Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Debt Investor Presentation (December 2008)
34 slides from Orange Sa's debt investor presentation, December 2008
Slide 1: France Telecom
france telecom December 2008
Slide 2: Cautionary statement
cautionary statement this presentation contains forward-looking statements within the meaning of the provisions of the US Private Securities Litigation Reform Act of 1995 about France Telecom’s business, in particular for 2008. Although France Telecom believes these statements are based on reasonabl
Slide 3: France Telecom Team
France Telecom Team : Sté Stéphane Pallez: Pallez: Deputy Group CFO Jean- Jean-Michel Thibaud: Thibaud: Group Treasurer Hervé Hervé Labbé Labbé: Head of Dealing Room Charlotte Labroue: Labroue: Investor Relations 3
Slide 4: Agenda
agenda 1 strong 9m08 results fully on track with full year objectives 2 in a challenging economic environment, FT is structurally advantaged 3 debt profile 4
Slide 5: A transformed leader with strong momentum
a transformed leader with strong momentum from 2004… …to Sept. 2008 annual revenues EUR 47.2 bn EUR 52.9 bn* subscribers outside 63 million 110 million France more international number of countries 19 countries 33 countries of presence, consumer subscribers with 48 million 119 million Orange brand m
Slide 6: 9m08 key financial achievements in line with announced trends and full year guidance
9m08 key financial achievements in line with announced trends and full year guidance 9m07 change comparable 9m08 comparable in millions of euros basis actual basis key points as expected, 3Q08 growth revenues 38,562 39,854 +3.4% in line with market trends evolution GOM* 14,295 14,766 +3.3% GOM growt
Slide 7: Revenue: strong resilience vs GDP growth slowdown
revenue: strong resilience vs GDP growth slowdown revenue growth per quarter on a comparable basis vs weighted GDP growth insight composite weighted GDP Group revenue growth on growth on Orange footprint* a comparable basis after 4 quarters of strong growth, 3Q08 growth ** excluding continues to be
Slide 8: Revenue growth snapshot per country
revenue growth snapshot per country in line with end of July expectations for 2H expectations for 2H 3Q08* achievements for the quarter France resilience of activities +1.6% resilient performance while in a lower growth context impacted by specific items UK performance closer +5.1% as expected, lowe
Slide 9: 9m08 results fully on track with full year objectives
9m08 results fully on track with full year objectives 2008 insight indication market group FY08 revenue trend achievement for 9m08 should be at the high end of trend average market growth evolution in spite of revenue growth 2-3% 3.4% expected slowdown in some countries no major trend change guidanc
Slide 10: Agenda
agenda 1 strong 9m08 results fully on track with full year objectives 2 in a challenging economic environment, FT is structurally advantaged 3 debt profile 10
Slide 11: In difficult times, households cut on spend, but not uniformly across categories
in difficult times, households cut on spend, but not uniformly across categories insight France: annual change in household spend while not immune 10% from economic slowdown, services tend to be less impacted than other spend 5% durable and categories non durable goods total household among services
Slide 12: Among services, telecoms have built a very robust position over time
among services, telecoms have built a very robust position over time France: share of telecom in total household spend (in %) 2,4% insight 2,5% Internet take-off 2,0% mobile take-off 1,5% fixed line take-off telecom services have 1,0% captured a growing share of customers’ 0,5% wallet over 3 0,0% su
Slide 13: Today, most households intend to maintain their spend on telecom services
today, most households intend to maintain their spend on telecom services question : how will you manage your spend compared to last year ? (in %) luxury goods 69 31 “suppress“ or consumer electronics 66 34 “decrease a lot” or gambling 62 38 “decrease a little” household capital goods 57 43 alcoholi
Slide 14: France Telecom has five drivers to sustain a strong cash flow generation
France Telecom has five drivers to sustain a strong cash flow generation business diversification fixed / mobile balance transformation new & operational performance territories & convergence initiatives replicated across all countries enhancing medium / long term growth profile sustainable strong c
Slide 15: NExT plan has enhanced business mix diversification
NExT plan has enhanced business mix diversification … group revenue split and evolution 45% 25% 4% 55% 11% 6% 45% 9% 2002 + 34%* 2007 2010 PSTN mobile data & new services Internet access new territories * actual growth rate, excluding Orange Business Services 15
Slide 16: Entry into adjacent new territories is enhancing medium / long term growth profile
entry into adjacent new territories is enhancing medium / long term growth profile increase the share of growth initiatives in Group revenues ~15% content audience 6% e-health 2007 2010 16
Slide 17: Increasing involvements in emerging countries for growth AND profitability
increasing involvements in emerging countries for growth AND profitability weight of emerging countries in France Telecom’s revenues Eastern Europe 15% Poland mobile 14% 12% 30% 28% 2006 2007 9M08 41% Middle East, Africa and other 17
Slide 18: Among peers, France Telecom has the highest share of postpaid mobile in Western Europe
among peers, France Telecom has the highest share of postpaid mobile in Western Europe share of postpaid customers over total mobile customers 55% 50% 39% 37% (1) (2) (3) (4) source : company figures, end of June, 2008 1 France, Spain, UK, Belgium, Switzerland 2 Spain, UK, Ireland, Germany 3 Germany
Slide 19: On OPEX, we strive for continuous operational improvement and cost management
on OPEX*, we strive for continuous operational improvement and cost management evolution of opex achieved outlook in % of revenues ~92% of 06-08’ on track to achieve 06-08‘ headcount reduction guidance of 17,000 net guidance of 16,000 reduction at Group level labour** 16.7% 16.1% permanent staff in
Slide 20: CAPEX maintained at around 13% of revenues to invest in new sources of growth
CAPEX maintained at around 13% of revenues to invest in new sources of growth CAPEX evolution as a % of revenues mid-term trend key points €6.0 bn € 6.9 bn 12,5% 13,2% ~13% fiber to the home rollout decision not before end additional 9% of 2009 growth projects* 15-25% 6% investments in content, CAPE
Slide 21: As a result, FT should deliver strong resilience in its organic cash flow
as a result, FT should deliver strong resilience in its organic cash flow* FT organic cash flow, in €bn > 7,8 7,8 top line resilience + 6,9 ongoing cost transformation + optimization of cash items sustainable strong cash flow generation 2006 2007 2008 2009 2010 2011 *see glossary 21
Slide 22: M&A policy and 07 / 08 achievements
M&A policy and 07 / 08 achievements disposal of Orange operations in The Netherlands, Netherlands October acquisition of 2007 VOXmobile in 3 main objectives Luxembourg, Luxembourg July 2007 restructuring of One in Austria, Austria November 07 reinforce our footprint on acquisition of ya.com in 3rd m
Slide 23: Dividend policy unchanged
dividend policy unchanged while keeping in the medium term a net debt to GOM ratio below 2 under current market conditions possibility for the Board to €0.6 per share of interim ordinary distribute above 45% of organic dividend was paid September 11, cash flow vs. 40-45% before 2008 change in ordina
Slide 24: Agenda
agenda 1 strong 9m08 results fully on track with full year objectives 2 in a challenging economic environment, FT is structurally advantaged 3 debt profile 24
Slide 25: 1H08 net financial debt decrease yoy: net debt/GOM ratio drop from 2.25 to 1.97
1H08 net financial debt decrease yoy: net debt/GOM ratio drop from 2.25 to 1.97 net debt changes in millions of euros 42,113 74 64 37,980 3,386 533 38,204 net debt -188 / GOM* -3,645 2.25 Mobistar net debt / GOM* o/w citivox net debt / o/w TP 273M€ acquisition 30M€ GOM* 1.99 o/w Sonatel 115M€ o/w Mo
Slide 26: Debt management: France Telecom has a strong liquidity position
debt management: France Telecom has a strong liquidity position liquidity situation for 2008 repayments at the end of September insight in billions of euros 14.1 strong liquidity position as 12.6 of end of sept 08: €12.6bn 8.0 FTSA back up lines – €8bn of back-up line on FT SA with no material other
Slide 27: Sound financial structure
sound financial structure next years repayments at a reasonable level compared to our cash flow generation gross debt repayments of FT SA and main subsidiaries1 at end of sept 08 (in euros billions) 19.6 of which ~€ 3.0bn in Dec09 5.4 4.2 3.6 3.3 following interim dividend 2009 2010 2011 2012 >2013
Slide 28: France Telecom SA Bond Debt Distribution as of 11-30-2008
France Telecom SA Bond Debt Distribution as of 11- 30-2008 million € 4 000 3 754 3 704 3 500 3 157 3 000 2 836 2 681 2 602 2 015 1963 2 000 1 500 1 209 1 150 1 000 602 542 500 602 422 125 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020 2022 2025 2028 2031 2033 2034 TDIRA eur usd gbp cad chf
Slide 29: S&P, Moody's and Fitch Ratings
S&P, Moody’s and Fitch Ratings A2 / A A3 / A- Baa1 / BBB+ Baa2 / BBB Baa3 / BBB- Ba1 / BB+ mar-02 jul-02 may-03 dec-03 feb-04 jan-05 feb-05 oct-05 dec-07 dec-08 Moody's Fitch S&P 29
Slide 30: Net Financial Debt Evolution
Net Financial Debt Evolution €b 68 Years 61 63,4 12 60 49,8 47,8 10 44,2 42,0 38,0 6,8 38,1 8 40 6 14,6 6,4 6,7 7,1 7,1 4 20 6 5,6 4,6 4 2 2 0 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 sept 2008 Year end net financial debt Average maturity of net financial debt €m 7,05% 5 000 6,79% 4 041 6,50%
Slide 31: Net Financial Debt Allocation: Fixed - Floating - by Currency
Net Financial Debt Allocation: Fixed - Floating - by Currency (after derivatives) 100% 25% 9% 27% 17% 14,5% 5,25% 80% 39% 37% 35% 40% 41% 30% 54% 62% 60% 40% 75% 91% 73% 83% 85,5% 94,75% 61% 63% 65% 60% 59% 70% 20% 46% 38% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 sept - 08
Slide 32: 2008 Funding - 4.15 Billion € raised
2008 Funding - 4.15 Billion € raised including : Bond re-opening in April : - EUR 225 million tap of the 4.750% notes due 21 February 2012 - EUR 150 million tap of the 3.625% notes due 14 October 2015 - EUR 400 million tap of the 4.750% notes due 21 February 2017 Benchmark in May : - EUR 750 million
Slide 33: 5yr CDS Evolution of main European Telecom Companies
5yr CDS Evolution of main European Telecom Companies 250 200 150 100 50 0 29/6/07 29/8/07 29/10/07 29/12/07 29/2/08 29/4/08 29/6/08 29/8/08 29/10/08 Telefonica (Baa1/A-) Deutsche Telekom (Baa1/BBB+-) Vodafone (Baa1/A-) France Telecom (A3/A-) Source: Markit 33
Slide 34: Glossary
glossary CAPEX: capital expenditures on tangible and intangible assets excluding telecommunication licenses and excluding investments financed through finance leases GOM: Gross Operating Margin. Revenues less external purchases, other operating expenses (net of other operating income) and labor expe
France Telecom — Debt Investor Presentation (December 2008) on 6ix