Orange Sa · EURONEXT:ORA
Orange Sa — FY2001 Earnings Presentation
74 slides from Orange Sa's earnings presentation, 2002
Slide 1: Greetings in multiple languages
g’day hallo buon giorno hello goedemorgen hej guten tag hola bonjour
Slide 2: Jean-François Pontal, Chief Executive Officer
Jean-François Pontal chief executive officer
Slide 3: Four underlying themes
four underlying themes � powerful operational & financial performance � strategic developments � strengthened position for growth � accelerated financial targets
Slide 4: Strong operational performance
strong operational performance � impressive share of customer growth � no.1 operator in France and UK � further momentum through rebranding � encouraging ARPU trends
Slide 5: Non-voice revenues increasingly material
non-voice revenues increasingly material as a percentage of network revenues - 2001 14.0% 12.0% 11.2% 10.2% 10.0% 7.9% 7.9% 8.0% 6.7% 6.3% 6.0% 3.8% 4.0% 2.0% 0.6% 0.0% UK Switzerland Denmark Belgium France Netherlands Slovakia Romania
Slide 6: Strong financial performance
strong financial performance � turnover up 25% � EBITDA up 86% � four fold increase in operating income � first profit before tax, goodwill amortisation & minority interests
Slide 7: Strategic developments
strategic developments
Slide 8: Strengthened position for growth
strengthened position for growth � larger and higher value customer base � emerging voice trends � accelerating non-voice usage growth � best customer loyalty
Slide 9: Accelerated financial targets
accelerated financial targets � EBITDA margins � France (40% by 2003/4) � UK (35% by 2003/4) � Rest of World
Slide 10: Delivering the Orange vision
delivering the Orange vision � in touch and in control � content rich services � underpinned by the brand � building the best networks � innovative, customer focused services
Slide 11: Graham Howe, Deputy CEO & CFO
Graham Howe deputy chief executive & chief financial officer
Slide 12: Delivering our vision in 2001
delivering our vision in 2001 � widened leadership in France successful rebranding 48% share of reported growth � established leadership in UK largest active customer base 36.6% share of reported growth � rest of world progress strong rebranding of Mobilix in Denmark refocused within markets � encou
Slide 13: Performing ahead of expectations
performing ahead of expectations � accelerated EBITDA growth � ROW becomes EBITDA positive � four fold increase in operating income � first annual profit before tax, goodwill amortisation and minority interests � tangible capex covered by EBITDA
Slide 14: Group financial highlights
group financial highlights m 2001 2000 turnover 15,087 25% 12,059 EBITDA 3,288 86% 1,765 operating income 1,440 3.8 x 383 interest (438) - (392) other non-operating expenses (12) - equity in net loss of affiliates (604) (400) profit/(loss) before tax, goodwill amortisation and minority interests 386
Slide 15: Exceptional impairment charge
exceptional impairment charge m MobilCom (3,428) Ananova & Wildfire (207) total (3,635)
Slide 16: Group financial highlights
group financial highlights m 2001 2000 profit/(loss) before tax, goodwill amortisation and minority interests 386 (409) tax (684) (459) goodwill amortisation (556) (612) minority interests (32) 159 loss before impairment charge (886) (1,321) exceptional impairment charge (3,635) - net loss (4,521) (
Slide 17: Strong balance sheet
strong balance sheet at 31 December 2001 m 2001 total long-term assets 28,198 total current assets 5,379 total assets 33,577 shareholders’ equity 18,830 minority interests 142 total long-term liabilities 4,418 total current liabilities 10,187 total liabilities and shareholders’ equity 33,577
Slide 18: Group cashflow statement
group cashflow statement m 2001 2000 funds generated from operations 2,448 1,084 net capex (including licences) capex (3,018) (3,330) vendor financing 234 - licences (873) (7,268) changes in working capital 208 559 free cash flow (1,001) (8,955) financial investments (669) (1,103) proceeds from the
Slide 19: Capex covered by EBITDA
capex covered by EBITDA EBITDA minus tangible capex* 2001 2000 m France 1,372 437 UK 11 (368) ROW (1,373) (1,631) group 10 (1,562) 2000 figures are pro forma * using balance sheet additions
Slide 20: Capital expenditure
capital expenditure tangible assets 3,327 3,278 m 1,108 1,199 +8% 1,127 +12% 1,266 1,092 813 - 26% 2000 2001 France UK ROW
Slide 21: Group capital expenditure
group capital expenditure projected tangible capex / turnover 35% 30% 25% 20% 15% 10% 5% 0% 1999 2000 2001 2002 2003 2004 2005 2006
Slide 22: Key drivers
key drivers
Slide 23: 29% growth in customer base
29% growth in customer base group controlled subsidiaries - reported customer base in thousands +29% 39,271 30,501 9,061 +43% 6,356 12,387 +26% 9,834 14,311 17,823 +25% 2000 2001 France UK ROW note: proportionate customers increased by 25% from 31.2 million at 31 December 2000 to 39.1 million at 31
Slide 24: Focusing on contract growth
focusing on contract growth Orange France Orange UK 80% 80% 70% 70% 60% 60% 50% 50% % contract % contract 40% 40% 30% 30% 20% 20% 10% 10% 0% 0% Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q 2 2001 Q3 2001 Q4 2001 customer mix net connection
Slide 25: Turnover increased 25%
turnover increased 25% +25% 15,087 m 2,941 +34% 12,059 2,193 5,337 +27% 4,211 6,876 +21% 5,690 2000 2001 France UK ROW note: after intra-group eliminations of 67m in 2001 and 35m in 2000
Slide 26: Recurring GSM network revenues up 31%
recurring GSM network revenues up 31% m +31% 13,434 2,677 +37% 10,231 1,949 4,590 +39% 3,300 6,234 +24% 5,017 2000 2001 France UK ROW note: after intra-group eliminations of 67m in 2001 and 35m in 2000
Slide 27: 86% EBITDA growth
86% EBITDA growth 17% margin 24% margin m +86% 3,288 16 1,277 1,765 759 2,185 1,529 (443) (190) (80) 2000 2001 France UK ROW group costs note: margins as a percentage of GSM network revenues
Slide 28: EBITDA before SACs
EBITDA before SACs +28% 5,319 m 4,144 2,031 2,379 3,288 1,765 2000 2001 EBITDA SACs
Slide 29: Orange France
Orange France
Slide 30: France: EBITDA
Orange France: EBITDA stronger growth 3,105 m 2,564 920 1,924 1,035 +43% 980 2,185 1,529 944 1999 2000 2001 EBITDA SACs
Slide 31: France: EBITDA margins
Orange France: EBITDA margins accelerating our target 35% 31% 25% 1999 2000 2001 revised target: EBITDA margin to reach 40% by 2003/2004 note: margins as a percentage of network revenues
Slide 32: France: customer base
Orange France: customer base maintaining market leadership 48.7% 48.2% 48.2% market share +25% 17,823 customers (000) 14,311 47% 10,051 45% 36% 55% 53% 64% 1999 2000 2001 contract prepay source: ART note: Orange France´s contract and prepay bases have been restated above for the reclassification of
Slide 33: France: customer growth
Orange France: customer growth increased share of growth following rebranding share of net connections 47.7% 48.0% 47.0% net connections (000) 4,512 4,260 3,512 55% 54% 66% 46% 45% 34% 1999 2000 2001 contract prepay source: ART note: Orange France´s contract and prepay net connections have been rest
Slide 34: France: annual rolling churn
Orange France annual rolling churn contract prepay overall 22.7% 23.4% 20.5% 20.6% 18.6% 17.2% Dec 00 Dec 01
Slide 35: France: stimulating contract usage
Orange France stimulating contract usage (mins) contract prepay overall 207 213 147 138 58 51 Dec 00 Dec 01 contract usage has increased by a CAGR of 5% since 1999 note: annual rolling AUPU
Slide 36: France: average revenue per user
Orange France average revenue per user ( ) contract prepay overall 592 583 426 392 179 175 Dec 00 Dec 01 note: annual rolling ARPU
Slide 37: France: average revenue upward quarterly trends
Orange France: average revenue upward quarterly trends ( ) contract prepay overall 570 582 594 585 384 394 404 387 162 179 193 163 Q1 01 Q2 01 Q3 01 Q4 01 note: annualised quarterly ARPU
Slide 38: France: subscriber acquisition costs driven down
Orange France subscriber acquisition costs driven down ( ) contract prepay overall 226 201 155 135 96 79 Dec 00 Dec 01 note: annual rolling SACs
Slide 39: France: acquisition & retention costs
Orange France:acquisition & retention costs continued fall as a percentage of turnover 25% 21% 1% 16% 3% 3% 24% 18% 13% 1999 2000 2001 acquisition retention note : acquisition costs were �980m in 1999, �1,035m in 2000 and �920m in 2001 retention costs were �47m in 1999, �140m in 2000 and �201m in 20
Slide 40: France: operating cost ratios
Orange France operating cost ratios 40% 35% 35% 30% selling, general 27% & administration 28% 25% 25% 25% cost of sales 22% 24% 24% 20% 1998 1999 2000 2001 note: operating costs (excluding SACs) as a percentage of network revenues
Slide 41: France: key messages
Orange France key messages � increased share of growth following rebranding � accelerated EBITDA margin growth and targets � positive signs on ARPU � significant decline in acquisition costs
Slide 42: Orange UK
Orange UK
Slide 43: UK: EBITDA
Orange UK: EBITDA continued underlying growth 1,976 m 1,553 699 794 872 +68% 1,277 492 759 380 1999 2000 2001 EBITDA SACs
Slide 44: UK: EBITDA margins
Orange UK: EBITDA margins accelerating our target 28% 23% 20% 1999 2000 2001 revised target: EBITDA margin to reach 35% by 2003/2004 note: margins as a percentage of network revenues
Slide 45: UK: customer base
Orange UK: customer base becoming largest UK operator *28.2% market share 24.5% 12,387 customers (000) 9,834 20.4% 70% 4,894 69% 50% 31% 30% 50% 1999 2000 2001 contract prepay source: companies, press releases and Orange estimates * market share of active customers in 2001
Slide 46: UK: customer growth
Orange UK: customer growth increasing share of market growth share of net connections 36.6%* 30.6% 25.0% net connections (000) 4,940 2,731 2,553 87% 72% 73% 28% 27% 13% 1999 2000 2001 contract prepay source: company’s press releases and Orange estimates * share of reported net connections in 2001
Slide 47: UK: annual rolling churn
Orange UK annual rolling churn contract prepay overall 26.3% 23.8% 19.7% 18.4% 15.5% 15.2% excluding migrations 9.2% 5.3% Dec 00 Dec 01
Slide 48: UK: contract usage increases another 11%
Orange UK contract usage increases another 11% contract prepay overall 335 303 159 138 68 57 Dec 00 Dec 01 contract usage has increased by a CAGR of 21% since 1999 note: annual rolling AUPU (mins)
Slide 49: UK: average revenues
Orange UK: average revenues (£) contract ARPU increases another 5% contract prepay overall 525 550 280 246 126 121 Dec 00 Dec 01 contract ARPU has increased by a CAGR of 5% since 1999 note: annual rolling ARPU
Slide 50: UK: average revenue upward quarterly trends
Orange UK: average revenue (£) upward quarterly trends contract prepay overall 543 543 563 550 248 237 249 251 122 116 121 123 Q1 01 Q2 01 Q3 01 Q4 01 note: annualised quarterly ARPU
Slide 51: UK: voice ARPU growth
Orange UK: voice ARPU growth (£) 2.2% increase in 2001 520 518 516 510 507 500 496 490 490 480 470 Dec 99 Jun 00 Dec 00 Jun 01 Dec 01 contract voice ARPU has increased by a CAGR of 3% since 1999 note: annual rolling voice ARPU
Slide 52: UK: subscriber acquisition costs
Orange UK subscriber acquisition costs (£) contract prepay overall 214 196 100 83 49 41 Dec 00 Dec 01 note: annual rolling SACs
Slide 53: UK: acquisition & retention costs
Orange UK: acquisition & retention costs continued fall as a percentage of turnover 26% 23% 5% 19% 4% 6% 21% 19% 13% 1999 2000 2001 acquisition retention note : acquisition costs were �492m in 1999, �794m in 2000 and �699m in 2001 retention costs were �119m in 1999, �167m in 2000 and �330m in 2001
Slide 54: UK: operating cost ratios
Orange UK operating cost ratios 35% 33% cost of sales 31% 30% 30% 30% 28% 28% selling, general 27% 27% & administration 25% 20% 1998 1999 2000 2001 note: operating costs (excluding SACs) as a percentage of network revenues
Slide 55: UK: key messages
Orange UK key messages � largest UK operator* � accelerated EBITDA margin growth and targets � successful focus on contract customers � consistent growth in contract usage and revenues � quarterly increases in blended ARPU * in terms of active customers
Slide 56: Rest of world
rest of world
Slide 57: Key European controlled companies: EBITDA
key european controlled companies EBITDA positive in 2001 ( m) margins as % of network revenues 38% 38% 14% 19% 49% 53% 197 153 143 82 76 64 (39) 7 Sweden Netherlands Denmark Switzerland Slovakia Belgium Romania (69) (60) 31% collective EBITDA margin in 2001 (277) (277) (336) start up developing est
Slide 58: Key European controlled companies: turnover
key european controlled companies 34% increase in turnover ( m) 881 +45% 587 +23% 363 378 +27% +69% 194 235 +22% +34% 215 159 479 176 297 607 Netherlands Denmark Switzerland Slovakia Romania Belgium developing established 2000 2001 note:excludes intra-segment eliminations total ROW turnover:2001 = �
Slide 59: Key European controlled companies: customer growth
key european controlled companies 43% customer growth customer base in thousands 2,547 +42% 1,637 1,114 1,205 +34% +9% 925 +95% 600 +18% +16% 1,023 517 786 617 1,222 1,800 Netherlands Denmark Switzerland Slovakia Romania Belgium developing established 2000 2001 note:total ROW customer base 9.1 milli
Slide 60: Key European controlled companies: ARPU
key european controlled companies average revenue per user ( ) 635 618 422 395 348 328 269 276 265 259 242 225 Netherlands Denmark Switzerland Slovakia Romania Belgium developing established 2000 2001 note: overall annual rolling ARPU
Slide 61: Key European controlled companies: tangible capex
key european controlled companies building quality networks - tangible capex ( m) 361 322 212 199 177 161 117 99 93 90 58 51 36 0 Sweden Netherlands Denmark Switzerland Slovakia Romania Belgium start up developing established 2000 2001 note: total ROW capex: 2001 = 1,199m; 2000 = 1,108m
Slide 62: Rest of world: key messages
rest of world key messages � EBITDA positive, well ahead of IPO target � healthy margins already achieved in established businesses � building best in country networks � strengthened platforms for growth
Slide 63: Associate companies
associate companies 2001 key achievements MobilCom � reporting 21 March 2002 Wind* � consolidated revenues doubled to 2,794m � EBITDA was positive 46m � 7.9m wirefree customers at 31 December 2001 TA Orange (Thailand) � soft launch mid December 2001 � full commercial launch expected at end of March
Slide 64: Non-voice trends
Non-VoIice trends
Slide 65: Non-voice revenues increasingly material
non-voice revenues increasingly material as a percentage of network revenues - 2001 14.0% 12.0% 11.2% 10.2% 10.0% 7.9% 7.9% 8.0% 6.7% 6.3% 6.0% 3.8% 4.0% 2.0% 0.6% 0.0% UK Switzerland Denmark Belgium France Netherlands Slovakia Romania
Slide 66: Data revenues building towards target
data revenues building towards target 25% target 25% of network 20% revenues by 2005 UMTS 15% GPRS 10% WAP HSCSD 5% SMS 0% 1999 2000 2001 2002 2003 2004 2005 note: data as a percentage of network revenues (UK)
Slide 67: France: SMS messages sent
Orange France: SMS messages sent growth accelerating as market matures millions of messages +107% 1,518 735 190 1999 2000 2001 note: total SMS including non-chargeable
Slide 68: UK: SMS messages sent
Orange UK: SMS messages sent SMS usage accelerating millions of messages 5,181 +115% 2,405 285 1999 2000 2001 note: total SMS including non-chargeable
Slide 69: UK: SMS outperformance
Orange UK: SMS outperformance UK SMS market share relative to customer market share 5% relative market share 0% Orange Vodafone O2 One-2-One -5% source: mobile data association. Share of SMS in 2001 less share of active customer base at Q3 2001
Slide 70: Active SMS users
active SMS users % of customer base using SMS 64% 65% 60% 50% 51% 46% 43% 40% 37% 29% 25% 26% 21% 22% 17% 18% J u l De c Jun Dec J u l Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 00 00 01 01 00 00 01 01 00 00 01 01 00 00 01 01 UK prepay contract France
Slide 71: Average SMS usage increasing
average SMS usage increasing average messages sent per active SMS user 73 60 56 52 47 45 43 41 39 38 37 32 32 25 21 22 J u l Dec Jun Dec Jul Dec Jun Dec Jun D e c Jun Dec Jun Dec Jun Dec 00 00 01 01 00 00 01 01 00 00 01 01 00 00 01 01 UK prepay contract France
Slide 72: 2001: a strong performance
Orange 2001: a strong performance � accelerating EBITDA targets � four fold increase in operating income � positive ARPU trends � non-voice revenue growth continues � strengthened position in all markets
Slide 73: Accelerating targets
accelerating targets � France: 40% EBITDA margin by 2003/2004 � UK: 35% EBITDA margin by 2003/2004 � rest of world controlled operations: developing: EBITDA positive by 2003 established: 35% EBITDA margin by 2003
Slide 74: The future's bright, the future's Orange
the future’s bright, the future’s Orange