Orange Sa · EURONEXT:ORA
Orange Sa — FY2020 Earnings Presentation
44 slides from Orange Sa's earnings presentation, Feb 18, 2021
Slide 1: Orange financial results FY 2020
Orange financial results #FY_2020 18 February 2021 Stéphane Richard Chairman and CEO Ramon Fernandez Deputy CEO, Finance, Performance and Development 1
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange's financial situation, results of operations and strategy. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to
Slide 3: Section One: FY 2020 highlights
Section One FY 2020 highlights 3
Slide 4: Key messages
Key messages FTTH leadership reinforced with additional+1.2m customers in France and 400K in Europe Excellent commercial performance overall with FTTH net adds record reaching 9.2M customers Resilient revenues in the context of Covid supported by outstanding MEA and solid France B2B Solid Recovery o
Slide 5: 2020 key achievements
2020 key achievements FTTH France Enterprise Record FTTH IT&IS growth at 47.2m net adds in Q4 +388k connectable homes +2.3% yoy FY Best mobile network back to solid trend in Q4 at +24% 10th year in a row +5.6% despite the crisis 9.3m cust. yoy #1 in Cloud in Europe for +1.8m customers yoy, # 1 NPS H
Slide 6: Orange Concessions: the leading fiber platform in French rural areas
Orange Concessions: the leading fiber platform in French rural areas Awarded lines in PIN areas Already built To be built SCOPE 4,489k 1,156k + 3,333k 50/50 High profile Dedicated Increased A platform partnership financial set for management financial with an option to partners exceptional acquire a
Slide 7: FY 2020 financial achievements
FY 20 FY 2020 Revenue EBITDAaL eCapex financial achievements €42.3bn €12.7bn €7.1bn yoy : comparison with the same period of the previous year, on a comparable basis unless otherwise specified All Group level mentions include both telecom and banking +0.3% yoy in FY20 -1.0% yoy in FY20 -1.7% yoy in
Slide 8: Towards a more sustainable, inclusive & responsible business
Digital inclusion develop connectivity and inclusive services Ambitions Towards a more VHBB addressable homes (in millions) 69m / 2023 sustainable, 48m 32 / 2025 Orange Digital Center 3 inclusive & Environment reduce our CO2 eq. emissions and implement circular economy to achieve Net Zero responsibl
Slide 9: Section Two: Financial results overview
Section Two Financial results overview 9
Slide 10: Revenue slightly up in FY 2020
FY20 revenue growth contribution per segment (yoy in €m) Revenue -79 +0.3% Other European Countries slightly up in FY 296 -107 42,270 28 2020 42,151 Spain -312 291 -388 FY19 cb France Europe MEA Enterprise Others FY 20 FY20 revenue evolution per activity (yoy in %) Q4 2020 FY 2020 +4.1% +4.4% +2.1%
Slide 11: EBITDAaL down in crisis context
FY 20 EBITDAaL Telecom growth per segment (yoy in €m) -1.0% EBITDAaL down in crisis context 179 -214 12,970 33 Growth in MEA, resilience in 18 France and Europe mitigating -179 deterioration in Spain & Enterprise 31 12,839 FY 19 cb France Other MEA Spain Enterprise Others FY 2020 european countries
Slide 12: Net income up
+56.9% Net income up 2,246 -49 5,055 +56.9% 3,222 -131 -131 -49 -53 FY 2019 EBITDAaL cb adjustments* Impairment Financial result tax refund D&A, income FY 2020 Net Income of goodwill & tax paid & Net Income from fixed assets others from Consolidated Consolidated Group 1 2 3 Group FY 2020 Net income
Slide 13: Organic Cash Flow in 2020 growing at €2.5bn
Organic Cash Flow (telecom activities) in 2020 growing at €2.5bn and at €4.7bn adding tax refund (in €bn) Organic Cash 5.7 +€150m yoy 4.7 Flow* turnaround -1.1 -1.1 -0.2 -0.8 2.5 2.2 EBITDAaL income net financial Change in other Organic Tax refund Organic - eCAPEX taxes paid interests paid** working
Slide 14: Section Three: Business review
Section Three Business review 14
Slide 15: Q4 2020 France: financial performance
Q4 2020 France: financial performance Resilience of core retail services compensates structural decline of narrowband in €m Q4 20 yoy cb FY 20 yoy cb Revenues 4,744 +0.2% 18,461 +1.6% Retail services 2,696 -1.3% 10,764 -0.4% Convergent services* 1,155 +0.5% 4,559 +3.1% +0.6% Q4 Retail excl. digital
Slide 16: Q4 2020 France: commercial performance
Q4 2020 France: commercial performance Strengthening leadership Mobile contract net adds (in ‘000s) and churn rate Fixed BB net adds (in ‘000s) net adds excl M2M quarterly churn rate in % FTTH ADSL and others +95 +105 13% 13% +125 +87 54% +49 +37 +61 +360 +388 +47 of broadband B2C +239 +238 +29 +192
Slide 17: Q4 2020 Europe
Q4 2020 Europe Strong commercial trends despite Covid-19 in €m Q4 20 yoy cb FY 20 yoy cb Revenue evolution (in €m) Revenues 2,715 -4.3% 10,580 -3.5% 2,838 Retail services 1,781 -4.2% 7,147 -3.0% Convergent services* 667 2,717 +0.5% -23 -3.4% Mobile only services 747 -7.4% 3,038 -7.5% Fixed only serv
Slide 18: Q4 2020 Spain
Q4 2020 Spain Confirmation of commercial turnaround, first step to improve EBITDAaL trend, our priority in €m Q4 20 yoy cb FY 20 yoy cb Revenues 1,211 -8.8% 4,951 -5.9% 85% Convergence as % of broadband B2C customer base Retail services 837 -10.8% 3,476 -7.6% +2pt yoy Convergent services* 477 -9.2%
Slide 19: Q4 2020 Africa & Middle East
Q4 2020 Africa & Middle East Outstanding performance in €m Q4 20 yoy cb FY 20 yoy cb Revenues 1,515 +8.3% 5,834 +5.2% Retail services Mobile only services 1,301 +10.5% 1,140 +8.5% 5,007 4,420 +7.8% +6.7% 33.0 m +39% 1.7m +39% Fixed only services 152 +23.7% 562 +15.5% 4G customers yoy FBB customers y
Slide 20: Q4 2020 Enterprise
Q4 2020 Enterprise Strong recovery in IT&IS revenues thanks to Cloud and Cybersecurity in €m Q4 20 yoy cb FY 20 yoy cb IT&IS share in total revenues: 39.5% Revenues 2,050 -1.2% 7,807 -1.4% (vs. 37.2%* in FY19 – historical data) Fixed only services 942 -5.2% 3,851 -2.5% Voice 302 -6.0% 1,237 -3.8% Da
Slide 21: Section Four: Scale Up, €1bn net cost savings program by 2023
Section Four Scale Up, the €1bn net cost savings program by 2023 21
Slide 22: Scale Up program, €1bn net savings out of €13.8bn indirect costs
Scale Up program, €1bn net savings out of €13.8bn indirect costs Direct Costs Indirect Costs FY 2019 historical cost base €11.6 bn €17.8 bn By nature By Segment 2.5 Taxes & others A&P 9% 1.3 5% CRM 3% Enterprise Interconnection & 22% connectivity Equipments IT & Network 16% € 13.8bn Labour 50% € 13.
Slide 23: Several levers identified with dedicated task force
Several levers identified with dedicated task force Savings ambitions by nature* (€1 bn) by 2023 Levers Labour / G&A Enhance natural attrition Real Estate New optimisation opportunities IT & Network Automation, mutualisation & Energy efficiency CRM Constant increase in digital channels, portfolio ra
Slide 24: Focus on selected major initiatives, 2023 savings targets vs. 2019
Focus on selected major initiatives, 2023 savings targets vs. 2019 ~€500m ~€100m ~€60-80m net savings vs. 2019 net savings vs. 2019 net savings vs. 2019 People Transformation Real Estate Automation (RPA, data, IA) New behaviours reinforced by sanitary Starting negotiations with employee crisis & CSR
Slide 25: Cost decrease acceleration to reach €1bn net reduction target by 2023
Cost decrease acceleration to reach 1bn€ net reduction target by 2023 Savings ambitions per year in €m 13.8 bn€ -100 -200/-250 -300/-350 12.8 bn€ -300/ -400 2019 2020 2021 2022 2023 Scale-up cost base in 2023 25
Slide 26: Section Five: Guidance
Section Five Guidance 26
Slide 27: Organic Cash Flow & tax refund inflow
Organic Cash Flow & tax refund inflow In €bn 4.7 2.2 2.5 >2.6 2.3 Organic Cash Flow Organic Cash Flow OCF + tax refund Organic Cash Flow 2021 2019 2020 2020 before tax refund 27
Slide 28: Balanced tax allocation to create value mid-long term
Balanced tax allocation to create value mid-long term Benefits/Value Creation 2021 & 2022 allocation of the tax refund cash 20 cts Dividend eCAPEX Highly accretive value investments with IRR -0.4 between 15% and 20%: -0.5 -3rd party co-financing in France -Investments in network in MEA CSR projects
Slide 29: Guidance 2021
Guidance 2021 2020 2021e Tax refund 2021e before tax refund allocation impact Achieved allocation in 2021 Decrease between €0.1bn and EBITDAaL, yoy -1% Around +1% €0.2bn, subject to employee Flat - share plan take-up and CSR eCAPEX yoy 1 ~ 7.1 bn€ 2 ~ €7.3 bn 3 ~ €0.3bn € 7.6 -7.7bn Organic Cash €2.
Slide 30: Reiterated 2023 Organic Cash Flow guidance
Reiterated 2023 Organic Cash Flow guidance Step-up of Organic Cash flow from end of 2020 to 2023 (in €bn) Weight increase of Organic CF on Executive Team remuneration scheme 3.5 to 4.0 2.5 2.3 Organic Cash Flow Organic Cash Flow EBITDAaL growth (including eCapex decrease * Organic Cash Flow 2019 202
Slide 31: Section Six: FY20 Q&A
Section Six FY20 Q&A 31
Slide 32: Section Seven: European Towerco
Section Seven European Towerco 32
Slide 33: Creating a leading European mobile passive infrastructure platform
Creating a leading European mobile passive infrastructure platform Run Orange’s first class mobile passive infrastructure as an industrial growth engine Key objectives Get ready to take part in the European tower market consolidation Timeline Dedicated project Presentation of TowerCo Management Comp
Slide 34: TowerCo key metrics
TowerCo key metrics 2020 metrics France Spain Total Pro forma financial metrics(2) # of macro sites (’000s) 17.6 7.9 25.5 €m 2019 2020 Tenancy ratio(1) 1.18x 1.59x 1.31x Revenue 493 510 Ground-based towers / ~55% / 45% ~52% / 48% rooftops (%) France 349 358 Land owned 2 000 + Spain 143 152 EBITDA (I
Slide 35: TowerCo's scope, structure and governance
TowerCo’s scope, structure and governance underpin its full autonomy and independence Simplified legal structure Fully self-standing entity Orange All core assets and functions transferred SA • Sites, land, leases and third-party tenancy contracts • Full in-house capabilities to run operations for
Slide 36: Best-in-class MSA providing long-term cash flow visibility for TowerCo
Best-in-class MSA providing long-term cash flow visibility for TowerCo to drive value creation while preserving Orange’s retail leadership MSA Key Terms MSA type agreement Contract Structure One MSA per country with a common template 15-year initial term Term 2x10-year automatic renewal Rene
Slide 37: A clear path to long-term value creation
A clear path to long-term value creation Organic growth Revenue Costs potential • Tenancy ratio increase from 1.3x to 1.5x by 2026 • Lease costs renegotiation and optimisation • Up to 3 000 new macro sites to be built over the next 8 years • New digital services to be developed Inorganic growth
Slide 38: Section Eight: European Towerco Q&A
Section Eight European Towerco Q&A 38
Slide 39: Annexes
Annexes 39
Slide 40: Convergent B2C customer base in million
Convergent B2C customer base in million % of broadband B2C customer base Convergence, France* Spain Poland 5.84 3.00 2.99 2.95 2.96 3.00 1.48 the bedrock of 5.82 83% 85% 1.44 54% 1.41 65% our strategy 5.80 5.80 5.80 1.37 1.39 55% 62% Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 Q4 19
Slide 41: COVID-19 crisis and cofinancing drove lower eCAPEX
Telecom eCapex/CA (telecom, en %) FY 2020 eCAPEX COVID-19 crisis 17.1% 16.8% and cofinancing €7.1bn FTTH eCAPEX drove lower 12.3% 12.6% eCAPEX excl. FTTH eCAPEX, despite - 1.8% yoy - €127m yoy 2019 bc 2020 acceleration in FTTH rollout 48.3m VHBB** connectable lines FTTH connectable VHBB connectable
Slide 42: Change in net income
Change in net income FY 2019 FY 2019 FY 2020 (in millions of euros) historical cb actual EBITDAaL 12,856 12,812 12,680 Adjustments* 15 41 (115) Depreciation & amortization of fixed assets (7,110) (7,134) Impairment of goodwill & fixed assets 19 (30) Share of profit (losses) of associates and JV 8 (2
Slide 43: Adjustments
Adjustments FY 19 FY 19 FY 20 (in millions of euros) historical cb Actual Cost of restructuring programs (165) (163) (83) Cost of acquisitions and integration (24) (24) (37) Significant litigations (49) (49) (211) Specific labour expenses (23) (23) (12) o\w Senior Part Time (25) (25) (13) Portfolio
Slide 44: Change in net debt
Change in net debt 2019 2020 (in millions of euros) historical Actual EBITDAaL - eCAPEX (telecom activities) 5,750* 5,736 Change in working capital requirements (204) (500) Change in eCAPEX payables 45 307 Net interest paid (including dividends received)** (1,196) (1,127) Income taxes paid (1,079) (