Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — FY2005 Earnings Presentation
101 slides from Orange Sa's earnings presentation, Feb 14, 2006
Slide 1: Delivering NExT
Delivering NE X T February 14 th , 2006
Slide 2: Cautionary Statement
Cautionary Statement This presentation contains forward-looking statements and information on France Telecom's objectives, notably for 2006. Although France Telecom believes that these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and
Slide 3: Delivering NExT: Introduction: where are we?
Delivering NExT Introduction: where are we? Transform France Telecom to deliver NExT 2005 results and 2006 trends Use of cash and conclusion
Slide 4: 2005: Despite pressure on pro forma revenue growth, financial commitments achieved
2005: Despite pressure on pro forma revenue growth, financial commitments achieved Revenues 84.1m total mobile clients (+15.9% yoy PF*), 1.5m mobile broadband clients end of Stabilisation of ADSL market share in France, 1.6m Livebox in France GOM* In line with initial guidance (excluding EUR256m fin
Slide 5: FY 2005: strong growth of net income group share
FY 2005: strong growth of net income group share Gross Operating Margin (including fine & consolidation of Amena) + 2.8% As a % of revenues Actual FY04 17,923 38.8% FY05 18,416 37.6% Euro millions Proforma* % chg + 0.8% G.O.M. rate before commercial expenses Revenues 46,158 49,038 + 6.2% +2.5% Actua
Slide 6: FY 2005: Sound financial fundamentals, cash flow is maintained
FY 2005: Sound financial fundamentals, cash flow is maintained * See glossary, **Net Debt end of the period / GOM including 12 months consolidation of Amena Actual FY04 FY05 CAPEX * 5,134 6,045 As a % of revenues 11.1% 12.3% Organic Cash Flow * Net Debt /G.O.M.** 2.78x 2.48x** FY 04 FY05 7,688 7,481
Slide 7: 2005: France Telecom leader on broadband, has built a sound base for NExT
Number of Livebox – Group (000) Number of mobile broadband Customers - Group (000) 2005: France Telecom leader on broadband, has built a sound base for NExT 1,547 Q304 Q404 Q105 Q205 Q305 Q405 1,124 1,780 Q204 Q304 Q404 Q105 Q205 Q305 Q405
Slide 8: 2005: first NExT rollouts
2005: first NExT rollouts Dec 2004 Mar. 2005 June 2005 Sept. 2005 Dec. 2005 Business Everywhere end users in France Convergent offers MaLigneTV Orange / Wanadoo UK home broadband offer Business Talk Sept. 04 Dec. 04 March 05 June 05 Sept. 05 Dec 05 (000) (000)
Slide 9: 2005: France Telecom a major global player in broadband DSL access
2005: France Telecom a major global player in broadband DSL access Number of customers (in million) 14.000 6.639 6.496 6.200 5.565 5.380 5.262 4.580 4.438 4.391 China Telecom France Telecom SBC ATT China Netcom Korea Telecom Softbank Group Telecom Italia Deutsche Telekom Telefonica Verizon Source DA
Slide 10: What has changed since NExT announcement: competition gets fiercer
October November December What has changed since NExT announcement: competition gets fiercer A tougher competitive environment for 2006 Vodafone: “investment in growth” Deutsche Telekom: “aggressive market investment” France: Unlimited free international calls from Iliad and 9T France: Full Unbundli
Slide 11: What has changed since NExT announcement: Regulatory evolution
““L’Autorité restera vigilante sur l’évolution de leurs accords avec les opérateurs de réseaux mobiles hôtes, qui ne laissent pas, aujourd’hui, assez de liberté aux MVNO ” . Paul Champsaur New year wishes for January “ARCEP launches a public consultation on the market for international roaming . ARC
Slide 12: What has changed since NExT announcement: The broadband revolution
What has changed since NExT announcement: The broadband revolution VoIP in France Total broadband mobile customers in France VoIP as % of total traffic Dec. 05 mobile broadband customers vs initial target 25% 10% 2% 14% 30% 40% Dec. 05 Dec 06 (est) Accelerated changes in usage 2005 target 2005 reali
Slide 13: The vision is unchanged: NExT is designed to answer these changes
The vision is unchanged NExT is designed to answer these changes "Services Everywhere“ Best in class customer care Differentiate through customer care & professional services “Telecommunication Everywhere“ Clients communicate, We manage the networks "Contents Everywhere“ & Life services Enrich the e
Slide 14: 2006 main assessments and actions
2006 main assessments and actions Accelerated PSTN voice transition in France Higher mobile substitution in Poland Quicker mobile broadband market development in France Stronger price pressure Direct consequences on business model Increase CAPEX & OPEX to support Livebox, TV setup boxes and other de
Slide 15: Delivering NExT: Introduction
Delivering NExT Introduction Transform France Telecom to deliver NExT 2005 results and 2006 trends Use of cash and conclusion
Slide 16: Three priorities
Enhance reactivity Improve marketing effectiveness Accelerate transformation to improve costs Three priorities
Slide 17: Three priorities
Three priorities Enhance reactivity Improve marketing effectiveness Accelerate transformation to improve costs
Slide 18: Tightened management organization
Tightened management organization Olivier Barberot Grp Human Resources Jean-Yves Larrouturou Grp General Secretary Georges Penalver Grp Strategic Marketing & Product Factory Louis-Pierre Wenes Grp Transformation & French operations Sanjiv Ahuja CEO Orange Barbara Dalibard Enterprise Communication Se
Slide 19: Managing strong local businesses and taking advantage of global business lines
France UK Spain Poland ROE ROW Enterprise Managing strong local businesses and taking advantage of global business lines Group Management Committee will exercise its direct responsibility for of all group businesses on a geographical basis Home Personal Reinforce country integration on each business
Slide 20: Manage overall group key priorities
Manage overall group key priorities Manage to secure sustainable organic cash generation Organic Cash Flow generation Cash target for each entity CAPEX allowance to be released only after completion of specific milestone Management incentive based on Organic Cash Flow Increase flexibility to improve
Slide 21: Country integration to better serve the customer
Country integration to better serve the customer A major step towards the integrated operator One manager for each geography Global approach for Enterprise Leverage brand to spur convergent offers Integrated marketing management An unified local chain of command for better effectiveness Direct conta
Slide 22: Country integration: the example of Spain
Country integration: the example of Spain Strong commercial performance and cost savings execution Strong operational results for the first 2 months of the integration Synergies on track for 2008 (EUR130m yearly basis announced In July) FT Spain Amena 4Q05 share of conquest maintained around 20% 449
Slide 23: Three priorities
Three priorities Enhance reactivity Improve marketing effectiveness Accelerate transformation to improve costs
Slide 24: Improve cost and marketing effectiveness
Improve cost and marketing effectiveness Create a group transformation team and a strategic marketing function Transformation teams to monitor transformation projects portfolio management Leveraging presence in attractive growth markets Strategic marketing to improve time to market Strategic marketi
Slide 25: Group transformation: NExT commitment clustered into major objectives
Group transformation: NExT commitment clustered into major objectives Revenue and Finance Grow people intensive services revenue by over 50% by 2008 Slight decrease of revenues for enterprise with over 30% in ICT services Over EUR 400m direct paid content revenues in 2008 Product and services Develo
Slide 26: Group transformation: Sourcing & support functions
Group transformation: Sourcing & support functions EUR1.2bn cumulated savings over the period thanks to EUR400m sourcing gains in 2006 Strategy of suppliers portfolio Sourcing initiatives Optimized country structure E-buro IT&N EUR2bn target of cumulative through savings over 2006-2008 announced in
Slide 27: Group transformation: IT & Networks
Group transformation: IT & Networks 2006 short term target 50 bp on Opex gain 200 bp of EBITDA margin gain before end of NExT Capacity Management Sourcing actions Cost assurance International voice traffic internationalization Lean Management Country integration Data Center consolidation 200bp Objec
Slide 28: Group transformation: Human resources and ACT
Group transformation: Human resources and ACT “The right skill in the right place” Adapt workforce to industry transformations Transfer support functions to customer services Efficiency Increase targeted trainings Align employees incentive with NExT objectives Organic Cash Flow targets Headcounts 20
Slide 29: Three priorities
Three priorities Enhance reactivity Improve marketing effectiveness Accelerate transformation to improve costs
Slide 30: Group strategic marketing
Group strategic marketing Quicker and better on the market Group Product Roadmap Strategic Anticipation Improve customer Intelligence Anticipation, speed and quality Dedicated collocated teams from Marketing, R&D ITN working end-to-end from customer propositions to in-country delivery R&D Customer P
Slide 31: Group strategic marketing: The FT Group Product Factory
Group strategic marketing The FT Group Product Factory Deliver the new communications model for consumers Enhance intermediation capabilities Personalize Entertainment IP transformation Data fixed – Mobile convergence Voice fixed – Mobile convergence Strategic Anticipation (13 key projects) Consumer
Slide 32: The Group Product Factory NExT deliveries
Q1-06 Q2-06 Q3-06 Q4-06 Group strategic marketing The Group Product Factory NExT deliveries Business Everywhere Push Mail + PKI Tribe Pack Voice FTTH (Pilot) HomeZone One Phone Loyalty Program NExT Portal Wideband audio on broadband Business Pack Groupware + Security Connected Everywhere
Slide 33: Delivering NExT: Towards the integrated operator
Delivering NExT Towards the integrated operator Strategic framework confirmed Management streamlined and focused on delivery Commercial efficiency enhanced
Slide 34: Delivering NExT: 2005 results
Delivering NExT 2005 results Introduction Transform France Telecom to deliver NExT 2005 results and 2006 trends Use of cash and conclusion
Slide 35: Group Consolidated Revenues by segment
47,841 49,038 Enterprise Total - 5.4% +2.5% - 5.5% +6.2% 2005 Group Consolidated Revenues by segment €49,038m / + 6.2% actual / + 2.5% pro-forma* eliminations Directories Home Personal Euros millions +6.0% -1.2% +7.4% FY05 PF* * See glossary +8.5% +0.4% +14.4% FY05 Act. 21,913 23,535 22,534 22,800 8
Slide 36: 2004-2005 GOM rate changes analysis
2004 -2005 GOM rate changes analysis Organic changes + 0.3 - 0.3 - 0.5 - 0.5 - 0.4 + 0.9 Personal ROW Home France Home Poland Personal UK Enterprise Others * GOM margin rate excluding mobile fine and Lebanon reversal provision
Slide 37: 2005 Operating margins
38,8% 38,2% 37,6% 51,2% 50,5% 50,9% FY04 FY04PF* FY05 2005 Operating margins Sustained GOM margins Group gross operating margin before commercial expenses* Group gross operating margin* * See glossary ; ** After the impact of the EUR256m fine – Excluding the EUR256m fine, FY05 GOM was 38.1% and FY05
Slide 38: Personal in 2005: sustained revenue growth
Gross Operating Margin (euro millions) Personal in 2005: sustained revenue growth Capex (euro millions) Revenues (euro millions) 23,535 21,913 20,564 FY04 FY04 PF* FY05 +7.4% 8,471 8,225 8,076 FY04 FY04 PF* FY05 +3.0% Gross Operating Margin rate (%) 37.5% 39.3% 37.1% 60.5% 60.5% 62.6% FY04 FY04 PF*
Slide 39: Personal in 2005: France
* Not included in subscribers figures - ** 3G+Edge - *** Call Termination Rate - **** see glossary Sustained pro-forma**** revenue growth in 4Q05: +7.0% yoy pre CTR*** cut 22.430m customers, +5.6% yoy, contract mix increase from 60.6% to 61.8% 184K MVNO’s customers* (more than 50% mobile wholesale m
Slide 40: Personal in 2005: UK and Spain
* Not included in subscribers figures - ** 3G+Edge - *** Call Termination Rate - **** see glossary Revenue growth +5.1% pre CTR*** for FY05, strong growth in 4Q05: +5.6% yoy pf**** 14.858m customers, +4.5% yoy 343k prepaid net adds in 4Q05 ARPU: - 4% at £263, +0.3% yoy pre CTR *** cut Leading UK mob
Slide 41: Personal in 2005: Poland and ROW
Increase of Polish mobile market: 76.7% penetration rate at the end of December Substantial increase of customer base: +33.3% yoy at 9.9m customers Increase of overall market share: 33.9%, versus 32.2% in Q404 41.3% overall net adds market share in Q405 26.8m ROW mobile customers, +31.3% yoy PF* Sub
Slide 42: Home in 2005: Resilience of market share but pressure on margins
Gross Operating Margin (euro millions) Home in 2005: Resilience of market share but pressure on margins Capex (euro millions) Revenues (euro millions) 22,534 22,800 22,440 FY04 FY04 PF* FY05 -1.2% 7,602 7,400 7,339** FY04 FY04 PF* FY05 -3.5% 2,537 2,103 2,051 11,3% 9,2% 9,1% FY04 FY04 PF* FY05 Capex
Slide 43: Home France in 2005: Leadership on broadband
Home France in 2005: L eadership on broadband improved in a competitive market Quasi stabilisation of total number of lines at 27.5m (-0.2% yoy) Increase of monthly rental fee impact: + EUR178m Success of access related services confirmed: 10.4m (+13.0% yoy) Calling services Positive impact of new o
Slide 44: Home in 2005: fixed voice and international
Migrating traffic revenues to access revenues: monthly fee representing 46% of fixed voice revenues (vs 40.5% in 1Q05) Strong development of New Tariff Plans base (3.5m activated customers) to respond to fixed to mobile substitution Drop of local call market share (from 99.7% in 4Q04 to 82.3%) due t
Slide 45: Enterprise in 2005: In line with expectations
Gross Operating Margin (euro millions) Entreprise in 2005: In line with expectations – Margin rate maintained in spite of revenue decline Capex (euro millions) Revenues (euro millions) 7,785 8,227 8,235 FY04 FY04 PF* FY05 -5.4% 1,949 2,024 2,039 FY04 FY04 PF* FY05 -3.7% Gross Operating Margin rate (
Slide 46: Enterprise in 2005: Slowdown of voice revenues decline
Slowdown of voice revenues decline in 4Q05 in France despite: Competitive pressure, Regulatory pressure on voice revenues due to fixed to mobile tarification cut in France in January Continued development of IP convergence : +57% IP-VPN access in 2005 Fixed-mobile convergence : +27% Business Everywh
Slide 47: Directories in 2005: Acceleration of recruitment of new advertisers
Gross Operating Margin (euro millions) Directories in 2005: Acceleration of recruitment of new advertisers Capex (euro millions) Revenues (euro millions) 1,061 1,001 FY04 FY04 PF* FY05 +6.0% FY04 FY04 PF* FY05 +12.1% Gross Operating Margin rate (%) 41.3% 41.6% 43.7% 48.5% 50.5% 48.1% FY04 FY04 PF* F
Slide 48: Directories in 2005: Increased market penetration
Increased market penetration: +6.1% yoy in PagesJaunes total advertisers base in France (619.5 K) Effective trade up strategy primarily through Internet: pagesjaunes.fr ARPA* up 23.5% and number of advertisers up 10.3% YoY No print/online substitution: 65% of clients are printed and online directori
Slide 49: From Revenues to Gross operating margin
Euro millions Revenues Non labour costs Of which external purchases as a % of revenues FY04 actual FY05 46,158 49,038 17,923 18,416 38.8% 37.6% 19,385 21,860 17,870 20,149 as a % of revenues 42% 44.6% as a % of revenues 38.7% 41.1% From Revenues to Gross operating margin Gross Operating Margin Labou
Slide 50: CAPEX analysis
Total Group CAPEX 5,384 6,045 + 12.3% % of revenues 11.3% 12.3% CAPEX analysis CAPEX* by key item * See glossary FY04 pro forma* FY05 actual FY05/FY04 pro forma* IT & Customers’ services Plateforms 1,363 1,506 + 10.5% o/w ADSL + 0.7% o/w 2G - 3G and radio access network 1,575 1,635 +3.8% Euro millio
Slide 51: From Gross Operating Margin to Operating Income
From Gross Operating Margin to Operating Income Gross Operating Margin Employee Profit Sharing FY04 FY05 17,923 18,416 9,312 11,284 - - Proforma* % chg + 0.8% Operating Income Share-based payment Amortization Impairment of goodwill Impairment of assets Disposal of assets Restructuring costs Associat
Slide 52: From Operating income to net income
Euro millions From Operating income to net income Operating Income Total Financial Charges, net Income taxes Net result Minority Interests Net Result Group Share FY04 FY05 -3,625 -3,356 9,312 11,284 -2,477 -1,568 -193 -651 3,210 3,017 5,709 6,360
Slide 53: FY05 financing: From GOM to Net cash provided by operating activities
Gross Operating Margin Interest Expense, net* (cash) Cancellation of Forex impact included in GOM Income Taxes (cash) Early Retirement Plan (cash) Employee Profit Sharing (P&L) Others (ow restructuring costs) Change in Working Capital requirement (inventories + receivables - payables) Change in Work
Slide 54: Financing in FY05
Purchase of tangible and intangible assets, net of change in fixed asset vendors - 6,108 7,481 - 5,208 7,688 Organic Cash Flow * 199 215 Proceeds from sale of tangible and intangible assets Financing in FY05 Net Cash provided by operating activities 13,374 ow Capex FY05 12,697 FY04 -5,134 -6,045 Eur
Slide 55: Net Debt – end of 2005
Net Debt – end of 2005 * See glossary Net debt changes 47,846 49,822 - 363 - 1,324 - 1,595 + 7,603 + 1,184 - 7,481 Organic Cash Flow Dividend Acquisitions Disposals Sale of carry back Other Euro millions
Slide 56: France Telecom GOM 2002–2005: Mobile vs other activities
France Telecom GOM 2002 – Mobile vs other activities 2005* 36% 50% 64% 50% Mobile activities now accounts for 50% of total GOM Others Mobile Of which 49% for fixed in France Of which 39% for fixed in France Share of Fixed in France decreasing * Amena for 12 months in 2005
Slide 57: Delivering NExT: 2006 trends
Delivering NExT 2006 trends Introduction Transform France Telecom to deliver NExT 2005 results and 2006 trends Use of cash and conclusion
Slide 58: 2006 – France / Personal
Main operational objective Maintain revenue market share Main challenges … … and opportunities 2006 – France / Personal Regulatory pressure Cut on mobile Voice Termination Rate (-24% on 01/01/2006) more than €350m negative impact on revenues Cut on SMS Termination Rates New 2G licence fee Market gro
Slide 59: 2006 – France / Home
Sustain retail ADSL market share Main operational objective Main challenges … … and opportunities 2006 – France / Home Access Retail: number of retail lines impacted by full unbundling and wholesale line rental Wholesale: FULL price decrease (9.3 euros vs 9.5 euros) Voice Impact of CTR cut: cc. EUR–
Slide 60: 2006 – UK / Personal
Main operational objective Maintain profitability while growing the business Main challenges … … and opportunities 2006 - UK / Personal A 110% penetrated market Competitiveness on PAYM offers Mix of direct & indirect distribution Market leadership as an UK integrated operator Continue momentum in th
Slide 61: 2006 – UK / Home
Main operational objective Accelerate DSL’s customers migration to ULL Main challenges … … and opportunities 2006 - UK / Home Adverse competitive environment Strong brands coming into the DSL market: Talk-Talk, Sky, Tesco, … Market prices will continue to drop (£14.99 to become the norm) Capitalize
Slide 62: 2006 – Spain / Personal
Main operational objective Increase net adds market share Main challenges … … and opportunities 2006 - Spain / Personal Market Leadership in Spain integrated business model Leverage Amena’s strong position on consumer postpaid and SoHo and indirect channel capability Increase value of prepaid base (
Slide 63: 2006 – Spain / Home
Main operational objective Increase DSL market share and global customer base Main challenges … … and opportunities 2006 – Spain / Home Worsened competitive environment … Price erosion driven by consolidation among fixed alternatives (T-Online/Albura, Tele2/Comunitel, Cable operators) Incumbent push
Slide 64: 2006 – Poland / Personal
Main operational objective Orange to become volume and value market leader Strong growth in customer base: More than 11.5 million customers Main challenges … … and opportunities 2006 – Poland / Personal High level of competition 4th operator operational in 2H06 Regulatory environment Successful rebr
Slide 65: 2006 – Poland / Home
Main operational objective More than 1.6m broadband customers by the end of 2006 Main challenges … … and opportunities 2006 – Poland / Home Competitive pressure Wimax, VoIP Fixed to mobile substitution Regulatory pressure Accelerate ADSL access penetration Capitalizing on Poland’s relatively low bro
Slide 66: 2006 – ROW / Personal
Main challenges … … and opportunities Main operational objective Maintain growth and profitability 2006 - ROW / Personal Unfavourable cut on Voice Termination Rate impact Increasing competition in all European markets Switzerland, Belgium, Netherlands, Romania Maintain market leadership in Central E
Slide 67: 2006 – ROW / Home
Main challenges … … and opportunities Main operational objective Continue to leverage strong emerging markets growth potential 2006 – ROW / Home Emerging countries Increase in competition in major countries (Ivory Coast, Jordan, …) Emerging countries Deploy adapted services (prepaid voice in Ivory C
Slide 68: 2006 – Enterprise
Main challenges … … and opportunities Main operational objective Confirm our leadership in IP transformation by providing new convergence and IT services 2006 - Enterprise Traditional voice access decline partially offset by data access growth as a result of IP migrations in France Pressure on data
Slide 69: Main country objectives for 2006
Main country objectives for 2006 France UK Spain Poland Improve cost structure, enhance commercial strength and launch innovative services Leverage rebranding and convergence to face increased competitive mobile and broadband markets Successfully manage integration Implementing Integrated Operator S
Slide 70: 2006: guidance
7 bn Euros 2006: guidance As released on January 11 th , 2006 Above 7% actual growth* Revenues Between - 1 and - 2 points related to revenues G.O.M rate Around 13% of revenues Capex Organic Cash Flow * Around + 2% on a comparable basis
Slide 71: Delivering NExT: Use of cash and conclusion
Delivering NExT Introduction Transform France Telecom to deliver NExT 2005 results and 2006 trends Use of cash and conclusion
Slide 72: Roadmap for delivering NExT
Roadmap for delivering NExT Execution risk under control Transformation teams, strategic marketing, streamlined management team and financial tracking of budget Clear financial objectives 2006 guidance confirmed 2007-2008 outlook to support sustainable organic cash generation Towards the leading Tel
Slide 73: Use of cash policy
Use of cash policy Debt reduction target maintained Strong increase in shareholders remuneration External Growth Debt / EBITDA ratio below 2 by the end of 2008 Very selective and cautious strategy for acquisition policy France Telecom will examine opportunities in fast growing countries EUR1 confirm
Slide 74: NExT: Strong assets to keep lead
Respecting multi-year financial trajectory NExT: Strong assets to keep lead A strategic vision: convergence and integration A “Product factory” for the right offer at the right time A strong and unique commercial brand A solid international footprint to leverage on growing markets A state of the art
Slide 75: Appendix
Appendix
Slide 76: FY05: revenues by segment
FY05: revenues by segment Statutory figures * See glossary FY04 FY04 PF* FY05 Total Group 46,158 47,841 49,038 Total Personal 20,564 21,913 23,535 Personal - France 8,365 9,217 9,773 Personal - UK 5,833 5,786 5,832 Personal Spain Personal - Poland 1,247 1,402 1,598 Personal - Rest of World 5,290 5,1
Slide 77: FY05: G.O.M. by segment
Statutory figures FY05: G.O.M. by segment * See glossary FY04 FY04 PF* FY05 Total Group 17,923 18,264 18,416 Total Personal 8,076 8,225 8,471 Personal - France 3,682 3,702 3,636 Personal - UK 1,843 1,859 1,651 Personal - Spain Personal - Poland Personal - Rest of World 1,980 2,026 2,471 Total Home 7
Slide 78: CAPEX analysis
CAPEX analysis Evolution of group Capex, m euros 1 ,929 1, 403 1, 173 1, 891 9.9% 16.2% 11.4% 14.7% Q304 Q404 Q305 Q405 + 2H05 benefited from a better phasing than in 2004 IT & N Capex = 4.8 Bn euros • of which 3.6 Bn euros of Network capex • of which 1.15Bn euros of IT capex Actual figures Capex as
Slide 79: FY G.O.M rate Personal
FY 05 G.O.M rate Personal Personal France Personal Poland Personal ROW Personal UK 44,0% 40,2% 63,7% 58,5% 39,8% 58,3% FY04 FY04 PF* FY05 GOM GOM pre-commercial expenses 31,6% 32,1% 28,3% 60,9% 61,5% 61,4% FY04 FY04 PF* FY05 GOM GOM pre-commercial expenses 37,2% 37,2% 37,8% 67,0% 67,0% 63,1% FY04 FY
Slide 80: Personal France
Personal France Revenues: €9,773m / + 6.0% pro-forma** / + 7.4% excluding CTR* cut * Call Termination Rate - ** See glossary - *** 3G+Edge - **** +0.6% yoy excluding CTR cut ARPU** (Euros) -0.9%**** 428** FY04 FY05 Contract Prepay Mobile Broadband Customers*** (000) 1,040 4Q04 1Q05 2Q05 3Q05 4Q05 Vo
Slide 81: Personal UK
Personal UK Revenues: €5,832m / +0.8% pro-forma** / + 5.1% excluding CTR* cut * Call Termination rate - **See glossary, Annual Rolling IFRS ARPU estimated - *** +0.3% yoy excluding CTR cut FY04 FY05 Contract Prepay ARPU** (£) Customer base** (000) 66,9% 66,5% 33,1% 33,5% FY04 FY05 Prepay Contracts 1
Slide 82: Personal Spain
Personal Spain Revenues: €536m* / + 8.0% pro-forma*** / + 11.2% excluding CTR** cut * 2-months - ** Call Termination rate - *** See glossary Customer base** (000) 51.5% 54.0% 48.5% 46.0% FY04 FY05 Prepay Contracts 10,301** 9,275 +11.1% Churn rate (%) 23.8% 24.8% 25.0% 25.5% 25.8% 25.2% 24.8% 24.4% 2
Slide 83: Personal Poland
Personal Poland Revenues: €1,598m / + 28.1% Actual / + 13.9% pro-forma* * See glossary Penetration rate & market share 76.7% 71.6% 68.2% 64.3% 60.3% 33.9% 33.4% 33.1% 32.6% 32.2% 4Q04 1Q05 2Q05 3Q05 4Q05 penetration market share Customer base* (000) 59.3% 56.5% 40.7% 43.5% FY04 FY05 Prepay Contracts
Slide 84: Personal ROW
Personal ROW Revenues: €5,991m / +13.3% Actual / + 15.9% pro-forma* * See glossary Customer base (000)* 2 846 4 569 1 137 4 938 1 701 2 861 2 361 2 913 6 618 1 249 6 823 1 914 4 771 2 519 Belgium Africa / Others Switzerland Romania Netherlands Egypt Slovakia FY 04PF* FY 05 +44.9% +2.4% +38.2% +66.7%
Slide 85: Home France
17,914 17,718 Total -1.1% -1.6% Home France Revenues: €17,718m / -1.6% actual / -1.1% pro-forma* Euro millions 9,776 9,677 5,591 5,504 2,547 2,537 FY04 PF* FY05 Other Services -0.4% Carrier Services -1.6% Consumer Serv. -1.0% % FY05 PF* -0.1% -1.3% -2.1% % FY05 actual * See glossary
Slide 86: Home France: Consumer Services ARPU
Home France: Consumer Services ARPU* * See glossary 12.8 12.6 12.4 12.1 12.2 9.5 9.9 10.8 10.5 10.1 4.7 4.4 3.9 4.0 4.3 End of Dec. 04 End of March 05 End of June 05 End of Sept. 05 End of Dec 05 Subscription fees Calling services On-line & Internet Services 26.9 26.7 26.8 26.9 27.0 Euros
Slide 87: Home France: Subscription fees revenues
Home France: Consumer Service - Subscription fees revenues: +4.2% pf* in FY05 * See glossary 26.9 27.1 27.2 27.4 27.5 4Q04 1Q05 2Q05 3Q05 4Q05 Total number of lines (including full unbundled lines) Nb of lines excluding full unbundled lines 27.6 27.6 27.5 27.4 27.5 Number of lines (in millions) 9.2
Slide 88: Home France: Calling Services revenues
Home France: Consumer Services - Calling Services revenues: -13.2% pf* in FY05 Consumer - Voice Market Share (PSTN) 69.5% 69.8% 70.1% 70.9% 73.3% 58.7% 58.8% 57.9% 58.1% 59.4% 4Q04 1Q05 2Q05 3Q05 4Q05 Packages in % of total customers 46.8% 43.6% 43.5% 42.4% 42.5% 4Q04 1Q05 2Q05 3Q05 4Q05 Local LD *
Slide 89: Home France: On Line Services revenues
Home France: Consumer Services - On Line Services revenues: +18.6% pf* in FY05 * See glossary France Telecom VoIP customers (000) 4Q 04 1Q 05 2Q05 3Q05 4Q05 49% 46.3% 56.3% 48.1% 43.7% 47.6% 46.5% 46.8% 46.9% 47.5% 4Q04 1Q05 2Q05 3Q05 4Q05 Net adds MS Market Share ADSL market share and net adds* 1,5
Slide 90: Home France: Carrier Services revenues
Home France Carrier Services r evenues : €5,504m / -1.3% actual –1.6% pf* Carrier services Domestic Others * See glossary 5,504 5,591 -199 -92 2004 PF Domestic Interconnection & Unbundling & IP ADSL Services to Operators Fixed to Mobile Other Revenues Euro million
Slide 91: Home ROW
Home ROW Revenues: €1,837m / +16.0% actual / +9.9% pro-forma *** * Annual rolling ARPU, ** internet (Narrowband + Broadband) subscribers, *** see glossary 8.2 10.6 10.9 9.2 16.3 13.6 UK** Spain** Netherlands FY04 FY05 Overall European ARPUs * (in euros) European Broadband customers (000s) UK Spain N
Slide 92: Enterprise – Progress on Business Transformation in 2005
Enterprise – Progress on Business Transformation in 2005 Full IP solution for Airbus in France & UK Darty : first Business Talk IP reference BearingPoint : provision of all services and support for full IPT solution Equant positioned in Gartner Magic Quadrant for Global Network Service Providers 200
Slide 93: Enterprise revenues
8,227 7,785 Total -5.4% -5.5% Euros millions -432 -471 2,695 2,965 3,245 3,350 2,317 2,345 2004 PF* Eliminations -1.2% -1.2% Business Networks in France + Other Bus. Serv. In France -3.1% Fixed line Telephony in France -9.1% % FY05 PF* Enterprise: Revenues: €7,785m/ -5.5% actual / -5.4% pro-forma* -
Slide 94: Enterprise: On-going transformation of the business model
49% 33% Enterprise On-going transformation of the business model Access growth in volume – France 2005/2004 (End of Period) Migration towards DSL support in France (EoP) 2004 PF* Outsourcing Total Enterprise revenues +19% 2005 vs 2004 PF* Total Enterprise Services Revenues (million euros) +7% Exclud
Slide 95: Directories Revenues
308,0 339,6 31 December 2004 31 December 2005 Directories Revenues €1,061m / +8.5% actual / +6.0% pro-forma* PagesJaunes.fr audience (m of visits)** Number of Internet advertisers (000s) – PagesJaunes.fr *** 383,1 538,4 +10% +41% * See glossary - **Source: Cybermétrie – Médiamétrie / eStat - ***Sour
Slide 96: Non labour costs
Non labour costs External purchases commercial expenses*, m euros Focus on growth: - commercial expenses account for 29.9% of total non labour costs 85% of commercial expenses relates to Personal and 30% to Personal UK 13,661 14,759 15,349 FY04 FY04 PF* FY05 Other non labour costs in % of revenues:
Slide 97: Labour costs and headcounts
107,836 107,847 104,661 8,762 8,908 8,850 FY04 FY04 PF* FY05 Labour costs * See glossary Labour costs*, m euros Headcounts, end of period -1.6% 209,302 Headcounts trends: (end of period) -3.0% yoy pro forma* -1.7% yoy FT SA: -0.3% yoy pro forma* France: -1.5% yoy pro forma* International: -3.4% yoy
Slide 98: Exchange rates
Exchange rates Actual 4Q05 forecasts USD 1.19 1.25 GBP 0.68 0.69 PLN 3.91 4.00 1€ =
Slide 99: Glossary (1)
Glossary (1) Contributive Consolidated Revenues : consolidated revenues excluding intra-group transactions Pro forma figures : figures of the preceding period adjusted to reflect the same scope of consolidation and exchange rates as in the current period Market Share of fixed line telephony in Franc
Slide 100: Glossary (2)
Glossary (2) Mobile AUPU: Monthly average usage per user (AUPU) is defined as total usage (including outgoing traffic, incoming traffic and roaming and exclude traffic from MVNOs) for the previous months divided by the weighted average number of Orange Group's customers during the same period. AUPU
Slide 101: Glossary (3)
Glossary (3) Gross operating margin (GOM): Revenues minus external purchases, operating costs (net of operating income) and wages and payroll expenses (labour costs). Labour costs presented in GOM do not include employee profit sharing and share-based payment. Capex: acquisitions of intangible and t