Orange Sa · EURONEXT:ORA
Orange Sa — Investor Day (December 2017)
55 slides from Orange Sa's investor day presentation, Dec 7, 2017
Slide 1: Investor Day 2017
Investor Day 2017 7 December 2017
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there c
Slide 3: Orange is back to sustainable growth
Orange is back to sustainable growth
Slide 4: Back to growth in revenues and adj. EBITDA
Back to growth in revenues and adj. EBITDA Revenues Adjusted EBITDA yoy cb in % yoy cb in % 4
Slide 5: #Essentials2020
#Essentials2020 An unmatched 1 Best networks customer experience based on 2 Enriched and innovative services 3 World class customer care
Slide 6: Orange is a fully integrated network operator
Orange is a fully integrated network operator Network Enriched services Addressable markets B2C B2B Wholesale 3 value creation levers 6
Slide 7: Leader in Europe with 25m FTTH connectable lines
Leader in Europe #1 FTTH connectable lines* In Europe with 25m FTTH connectable lines 25m 20m 13m Spain France Poland 8m 11.3m 3m 8.4m 2.2m 2m 2012 2013 2014 2015 2016 Q3’17 7 * Including other very high broadband technologies, o/w 21m FTTH only
Slide 8: 70% of FTTH deployment by Orange in France, including PIN
70% of FTTH deployment by Orange in France, including PIN Maintain existing leadership Deployed by Orange Deployed by others Orange addressable markets B2C B2B Orange Wholesale 70% B2C Others B2B 2014* 2015* 2016* Q3’17* 2022** 8 * Source ARCEP, November 2017; ** Orange estimates
Slide 9: Continued leadership in France
Continued leadership in France Very dense and Medium dense area targets Low dense (PIN) area targets Orange FTTH connectable homes Share of deployment done by Orange Deployed Deployed by others by others 20m ~85% ~10m ~30% 100% ~70% Deployed and Deployed and of the area maintained of PIN area mainta
Slide 10: Fiber deployments accelerated in Spain and on track in Poland
Fiber deployments accelerated in Spain and on track in Poland Spain Poland Orange FTTH* connectable Orange FTTH connectable homes ambition homes ambition 2020 2020 16m 2020 2018 >5m 2018 14m Q3’17 3.5m Q3’17 11.3m 2.2m 10 * Including other very high broadband technologies
Slide 11: Mobile network leadership
Mobile QoS in our 8 European countries network #1 in six European countries** #2 in two European countries** leadership 4G #1 customer base in 7 of our European countries* Deployed in 13 out of France Spain Poland Romania Belgium Slovakia Moldova our 21 African countries 12.7m 9.0m 5.4m 2.9m 1.6m 1.
Slide 12: Convergence commercial leadership
Convergence 1. Best network #1 Leader in Europe in terms of convergent B2C commercial customers in million 10m leadership 9m Share of convergent broadband B2C customers 8m Spain France Poland 83% 59% 47% 2015 2016 3Q17 12
Slide 13: Network evolution
Network evolution
Slide 14: Network leadership
Influence the telecom The right Major Programmes ecosystem and investments at the All-IP networks standardisation right time Virtualisation & Automation Home access above 1 Gbit/s 5G Network leadership 14
Slide 15: Our journey towards IP networks
Our journey towards IP networks 70% 84% 7.2m 90% Share of B2C IP- Share of IP-based IP-TV customers Share of copper in the based fixed voice fixed broadband lines in Europe* aggregation network lines removed and replaced by Fibre in France 15 * 9 million TV customers including satellite
Slide 16: Virtualisation and automation
Virtualisation and automation AI data BIG 75 Spain 20% “Easy GO Network” Leading country Savings in B2B solution in all-market Group- network available in 75 wide virtualisation operations OPEX countries 16
Slide 17: Investments in FTTH are future proof
Investments in FTTH are future proof 10 Gbp/s and more ! 17
Slide 18: Orange investments in 4G are 5G-ready
Orange investments in 4G are 5G-ready Enhanced mobile broadband 10 times better than 4G Deployment starting 2020 x10 CAPEX/Sales expected stable 5G drivers Network slicing Fixed on 5G New “vertical” services Wireless access to terminate fibre in CAPEX based on maturity suburban and semi-rural areas.
Slide 19: Enriched and innovative services
Enriched and innovative services
Slide 20: Content aggregation & distribution strategy
Content aggregation & distribution strategy 20
Slide 21: Financial services
Financial services
Slide 22: Slide 22
Slide 23: Leveraging Orange Brand
Leveraging Orange Brand the most valuable Brand in France Fishing pool +24m mobile customers +6m Customers of Groupama-Gan Optimised Customer segmentation Thanks to solid experience on telecom Cross Selling >60m customer visits in our shops >7 million sales acts 23
Slide 24: Orange Bank will generate additional value
Orange Bank will generate 1. Unlock value from our existing assets additional value for the Group 2. Active Balance sheet management 3. Commissions, Fees and Services 4. Lean costs 4 3 2 1 Telco Bank Group level level level 24
Slide 25: Enriched and innovative services for B2C
Enriched and innovative services for B2C 25
Slide 26: Enriched and innovative services for B2B
Enriched and innovative services for €2.1bn IT & Integration Services B2B revenues in FY16 OBS have evolved to better answer the increasing demand for integrated services of IT and connectivity 26
Slide 27: Enriched and innovative services for B2B
Enriched and Collect innovative Transport services for B2B Store & compute Support the digital Analyse transformation of B2B customers throughout Secure the data journey 27
Slide 28: Accelerate transformation through M&A
Accelerate transformation through M&A 28
Slide 29: Accelerate transformation through M&A
Accelerate In-market consolidation transformation Mobile Mobile + Mobile + Fixed Infrastructure through M&A Digitization and operational efficiency Artificial intelligence Bot B2C enriched services Financial Home services services B2B transformation Cloud Cyber Big Data IT services security SDN/NFV
Slide 30: World class customer care
World class customer care
Slide 31: World class customer care
World class 357 customer care Smart stores 46% of digital interactions Leadership in NPS in 16 countries representing 64% of 15m our global Visitors on “Orange et moi” app customers base 31
Slide 32: Continue the internal transformation
Continue the internal transformation 32
Slide 33: Develop internal skills and attract new talents
Develop internal skills and attract new talents 33
Slide 34: Federate people to the company project
Federate people to the company project 10% Employee voting right ambition 34
Slide 35: Investor Day 2017
Investor Day 201 7 > = *
Slide 36: Key topics
Key topics 1 Fiber 2 Wholesale 3 Opex 4 Capex Value creation 36
Slide 37: Key topics
Key topics 1 Fiber 2 Wholesale 3 Opex 4 Capex Value creation 37
Slide 38: FTTH rollout and commercial success in France
FTTH rollout and commercial success in France 8.4m 1.8m Orange FTTH network monetisation rate FTTH connectable lines FTTH customers (in millions) (in millions) 8.4 1.8 8.4m Deployed 6.9 1.5 by others 100% 5.1 6.9m deployed 1.0 by Orange 3.6 Wholesale 1.7 2.6 0.6 monetisation rate* 35% 59% 0.3 Overal
Slide 39: FTTH profitability drivers on track in France
FTTH profitability drivers on track in France ARPU uplift Market share Convergence FTTH vs ADSL growth Today +€8 +€7 +€6.2 +0.4pt 59% % of broadband B2C customer base +€5 in France* >+2 pts -3.8 pts Churn differential in Paris* # of mobile lines per 2015 Q3’17 2018 Long term * as of end of Sept. 201
Slide 40: FTTH profitability drivers on track in France
FTTH profitability drivers on track in France ARPU uplift Market share Convergence FTTH vs ADSL growth Today +€8 +€7 +€6.2 +0.4pt 59% % of broadband B2C customer base +€5 in France* >+2 pts -3.8 pts Churn differential in Paris* # of mobile lines per 2015 Q3’17 2018 Long term * as of end of Sept. 201
Slide 41: Positive net effect in adjusted EBITDA in PIN areas
Positive net effect in adjusted EBITDA in PIN areas Retail Wholesale Stable market share on the long term FTTH wholesale recurring fees revenues on deployed lines BB Market growth est. (+20% over 2017-2025) Ducts revenues ARPU uplift est. (>€8 on the long term) Progressive loss of copper wholesale U
Slide 42: Expected incremental IRR of FTTH
Expected incremental IRR of FTTH France Spain Poland ~2x Orange France’s ~3x Orange Spain’s ~2x Orange Poland’s WACC WACC WACC 42
Slide 43: Key topics
Key topics 1 Fiber 2 Wholesale 3 Opex 4 Capex Value creation 43
Slide 44: 2020 is the new peak year in fixed wholesale revenue in France
2020 is the new peak year in fixed wholesale revenue in France New peak in 2020 FTTH co-financing wholesale revenue ULL wholesale revenue 2015 2018 2020 tomorrow 44
Slide 45: Key topics
Key topics 1 Fiber 2 Wholesale 3 Opex 4 Capex Value creation 45
Slide 46: Cost efficiency program
Cost efficiency program Non exhaustive list of KPIs program total gross Group operational Customer management efficiency program saving over 2015-H1’17 efficiency plan % digital interactions [out of total care] in Europe 46% in 2017 supports increase €375m in adjusted % digital commercial transactio
Slide 47: Efficiency programmes
Efficiency programmes New OPEX Chrysalid Explore2020 BuyIn ambition €3bn >€3bn ~€0.5bn Gross saving Gross saving Gross saving Gross saving over 2011-2014 over 2015-2018 over 2015-2016 over 2019-2020 €2.6bn OPEX €2.6bn OPEX €1bn OPEX over 4 years over 4 years over 2 years Orange close to the top quar
Slide 48: Key topics
Key topics 1 Fiber 2 Wholesale 3 Opex 4 Capex Value creation 48
Slide 49: Decreasing CAPEX starting from 2019
Decreasing CAPEX starting from 2019 7.4 7.2 7.0 2016 2017 2018e 2019e 2020e 49
Slide 50: Track record on CAPEX efficiency
Track record on CAPEX efficiency CAPEX to sales ratio 26% Telecom Italia 24% 22% Vodafone 20% 18% Telefonica Orange 16% DT 14% Orange excl. FTTH 12% BT 10% 2009 2010 2011 2012 2013 2014 2015 2016 50
Slide 51: Group-wide effort on CAPEX efficiency
We have launched a group-wide effort on CAPEX Efficiency levers Areas of improvement Unitary cost Fixed Sourcing Mobile Volumes Ways of working IT & Service Platform -15% CPE Specifications changes Real Estate 51
Slide 52: Sustain growth and value creation
Sustain growth and value creation Adjusted EBITDA EBITDA Growth acceleration in 2018 vs 2017 Value Operating Cash Flow* creation Growth acceleration in 2018 vs 2017 ROCE OpCF* Operating ROCE (telecom)** Growth in 2017 and in 2018 *Adjusted EBITDA – CAPEX 52 ** Excluding acquisition and disposal
Slide 53: Investor Day 2017
Investor Day 201 7 > = *
Slide 54: Short and mid term guidance
Short and mid term guidance 2017 2018 2019-2020 Adjusted EBITDA ~+2% Higher growth rate vs 2017 Growth CAPEX €7.2bn €7.4bn (peak) Decrease Operating Cash Flow * Slightly positive Higher growth rate vs 2017 Growth Net debt / Adjusted EBITDA (telecom) Around 2x in the medium term Dividend New floor of
Slide 55: Investor Day 2017
Investor Day 201 7 > = *