Slide 1: First Half 2004 Results
First Half 2004 Results July 27th, 2004
Slide 2: Cautionary Statement
CAUTIONARY STATEMENT This presentation contains forward-looking statements about France Telecom. Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs, opportunities, technology and
Slide 3: Key messages
Key messages H1 results in line with expectations and full year targets Pro forma group revenues up 4.2% REAA* margin at 38.3% in H1 up 1 pt year on year – pro forma Operational trends confirmed Sustained double digit growth for mobile and broadband Resilience of Fixed line distribution and networks
Slide 4: 1H04 results (1)
1H04 results (1) Euros in millions 1H03 1H04 04/03 % chg Proforma % chg Revenues 22,852 23,182 +1.4% + 4.2% REAA before Commercial expenses* 10,838 11,685 +7.8% +10.2% REAA before Commercial exp margins 47.4 % 50.4% REAA* 8,485 8,868 + 4.5% + 6.9% REAA margin 37.1% 38.3% Operating Income 4,645 5,273
Slide 5: 1H04 results (2)
1H04 results (2) Euros in millions 1H03 1H04 04/03 % chg Proforma % chg CAPEX* 2,162 2,059 -4.8% -1.1% As % of revenues 9.5% 8.9% FCF** excluding Orange and Wanadoo minorities buy-out, and disposals 2,012 3,400 +69.0% YE 2003 1H04 Net Debt before change in accounting standards in H1 2004 44,167 44,3
Slide 6: Key operating figures 1H04 Summary (1)
Key operating figures 1H04 Summary (1) Euros in millions Revenues 1H04/1H03 actual change 1H04/1H03 pro forma change REAA* 1H04/1H03 actual change 1H04/1H03 pro forma change Orange 9,536 + 10.7% + 11.2% 3,683 + 12.7% + 13.4% Fixed-line, Distribution, Networks, Large Customers and Operators 10,799 -
Slide 7: Key operating figures H1 2004 Summary (2)
Key operating figures H1 2004 Summary (2) Euros in millions Operating Income 1H04/1H03 actual change 1H04/1H03 pro forma change REAA** minus CAPEX* 1H04/1H03 actual change 1H04/1H03 pro forma change Orange 2,411 +15.6% + 16.0% 2,731 + 16.6% + 17.2% Fixed-line, Distribution, Networks, Large Customers
Slide 8: TOP continues to impact positively operating margins
TOP continues to impact positively operating margins REAA margin before commercial expenses* REAA margin* Actual figures 46.4% 36.2% 48.5% 38.1% 51.6% 40.1% 51.4% 35.7% 49.7% 37.5% 51,1% 39,0% Q1 ‘03 Q2 ‘03 Q3 ‘03 Q4 ‘03 Q1 ‘04 Q2’04 * See glossary Positive trends for margins
Slide 9: Revenues and TOP indicators by segment
Revenues and TOP indicators by segment
Slide 10: Orange: Key Messages
Orange: Key Messages Customer base up 11.5% y-o-y France: +5.3% and UK: +3.7% y-o-y ROW: +28.9% y-o-y, representing 32.9% of Orange customers Continued improvement in REAA margin pre-SACs & SRCs allows for higher commercial spend while maintaining profitability Re-investment in top-line growth Highe
Slide 11: Orange: Customer base
Orange: Customer base Customers end of period in 000s Orange France + 5.3% 19,368 56.6% 43.4% 1H 03 20,396 59.7% 40.3% 1H 04 Orange UK + 3.7% Prepaid 13,258 32.4% 67.6% 1H 03 Contract 13,747 33.1% 66.9% 1H 04 Orange ROW + 28.9% 12,994 33.3% 66.7% 1H 03 16,746 33.1% 66.9% 1H 04 Increase in maturing m
Slide 12: Orange: ARPU trends
Orange: ARPU trends Annual rolling ARPU* Orange France (€) 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 + 32% yoy Orange UK (£) 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 +15% yoy Voice Non voice * See glossary Continuous trends in ARPU growth in key markets
Slide 13: Orange: Segment Revenues
Orange: Segment Revenues + 11.2% pro forma + 10.7% actual Euros in millions 8,615 2,044 2,852 3,806 -87 1H03 - 42 Forex Perimeter 8,573 1,952 2,901 3,806 -86 1H03PF 9,536 2,430 3,049 4,139 -82 1H04 Pro forma growth ROW: + 24.4% UK: + 5.1% France: + 8.8% Revenue growth above market expectations
Slide 14: Orange: REAA pre-SACs & SRCs margin
Orange: REAA pre-SACs* & SRCs* margin 47.9% 51.0% Orange Group 54.5% 57.7% France 47.2% 48.8% UK 41.8% 48.7% RoW 1H 03 PF 1H 04 * See glossary Higher operating margin pre-SACs & SRCs reflect positive impact of TOP program and leverage on operational strengths
Slide 15: Orange: SACs and SRCs trends
Orange: SACs and SRCs trends Orange France 3.1% 5.8% 1H 03 4.0% 5.8% 1H 04 Orange UK 4.2% 7.7% 1H 03 6.9% 9.9% 1H 04 Orange Group 3.5% 6.5% 5.1% 7.4% 1H 03 1H 04 SRCs as % of Total Revenues SACs as % of Total Revenues Focus on SRC in order to retain high value customers Churn reflects UK competitive
Slide 16: Orange: Focus on Orange UK
Orange: Focus on Orange UK Nets Adds (000s) (53) (61)(55) (112) (74) Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Contract Prepay Overall Limited customer acquisitions vs. competition Satisfactory contract customer acquisitions to retain value leadership Aggressive
Slide 17: Orange: Focus on Orange UK
Orange: Focus on Orange UK Annual Rolling Churn 30% 25% 20% 15% 10% 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 26.1% 23.2% Overall Contract Annual Rolling ARPU (£) 568 577 Contract 126 127 Prepay 267 274 Overall 1H 1H 04 Contract ARPU at a premium to all other players Limited growth in voice usage Lo
Slide 18: Orange: Focus on Orange UK
Orange: Focus on Orange UK Key Initiatives to address UK market issues Implementing group-wide segmentation strategy Launch of Orange Premier Growth in corporate and medium business segments Improving distribution channels performance Focus on direct channels across Orange Retail, Internet and teles
Slide 19: REAA & Operating Income analysis
REAA & Operating Income analysis Euros in millions REAA 1,735 1,026 1H03* -155 +14.1% 1,979 -4.9% +42.9% 975 918 1H04 -189 France UK RoW Group shared function 1,388 +15.6% 1,604 +111.9% -21.1% 487 519 -171 -199 1H03* 1H04 * pro forma ROW accounts for 25% of total Orange REAA
Slide 20: Operating figures 1H04
Operating figures 1H04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX 3,248 2,078 2,331 +13.4% 3,683 +16.0% 2,411 +3.8% +17.2% 2,731 1H03* 1H04 Contained OPEX: REAA margin up 38.6% in 1H 04 vs 37.9% in 1H 03 CAPEX of 0.95 bn euros (10% of revenues) Impact of EDGE/UMTS roll-out, overall CAPEX in
Slide 21: Orange: 1H 2004 Key Focus
Orange: 1H 2004 Key Focus Market based segmentation Greater customer intimacy, based on a thorough assessment of client needs by segment, to grow usage and increase loyalty Implementation of new business / reporting lines focused on customer segments. Targeted offers and advertising campaigns Signat
Slide 22: Orange: H1 2004 Key Focus
Orange: H1 2004 Key Focus Multimedia 3G/Broadband 3G Mobile Office Card: first 3G product launched in the UK in July with 66%population coverage 10 “3G” cities in France On track for commercial launch in the UK and France before the end of Footprint Sale of Danish operations agreed with TeliaSonera
Slide 23: Wanadoo: Key messages
Wanadoo: Key messages Wanadoo subscribers growth driven by Broadband Broadband subscribers: +80 % in Europe 35.4% of Wanadoo customers are broadband in Europe Directories On-line Directories revenues of Pages Jaunes in France*: Eur 122.8 m, up + 20.9% Number of Internet advertisers : 302k, up 15% *
Slide 24: Wanadoo: Access Customer growth
Wanadoo: Access Customer growth Customers in France Customers outside France In millions 4.2 33% 67% 4.4 36% 64% 4.5 40% 60% 4.7 46% 54% 4.7 49% 51% 4.6 9% 91% 4.5 11% 89% 4.6 14% 86% 4.7 16% 84% 4.6 21% 79% Q2 ‘03 Q3 ‘03 Q4 ‘03 Q1 ‘04 Q2’04 Q2 ‘03 Q3 ‘03 Q4 ‘03 Q1 ‘04 Q2 ‘04 Broadband Narrowband 35
Slide 25: Wanadoo: Segment Revenues
Wanadoo: Segment Revenues + 11.9% pro forma + 10.8% actual Euros in millions Pro forma growth 1,227 1,215 1,360 - 14 Directories: + 4.5% Access, portals and e-commerce: + 15.9% 1H03 Forex Perimeter & Others 1H03PF 1H04 Revenue growth impacted by tariff cuts
Slide 26: Operating figures 1H04
Operating figures 1H04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX + 12.2% +22.3% +12.1% + 12.3% 1H03* 1H04 Stable REAA margin +9.3% in 1H 2004 in spite of tougher competition * pro forma REAA-Capex improves despite adverse market conditions on access in France
Slide 27: Wanadoo: 1H04 key initiatives
Wanadoo: 1H04 key initiatives France A new range of innovative service offerings International Towards a European strategy For low income customers, new fixed-time, metered bandwidth ADSL packages starting at 14.9 € Broadband offers to come (indicative prices) 2Mbps for 39.9 € pm (2 years commitment
Slide 28: Fixed Line, Distribution and Networks: 1H04 Key messages
Fixed Line, Distribution and Networks: 1H04 Key messages ADSL H1 revenues* up 48.5% year on year Consumer Services: resilience of access revenues and lower traffic Two third of revenues secured* Number of lines year on year roughly stable (-0.8%) Business Services: price pressure and technology migr
Slide 29: Fixed Line: Broadband in France
Fixed Line, Distribution and Networks: Broadband in France Total ADSL revenue in France* Millions of lines activated End of period* Euros in millions 2Q 04: EUR 269 m up 12.5% vs 1Q 04 1Q 2003 2Q 2003 3Q 4Q 2003 1Q 2004 2Q 2004 Millions of lines 1.9 0.0 0.7 1.2 2.2 0.1 0.8 1.3 2.5 0.1 0.9 1.5 3.3 0.
Slide 30: Access lines and traffic market share in France
Fixed Line, Distribution and Networks: Access lines and traffic market share in France Number of lines & Market Share* Consumers with contract offers Local LD 77,8% 76,7% 75,8% 73,8% 72,5% 63,3% 62,9% 61,8% 34,0 33,8 60,3% 59,7% 33,9 33,8 33,7 31,30% 32,60% 35,7% 37,8% 39,7% 7,9 8,2 9,0 9,5 10,0 Jun
Slide 31: Fixed Line: Consumer services
Fixed Line, Distribution and Networks: Consumer services Consumer services / Subscription (-1.6%) Increase of installation fees New added value services Increase of specific tariff options (“Appel à prix unique”) “Liste Rouge” free access (€51m yoy) Slight decrease of the number of lines yoy (-0.8%)
Slide 32: 1H04 key initiatives to gain market share for consumer services
Fixed Line, Distribution and Networks: 1H04 key initiatives to gain market share for consumer services Per minute “Le plan”: subscription to all best FT prices towards all destinations Rebalancing prices of “tickets” offers Decrease of fixed to mobile termination fees Packages Fixed Line SMS flat ra
Slide 33: Other 1H04 key initiatives for consumer services
Fixed Line, Distribution and Networks: Other 1H04 key initiatives for consumer services Access “MaLigne TV” launched in Paris’ area (March 04), Marseille, Nantes and Nice (June 04) New Contract for Soho (April 04) Devices “ New handsets rental offer including DECT and SMS compatible devices (January
Slide 34: Fixed Line: Business services
Fixed Line, Distribution and Networks: Business services Business services / Business fixed line telephony (-9.7%) Subscription (around 10% of negative impact) : stabilized access volumes but subscription decrease mainly due to free access to “Liste Rouge” (€12M yoy) Calling services (around 80% of
Slide 35: 1H04 key initiatives for business services
Fixed Line, Distribution and Networks: 1H04 key initiatives to offer more value added services for business services Outsourcing / global managed solutions VoIP / ToIP On site services Nomadism MHS On-going deployment of existing contracts “Hospital @ home” services deployed with Axa E-telephony off
Slide 36: Fixed Line: Carrier services sub-segment
Fixed Line, Distribution and Networks: Carrier services sub-segment Carrier services Domestic interconnection (+0.8%*): positive volume effect offset by price mix effect (F2M price decrease as of 01 01 04), success of ‘DIAL’ products** International Operator Services (+20.1%*): strong increase Other
Slide 37: Fixed Line: segment revenues
Fixed Line, Distribution and Networks: segment revenues - 1.0% pro forma - 1.1% actual Euros in millions 10,915 1,672 3,389 5,679 10,909 1,671 3,393 5,669 - 255 - 144 + 243 + 46 10,799 1,913 3,250 5,414 1H 03 1H03PF Co nsumers Serv. Business Serv. Carriers Serv. Othe rs 1H04 Pro forma Other Revenues
Slide 38: Fixed-line, Distribution and Networks trends
Fixed-line, Distribution and Networks trends Pro forma revenues 1H 03/1H ‘02* 2H 03/2H 02* 1H 04/1H 03* -2.08% -2.65% -1.00% Include negative effect of revenue recognition adjustment in Q4 03 * Pro forma Significant improvements in half-year trends
Slide 39: Fixed Line: key operating figures 1H04
Fixed Line, Distribution, and Networks: key operating figures 1H04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX 3,732 2,155 3,106 +4.4% 3,895 +10.8% 2,387 + 3.4% +4.6% 3,248 1H03* 1H04 Further benefits from TOP Program REAA margin improved by 2 points from 34% to 36% OPEX down 3.8%* thanks to
Slide 40: Fixed Line: OPEX analysis
Fixed Line, Distribution and Networks: OPEX analysis labour cost non-labour cost Euros in millions 3,069 3,068 - 4.0% 2,945 4,160 4,109 - 3.7% 3,959 1H 2003 1H 2003 PF 1H 2004 1H 2003 1H 2003 PF 1H 2004 Opex under control
Slide 41: Equant: Revenues 1H
Revenues 1H 04 - 3.2% pro forma - 12.9% actual Euros in millions 1,341 1,206 1,168 1H03 1H03PF 1H04 Actual figures Direct network services -1.7% (USD655m) Indirect network services -24.1% (USD110m) Integration Services, Other Services , +23% (USD402m) SITA -22.0% (USD266m) Equant statutory revenues
Slide 42: Equant 1H Key initiative: Portfolio transformation
1H 04 Key initiative: Portfolio transformation Voice and Video • Sharp increase in customer opportunities for IP Telephony—over 1,400 IP-enabled connections - Transition of FT’s switched-based network to IP - Voice requirements in most outsourcing deals • Creation of a comprehensive set of solutions
Slide 43: Equant: Key operating figures 1H04
Key operating figures 1H04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX 121 123 -26.8% -60.4% -1 -42 -84 -143 1H03* 1H04 * Pro forma figures REAA down 60.4% as a result of reduced revenues, change in revenue mix and the expiry of the SITA minimum revenue commitment (MRC) On-going OPEX reductio
Slide 44: TP Group: Revenues and customers
Revenues and customers, 1H 04 Customers in m Fixed 11,28 11,37 11,02 11,12 10,95 June 03 Sept 03 Dec 03 March 04 June 04 Mobile 6,01 6,09 5,70 5,35 5,08 June 03 Sept 03 Dec 03 March 04 June 04 Revenues (Euros in millions) + 1.6% pro forma -8.4% actual Pro forma 2,123 1,701 -87 1,914 1,534 -78 - 88 -
Slide 45: TP Group: Key operating figures 1H
Key operating figures 1H 04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX +0.8% 863 870 +11.3% 611 549 +3.9% 412 428 315 -17.6% 1H03* 1H04 * pro forma figures High level in REAA margin maintained – 44.7% in 1H04 vs 45.1% in 1H03 Restructuring program delivering benefits Continued optimization o
Slide 46: TP Group: 1H Key initiatives
1H 04 Key initiative: Fixed line New tariff plan • Better ARPU mix (higher subscription revenue, 54%’04 vs. 31%’03)* • Stabilised MOU • Decrease in churn in terms of number of lines and traffic • Improvement in satisfaction level Mobile Post-paid business • ‘Idea HotSpot’ – WLAN wireless access to t
Slide 47: Other International Operations revenues
Other International Operations revenues + 7.5% pro forma - 20.8% actual Euros in millions 676 629 1H03 1H03 Pro 1H04 forma Main International activities 1H 03 Pro forma 1H 04 Uni 2 (Spain) 243 233 Sonatel (Senegal) 140 192 CI TelCom (Ivory Coast) 104 95 Jordan Telecom 69 73 Mauritius Telecom 33 33 P
Slide 48: Other international: key operating figures 1H
Other international: key operating figures 1H 04 Euros in millions REEA Op. Income CAPEX REEA-CAPEX 81 82 +12.1% +22.5% +36.7% 134 111 -1.6% 1H 03* 1H * pro forma figures REAA increase mainly due to – Increase in Senegal and Jordan (reduced Opex in fixed-telephony) Capex – Stability in all countries
Slide 49: Addressing operational issues
Addressing operational issues Orange UK Wanadoo market share In France Fixed line market share In France Price pressure on business market & Equant Growth in corporate and medium business segments Improving distribution channels performance Launch of 3G datacard Launch new broadband offers from Q3 2
Slide 50: TOP Program Update
TOP PROGRAM UPDATE
Slide 51: TOP program key messages
TOP program key messages Contained capex in 1H 04 (8.9% of revenue) Impact of sourcing, higher efficiency and programs phasing Full year target around 11% of revenue maintained Balancing growth and profitability Commercial expenses increase but higher REAA margins and higher top-line growth Labour c
Slide 52: Balancing growth and margin
Balancing growth and margin Euros in millions + 940 + 162 8,868 8,296 - 513 - 17 REAA 1H03 Revenue gain Labour costs pro forma Commercial expenses impact Other costs REAA 1H04 Consistent with Q1 and full year targets
Slide 53: 1H04 CAPEX analysis
1H04 CAPEX analysis CAPEX* by key item Euros in millions 1H03 actual 1H03 pro forma 1H04 actual 1H 04/1H 03 pro forma Total Group CAPEX 2,162 2,081 2,059 -1.1% % of revenues 9.5% 9.4% 8.9% o/w radio mobile 2G + 3G Equipment 734 720 731 +1.6% o/w ADSL 113 111 102 -8.5% o/w IT 499 489 506 +3.5% * excl
Slide 54: 1H04 OPEX analysis
1H04 OPEX analysis Group key OPEX* items Euros in millions 1H03 actual 1H03 Pro forma 1H04 actual 1H04/1H03 Pro forma Labour Costs** 4,810 4,702 4,540 — 3.5% % of revenues 21.0% 21.1% 19.6% Non Labour Costs*** 9,557 9,244 9,774 + 5.7% % of revenues 41.8% 41.6% 42.2% Total OPEX 14,367 13,945 14,314 +
Slide 55: 1H04 OPEX analysis: Labour costs
1H04 OPEX analysis: Labour costs Euros in millions 4,810 +147 4,540 - 29 - 79 - 1H03 Perimeter impact Forex impact Volume impact Costs & Mix impact 1H04 Volume impact Headcounts reduced by – 5.7%, (end of period, pro forma) 1/2 in France 1/2 outside France Costs and mix impact 3/5 Cost impact 2/5 Mi
Slide 56: Headcount trends
Headcount trends Headcount, End of period Actual : -7.2% year on year Pro forma :—5.7% year on year 225,982 223,498 218,523 212,281 209,782 92,373 91,888 88,626 84,279 82,900 International 19,375 19,122 19,083 17,771 17,914 French Sub. 114,234 112,488 110,814 110,231 108,968 FT SA 2Q 03 3Q 03 4Q 03
Slide 57: 1H04 OPEX analysis: non labour costs
1H04 OPEX analysis : non labour costs Euros in millions 1H03 actual 1H03 Pro forma 1H04 actual 1H04/1H03 Pro forma External purchases commercial expenses 2,353 2,304 2,817 + 22.3% % of revenues 10.3% 10.4% 12.1% Other External Purchases* 6,351 6,103 6,177 +1.2% % of revenues 27.8% 27.4% 26.6% Other
Slide 58: Operating working capital trends
Operating working capital trends DPO* 102,7 92,7 96,2 88,6 86,3 83,9 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 DSO* 55,1 54,6 52,3 47,8 46,2 46,9 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 * See glossary Operating working capital change negative in H1, full year objective is to be slightly positive
Slide 59: 1H04 Consolidated Results analysis
1H04 Consolidated Results analysis
Slide 60: From Revenues to Operating Income
From Revenues to Operating Income Euros in millions 1H03 1H04 % change Proforma % chg Revenues 22,852 23,182 + 1.4% + 4.2% Labor Costs 4,810 4,540 - 5.6 % -3.5% as a % of revenues 21.0% 19.6% Non Labor costs 9,557 9,774 +2.3% +5.7% as a % of revenues 41.8% 42.2% REAA 8,485 8,868 + 4.5% + 6.9% as a %
Slide 61: From Operating Income to Current Income from integrated companies
From Operating Income to Current Income from integrated companies Euros in millions 1H03 1H04 Operating Income 4,645 5,273 Interest expense, net excl. “TDIRA” “TDIRA” -2,052 - 1,609 Accrued “TDIRA” “TDIRA” interest expense -140 - 153 Foreign exchange gain (loss), net - 83 - 87 Discounting of early r
Slide 62: From Current Income from integrated companies to Net Income
From Current Income from integrated companies to Net Income Euros in millions 1H03 1H04 Current Income from integrated companies 2,270 3,350 Other non-operating income / (expense), net - 370 + Income taxes +3,231 - 769 Employee Profit Sharing - 75 - 104 Net Income / (loss) from Integrated Companies
Slide 63: Financing in 1H04: From REAA to Net cash used in operating activities
Financing in 1H04: From REAA to Net cash used in operating activities Euros in millions 1H03 1H04 REAA 8,485 8,868 Interest Expense, net - 2,052 - 1,609 Foreign Exchange impact - 760 + 97 Income Taxes - 226 - 168 Early Retirement Plan -350 -405 Employee Profit Sharing - 75 - 104 Restructuring costs
Slide 64: Financing in 1H04
Financing in 1H04 Euros in millions 1H03 1H04 A—Net Cash provided by operating activities 4,474 5,960 B—Net cash provided by investing activities - 4,007 - 3,340 ow Capex - 2,758 - 2,573 C—ow Disposals of financial investments 1,199 19 D—ow Orange & Wanadoo minorities buy out 0 - 2,276 E—Impact of i
Slide 65: Cash impact of main acquisitions and disposals
Cash impact of main acquisitions and disposals Euros in millions Post 1H 04: circa -0.6bn announced 1H 03: + 1,2 bn Casema 286Sprint Eutelsat 1H 03 2H 03: + 1,8 bn Wind Argentine Salvador Orange 2H 03 1H 04:—2,3 bn Wanadoo Orange 1H 04 Pages Jaunes 1,211- 1,450 O. Denmark (ESTIMATED) Wanadoo Equant
Slide 66: Conclusion
CONCLUSION
Slide 67: Conclusion
Conclusion H1 on track to achieve key objectives A right balance between growth (+4.2% pro forma revenue) and profitability (REAA margin up 1pt year on year pro forma) Regular improvement in cash generation from operations Strategy unchanged Focus on organic growth, no major acquisition considered C
Slide 68: Slide 68
Slide 69: Appendix
APPENDIX
Slide 70: 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 France:
Slide 71: Glossary (2)
Glossary (2) Mobile AUPU: Monthly average usage per user (AUPU) is defined as total usage (including outgoing traffic, incoming traffic and roaming) for the 12 previous months divided by the weighted average number of Orange Group’s customers during the same period. AUPU is quoted in minutes on a us
Slide 72: Glossary (3)
Glossary (3) REAA: Operating income before depreciation and amortization of tangible and intangible assets and before amortization of actuarial adjustments in the early retirement plan Capex: acquisitions of intangible and tangible assets, excluding GSM and UMTS licenses Opex: operating charges befo
Slide 73: 1H04 Group Consolidated Revenues by segment
1H04 Group Consolidated Revenues by segment + 4.2% pro forma + 1.4% actual Euros in millions 22,852 2,123 1,341 10,915 1,227 8,615 -2,223 1H03 -383 Forex - 227 Perimeter & other 22,242 1,914 1,206 10,909 1,215 8,573 -2,204 1H03PF 23,182 1,944 1,168 10,799 1,360 9,536 -2,301 1H04 Pro forma growth Oth
Slide 74: Forex Impact
Forex Impact: Adverse EUR 383 million impact Revenues by currency Other 5.0% EUR 66.8% GBP 14.1% USD 5.8% PLN 8.4% 10% strengthening of Euro has an Impact of… -3.0% on group REVENUE -2.3% on group REAA -1.4% on group Operating Income -1.9% on group REAA—CAPEX
Slide 75: Orange: ROW subscribers
Orange: ROW subscribers RoW: 32.9% of Orange’s customer base In million customers +52,8% 4,0 2,6 Romania +10,1% 2,4 2,7 Belgium +19,2% 1,9 2,2 Slovakia +28,5% 1,8 2,3 Egypt +35,1% 1,7 2,3 Africa / Others +46,1% 1,1 1,5 Netherlands +11,3% 1,0 1,1 Switzerlands +12,1% 0,5 0,6 Denmark 1H 03 1H 04
Slide 76: Orange: Segment Revenues
Orange: Segment Revenues +11.2% pro forma + 10.7% actual Euros in millions 8,615 23.7% 33.1% 44.2% -1.0% 1H 03 +10.7% 8,573 22.8% 33.8% 44.4% -1.0% 1H 03PF +11.2% 9,536 25.5% 32.0% 43.4% -0.9% 1H 04 Orange France Orange UK ROW Intra Group Eliminations
Slide 77: Orange: ROW Revenues
Orange: ROW Revenues +24.4% pro forma + 18.9% actual Euros in millions +51,5% Romania +18,1% Belgium +18,0% Slovakia +38,7% Egypt +52,9% Africa / Others +31,6% Netherlands +10,9% Switzerlands +0,6% Denmark 1H 03 Pro Forma 1H 04 Note: Africa / Other includes the following countries Botswana, Cameroon
Slide 78: Orange: Non voice revenue trends
Orange: Non voice revenue trends Non-voice represents 14.3% of Network revenues Non-voice revenues as % of network revenues 11.0% 13.4% France 15.4% 17.0% UK 4.2% 7.1% Romania 15.7% 15 15.6% Belgium 9.7% 11.4% Slovakia 4.4% 4.8% Egypt 11.1% 16.5% Netherlands 12.8% 15.4% Switzerlands 11.5% 15.8% Denm
Slide 79: Orange: Churn in key markets
Orange: Churn in key markets Churn* Orange France Annual rolling churn in % 25% 20% 15% 10% 5% 0% 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 18,6% 10,3% Overall Contract 30% 25% 20% 15% 10% Orange UK 26,1% 23,2% 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 Overall Contract * See glossary
Slide 80: Orange: Usage in Key Markets
Orange: Usage in Key Markets Annual rolling AUPU* Orange France AUPU in minutes 170 160 150 140 130 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 02 02 02 02 03 03 03 03 04 04 * See glossary. Orange UK 150 140 130 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 02 02 02 02 03 03 03 03 04 04 Continued increase in usage in France (+11
Slide 81: Orange: Segment REAA
Orange: Segment REAA +13.4% pro forma + 12.7% actual Euros in millions 3 268 20,8% 30,8% 53,1% -4,7% 1H 03 +12,7% 3 248 19,8% 31,6% 53,4% -4,8% 1H 03PF +13,4% 3 683 24,9% 26,5% 53,7% -5,1% 1H 04 Orange France Orange UK ROW Shared Group Functions
Slide 82: Orange: REAA margin
Orange: REAA margin REAA margin increase to 38.6% of total revenues France 45.6% 47.8% UK 35.4% 32.0% RoW 33.1% 37.9% 1H 03 Pro forma 1H 04
Slide 83: Orange: Segment Capex
Orange: Segment Capex +3.7% pro forma Euros in millions +2.8% actual 29,6% 39,0% 31,4% 1H 03 +2,8% 28,2% 40,0% 31,7% 1H 03PF +3,7% 26,3% 32,2% 41,5% 1H 04 Orange France Orange UK ROW
Slide 84: Orange: RoW ARPU
Orange: RoW ARPU RoW: stabilisation in ARPU* ARPU in Euros Romania 177 158 Belgium 409 431 Slovakia 196 201 Egypt Netherlands 379 381 Switzerland 710 688 Denmark 370 371 1H 03 1H 04 * See glossary.
Slide 85: Orange: Network Revenues
Orange: Network Revenues +12.0% pro forma + 11.5% actual Euros in millions 1H 03 Reported 7 926 23,4% 32,7% 44,7% -0,7% +11,5% 7 887 22,4% 33,4% 44,9% -0,7% 1H 03PF +12,0% 8 836 25,0% 31,5% 44,3% -0,9% 1H 04 Orange France Orange UK ROW Intra Group Eliminations
Slide 86: Orange: ROW Network Revenues
Orange: ROW Network Revenues Euros in millions Romania +51.5% Belgium +19.4% Slovakia +20.8% Egypt +36.4% Africa / Others +55.2% Netherlands +25.6% Switzerland +8.5% Denmark +9.4% 1H 03 1H 04 Note: Africa / Other includes the following countries Botswana, Cameroon, Ivory Coast, Madagascar, Dominica
Slide 87: Orange: RoW REAA
Orange: RoW REAA Strong REAA growth in RoW operations Euros in millions Romania 97.0 147.0 +51.5% Belgium 204.0 268.0 +31.4% Slovakia 81.0 105.0 +29.6% Egypt 74.0 95.0 +28.4% Africa / Others 66.0 125.0 +89.4% Netherlands 29.0 45.0 +55.2% Switzerlands 77.0 118.0 +53.2% Denmark 14.0 16.0 +14.3% 1H 03
Slide 88: Orange: RoW Capex
Orange: RoW Capex Euros in millions Romania 16.5% Belgium 9.0% Slovakia 9.9% Egypt 7.9% Africa / Others 15.6% Netherlands 6.9% Switzerlands 7.9% Denmark 7.3% 1H 03 Pro Forma 1H 04 1H 04 Capex as % of Revenues
Slide 89: Wanadoo: Number of customers in Spain
Wanadoo: Number of customers in Spain In millions 1.4 1,323 0,131 June 1.5 1,31 0,19 December 2003 1.4 1,2 0,235 June 2004 Broadband Narrowband
Slide 90: Wanadoo: Number of customers in the UK
Wanadoo: Number of customers in the UK In millions 2.64 2.549 0.091 June 2.58 2.422 0.158 December 2003 2.5 2.181 0.316 June 2004 Broadband Narrowband
Slide 91: Wanadoo: Number of customers in the Netherlands
Wanadoo: Number of customers in the Netherlands In millions 0.47 0.273 0.203 June 0.54 0.254 0.289 December 2003 0.61 0.212 0.401 June 2004 Broadband Narrowband
Slide 92: Wanadoo: ARPU trends
Wanadoo: ARPU trends In euros 17,3 17,8 17,7 10,2 10,1 10,5 8,5 9,1 10,2 7,8 7,5 8,3 June December 2003 June 2004 France UK Spain Netherlands
Slide 93: Fixed Line: Consumers with packages
Fixed Line, Distribution and Networks: Consumers with packages 30,8% 31,9% 34,9% 37,0% 38,1% 7,8 8,0 8,8 9,3 9,6 Q2 ‘03 Q3 ‘03 Q4 ‘03 Q1 ‘04 Q2’ 04 total packages * See glossary
Slide 94: 1H04 OPEX analysis: commercial expenses
1H04 OPEX analysis: commercial expenses FT Group Commercial expenses Euros in millions 1H03 Pro forma 1H04 actual 1H 04/1H 03 Pro forma Commercial expenses* 2,304 2,817 + 22.3% Split by nature Goods and handsets 1,221 1,554 +27.3% Commissions & Distr. 635 736 +16.0% Advertising, & brand 448 527 +17.
Slide 95: Income taxes
Income taxes Euros in millions 1H 2003 1H 2004 France Telecom SA tax group 1,100 401 Orange SA tax group 2,192 - 479 Wanadoo SA tax group 317 - 304 TOTAL FTSA fiscal perimeter -382 Other subsidiaries in and outside France - -378 -387 Total taxes 3,231 -769 Cash tax impact for H1 2004:—EUR 168m
Slide 96: Non-operating income
Non-operating income Euros in millions 1H 2004 Total non operating income +233 Of which: Provision reversal +270 Disposal of Pramindo Ikat + 50 Restructuring costs -39
Slide 97: Goodwill amortization
Goodwill amortization Euros in millions 1H 2003 1H 2004 Ow Orange -617 -665 Ow Wanadoo -134 -118 Ow TP Group -62 -73 Ow Equant -17 -15 Total recurrent Goodwil amortization -850 -894 Freeserve - 447 - BITCO / TA - 287 - Mauritius Telecom - 143 - QDQ Media - 149 - Equant - - 519 Others - 15 Total exce
Slide 98: Balance Sheet Highlights
Balance Sheet Highlights Euros in billions FY 2003 1H 2004 Long Term Assets 85,375 85,602 of which goodwill 25,838 28,315 Currents Assets 14,458 15,553 of which Cash and cash equivalent 3,350 2,951 of which marketable securities 1,874 376 FY 2003 1H 2004 Shareholders’ equity 12,026 15,328 Minority i