1Q05 France 704 149 677 768 146 768 131 705
Slide 67: Enterprise: number of lines
Enterprise: In Number 66 millions of lines 1Q03 Number5,897 2Q03 of Lines 5,913 3Q035,915 4Q035,933 1Q045,919 2Q04 5,914 3Q04 5,907 4Q04 5,930 1Q05 5,930
Slide 68: Headcount
Headcount Headcount, End FTSA French International Total * 67Actual ofGroup 115,992 the Subsidiaries figures period trends End 231,272 95,658 114,234 of1Q03 period* 19,622 91,675 225,284 112,488 2Q03 19,375 91,186 222,796 3Q03 110,814 19,122 87,923 4Q03 217,820 110,231 1Q04 19,083 83,297 211,299 2Q0
Slide 69: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANCE TELECOM Date: April 28, 2005 By: / S/ PIERRE HILAIRE Name: Pierre Hilaire Title: Director of Fina