Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Q3 2005 Earnings Presentation
48 slides from Orange Sa's earnings presentation, Oct 27, 2005
Slide 1: Form 6-K France Telecom
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 October 27, 2005 Commission File No. 1-14712 FRANCE TELECOM (Translation of registrant’s name into English) 6, place d’Alleray, 7
Slide 2: France Telecom 3Q 2005 figures
France Telecom 3Q 2005 figures th October 27 , 2005
Slide 3: Disclaimer
Disclaimer This presentation contains forward-looking statements relating to France Telecom’s objectives, in particular for 2005. Although France Telecom believes its objectives are based on reasonable assumptions, these forward-looking statements are subject to numerous risks and uncertainties and
Slide 4: Agenda
Agenda 1 Key messages: France Telecom to date 2 3Q 2005 figures Revenues TOP 3 Conclusion 3
Slide 5: Our key messages
Our key messages Positive trends on major KPIs Confident 3Q revenue growth below our objectives Operations to deliver Full year pro forma revenue growth close to 3% NExT Gross Operating Margin on track Following the acquisition of Amena No need for Strategy & Overall footprint completed in Western E
Slide 6: Home France: strong acceleration of Livebox deployment
Operations Home France: strong acceleration of Livebox deployment 990 363 627 416 182 211 194 234 40 3Q04 4Q04 1Q05 2Q05 3Q05 Livebox net adds Livebox Over 1 million Livebox beginning of october, 5 1.5 million targeted for year end
Slide 7: Home France: increase of retail broadband market share
Operations Home France: increase of retail broadband market share 52,1% 49,6% 47,8% 47,6% 47,2% 46,5% 46,8% 46,9% 56,3% 49% 48,1% 43,7% 41,7% 39% 35% 32% 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 Net adds MS Market Share Strong success of the new Broadband Multimedia offers 6
Slide 8: Home: continuous success of broadband roll-out outside France
Operations Home: continuous success of broadband roll-out outside France Number of broadband customers (m) Spain-UK-Netherlands-Poland 2.9 million broadband customers, of which 2.6 million ADSL (+90% yoy) 2.9 1.6 134k Livebox 67k VoIP customers Acceleration of LLU in all countries 3Q04 3Q05 (555 MDF
Slide 9: Personal: 70 million customers at the end of September
Operations Personal: 70 million customers at the end of September (excluding Amena) Total subscribers (m) 70 million mobile customers, up by 17% yoy 70.0 643 000 mobile Broadband customers in Europe 59.9 Around 10 million customers 3Q04 3Q05 of Amena to be added One of the main growth engines of the
Slide 10: Orange UK
Operations Orange UK Orange UK pro-forma revenue growth 0.2% Product portfolio renewed with new -0.3% PAYG tariffs launched in August & September First converged offers launched -2.4% Brand refresh underway 1Q05/1Q04 2Q05/2Q04 3Q05/3Q04 Cut in CTR impact to disappear in 4Q 2005 9
Slide 11: Enterprise: success confirmed for Business Everywhere
Operations Enterprise: success confirmed for Business Everywhere Business Everywhere end-users (000) Development of IP services: 375 + 60% in IP-VPN access 364 (end of period) 340 322 308 Towards IT and Telecom convergence: + 10% in Services revenues (9m 05 vs 9m 04) Sept. 04 Dec. 04 March 05 June 0
Slide 12: Operating margins: Opex under control
Operations Operating margins: Opex under control 50.9% 50.2% 51.4% 39.2% 38.8% 39.4% 9m04 9m04PF 9m05 Group gross operating margin before commercial expenses* Group gross operating margin* * See glossary +0.6 pt of Gross operating margin; +1.2 pt of Gross operating margin rate before commercial expe
Slide 13: Key figures
Operations Key figures Euros in billions Actual 9 months Actual Pro-forma % Proforma 3Q05 Proforma 3Q04 3Q04 change % chg % chg Revenues 11.818 12.070 12.264 +3.8% +1.6% +2.0% Gross Operating Margin* 4.762 4.819 4.862 +2.1% +0.9% +3.6% As a % of revenues 40.3% 39.9% 39.6% G.O.M. rate before commerci
Slide 14: Full year 2005 objectives
Operations Full year 2005 objectives Initially announced Close to 3% full year pf Pro-forma growth Revenues increase between + 3% & + 5% Stronger Q4 expected GOM Over 18.5 Bn Confirmed Capex Upper range of 10-12% Confirmed to Sales Net Debt / Below 2.5 Confirmed GOM High revenue growth rate expected
Slide 15: Overall European footprint achieved
Strategy & Overall European footprint achieved footprint United Kingdom Mobile: 14.5 millions Poland Internet: 2.1 millions Mobile: 9.1 millions Fixed: 11.2 millions Internet: 1.6 million France Mobile: 21.7 millions Fixed: 33.6 millions Internet: 5.6 millions Spain* Mobile Mobile: 9.7 millions Fixe
Slide 16: Focus on preparing NExT: converged offers
Strategy & Focus on preparing NExT: footprint converged offers Family Talk Around 6,000 offers sold 18,000 customers taking advantage on unlimited call between fixed & mobile Orange/Wanadoo UK home broadband offer 2Meg broadband package for under £10 for Orange customers Business Talk Darty and SFCI
Slide 17: Focus on preparing NExT: content
Strategy & footprint Focus on preparing NExT: content MaLigne TV 142 116 Close to 142k subscribers* at the end of 101 September (+106% in 9 months) 69 8.5 million addressable households at the end of September Continuous success of multiplay offers Introducing PVR for high-end set up boxes Dec 2004
Slide 18: A use of cash policy focused on all stakeholders
Use of A use of cash policy focused cash on all stakeholders Reduce net debt at a Objective maintained : Debt / GOM ratio Deleveraging below 2 before end 2008 reasonable pace from now Proposed 2005 dividend at EUR1 per share 2006-2008 dividend per share evolution to Enhance Shareholders take into ac
Slide 19: Agenda
Agenda 1 Key messages: France Telecom to date 2 3Q 2005 figures Revenues TOP 3 Conclusion 18
Slide 20: 3Q 05 Group Consolidated Revenues by segment
3Q 05 Group Consolidated Revenues by segment 12,264m / + 3.8% actual / + 1.6% pro-forma Euros millions %3Q %PF %PF actual 3Q 9M 12,070 12,264 Total +3.8% +1.6% +2.0% 287 293 Directories +5.7% +2.1% +6.6% 2,029 1,879 Enterprise - 7.4% -7.4% -5.7% 5,713 5,610 Home -0.2% -1.8% -1.6% 5,563 5,937 Persona
Slide 21: 3Q05 Personal Revenues: ROW confirmed as a strong growth driver
3Q05 Personal Revenues: ROW confirmed as a strong growth driver +233K net adds Sustained growth of customer base France +5.1% in pf and pro-forma revenues revenues yoy Back to positive pro-forma revenue UK growth +0.2% pf yoy +39% Substantial growth of mobile customer subscribers yoy Poland base +13
Slide 22: Personal France
Personal France: 2,503m / + 15.5% actual / +5.1% pro-forma / + 6.5 % excludingCTR* ARPU** (Euros) Mobile Broadband Customers*** (000) +1.2% 424 424 429 182 592 585 52 184 183 9 3Q04 3Q05 4Q04 1Q05 2Q05 3Q05 Contract Prepay 233k net adds in 3Q 05, ahead of 3Q 04 (207k) - 100k M6 Mobile customers Cont
Slide 23: Personal UK
Personal UK: 1,492m / -1.5% actual / +0.2% pro-forma / + 4.5% excludingCTR* ARPU** (£) Non Voice Revenues (% of network revenues) -4.7% 19.3% 19.1% 19.4% 18.8% 276 263 582 563 17.2% 17.2% 16.9% 126 111 3Q04 3Q05 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 Contract Prepay Underlying Blended ARPU growth
Slide 24: Personal Poland
Personal Poland: 415m / +25.1% actual / +13.1% pro-forma Customer base* Penetration rate & market share K customers +39% 68.2% 71.4% 64.3% 55.2% 60.3% 6,594 9,134 32.6% 33.5% 46% 54% 58% 31.2% 32.2% 33.1% 42% 3Q04 3Q05 3Q04 4Q04 1Q05 2Q05 3Q05 Contract Prepay penetration market share Increase of Pol
Slide 25: Personal ROW
Personal ROW: 1,582m / +10.9% actual / +15.4% pro-forma Revenues* Euro millions +20.1% +7.2% 443 343 368 369 +37.5% +12.7% +10.5% +8.1% 233 212 229 169 144 149 164 128 Romania Belgium Slovakia Africa / Others Netherlands Switzerland 3Q 04PF 3Q 05 Strong growth of Personal RoW revenues (+15.4% yoy pf
Slide 26: 3Q05 Home Revenues: broadband the main driver for future growth
3Q05 Home Revenues: broadband confirmed as the main driver for Home future growth Strongest ADSL retail market share 56.3% of net adds since 2003 France ADSL Net adds 1 million Livebox (beginning of Market share October 2005) Almost Ongoing strong increase in ADSL 1 million ADSL Poland customer base
Slide 27: Home France
Home France 4,398m/ -2.2% actual / -1.6% pro-forma Euros millions % 3Q % PF % PF actual 3Q 9m 4,469 4,398 Total -2.2% -1.6% -1.3% 629 617 Other Services -1.6% -2.0% -0.8% 1,386 1,366 Carrier Services -1.2% -1.5% -1.3% Consumer Serv. -3.0% -1.5% -1.4% 2,453 2,415 3Q04 PF 3Q05 26 Livebox success & unl
Slide 28: Home France: Consumer Services ARPU
Home France: Consumer Services ARPU * Euro 26.9 26.7 26.8 26.9 3.9 4.0 4.3 4.4 10.8 10.5 10.1 9.9 12.1 12.2 12.4 12.6 End of Dec. 04 End of March 05 End of June 05 End of Sept. 05 Subscription fees Calling services On-line & Internet Services * See glossary Sequential ARPU increase for the second co
Slide 29: Home France: Subscription fees revenues
Home France: Consumer Service - Subscription fees Revenues: +5.1% pf in 3Q05 Number of access Number of lines (in millions) related services (in millions) 27.5 27.6 27.6 27.5 27.4 9.8 10.1 9.5 9.2 27.4 27.5 27.4 27.2 27.1 8.8 3Q04 4Q04 1Q05 2Q05 3Q05 Total number of lines (including full unbundled l
Slide 30: Home France: Calling Services revenues
Home France Consumer Services - Calling Services revenues: -11.9% pfin 3Q05 Consumer - Voice Market Share (PSTN) Packages in % of total customers 43.5% 43.6% Local 69.8% 42.5% 42.4% 73.8% 73.3% 70.9% 70.1% 58.8% 60.3% LD 41.0% 59.4% 58.1% 57.9% 3Q04 4Q04 1Q05 2Q05 3Q05 3Q04 4Q04 1Q05 2Q05 3Q05 PSTN
Slide 31: Home France: On Line Services revenues
Home France Consumer Services - On Line Services revenues: +10.9% pf in 3Q05 ADSL market share and net adds* France Telecom VoIP customers (000) 47.2% 46.5% 46.8% 46.9% 47.6% 484 56.3% 326 49% 48.1% 245 41.7% 43.7% 150 32 3Q04 4Q04 1Q05 2Q05 3Q05 3Q 04 4Q 04 1Q 05 2Q05 3Q05 Net adds MS Market Share
Slide 32: Home France: Carrier Services
Home France Carrier Services: 1,366m / -1.2% actual / –1.5% pro-forma Carrier services Euros millions Domestic Others +13 +34 -19 -48 1,386 1,366 3Q04PF Domestic Services to Fixed to Mobile Other Revenues 3Q05 Interconnection & Operators Unbundling & IP ADSL Revenue growth slowdown in 3Q05 for Domes
Slide 33: Home Poland
Home Poland 778m / +1.3% actual, -7.9% pro-forma Number of Fixed Lines (million) ADSL customers* (000s) 11.3 11.4 11.3 11.4 11.3 11.3 11.2 980 888 793 631 453 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 3Q 04 4Q04 1Q05 2Q05 3Q05 Negative impact of fixed to mobile substitution Growing access revenues due to N
Slide 34: Home ROW
Home ROW 475m / +20.3% actual / +7.6% pro-forma European Broadband customers (000s) Overall European ARPUs * (in euros) 14.6 826 12.7 11.4 10.1 528 8.5 8.2 489 442 430 253 UK Spain Netherlands UK** Spain** Netherlands 3Q 04 3Q 05 9M04 9M05 Total ROW Broadband customers up 64% yoy and total ROW DSL c
Slide 35: Enterprise Revenues: business transformation towards IP and services
Enterprise Revenues: business transformation towards IP and services Continued development of IP Convergence +60% • Increasing demand for innovative IP services of IP-VPN • Voice migrations driven by Total Cost of Ownership access (end reduction, standardization and centralization of period) • Legac
Slide 36: Enterprise: 1,879m / -7.4% actual
Enterprise: 1,879m/ -7.4% actual / -7.4% pro-forma Euros millions % 3Q % % actual PF 3Q PF 9M 2,029 1,879 Total -7.4% -7.4% -5.7% 589 Global Services -3.5% -3.7% +0.3% 567 Business Networks 838 in France + Other Bus. -5.9% -5.7% -4.7% 790 Serv. In France 712 638 Fixed line Telephony in France -10.4%
Slide 37: Enterprise: Progress on Business Transformation in 3Q05
Enterprise: Progress on Business Transformation in 3Q05 Access growth in volume Enterprise Services revenues - France, 3Q05/3Q04 (EoP) (million Euros) 84% 548 + 10% 604 22% 25% Business Oléane access IP VPN access Everyhwere end (excluding Oléane) 9m 04 PF 9m 05 users Migration towards DSL support o
Slide 38: Directories Revenues
Directories Revenues 293M / 5.7% actual / +2.1% pro-forma PagesJaunes.fr audience (m of pages viewed)* Sustained commercial activity: +15.8% growth in customer base, +37% all media combined, as at Sept. 30, 50.0 36,5 2005** Revenue growth outperforming the advertising market on comparable publicatio
Slide 39: 3Q 05: Labour costs
3Q 05: Labour costs Labour costs*, m euros Volume effect: - 4.2% -1.1%** Headcounts, FTE: -8,489 2,094 2,099 2,077 Mix effect: + 0.1% Price effect: + 3.0% 3Q04 3Q04 PF 3Q05 Total effect: -1.1% Headcounts, end of period Headcounts trends: (end of period) -3.4% yoy pro forma 206,481 206,645 199,557 -3
Slide 40: 3Q 05: Non labour costs
3Q 05: Non labour costs External purchases commercial expenses*, m euros Focus on growth: 11.6% 11.8% 1,382 1,402 1,453 commercial expenses account for 27% of total non labour costs • 85% of commercial expenses relates 3Q04 3Q04 PF 3Q05 to Personal and 29% to Personal UK commercial expenses % of sal
Slide 41: 3Q 05: CAPEX analysis (1)
3Q 05: CAPEX analysis (1) CAPEX* by key item Euros in millions 9M04 9M05 9M05/9M04 pro forma actual pro forma Total Group CAPEX 3,290 4,116 +25.1% % of revenues 9.3% 11.5% o/w 2G - 3G and radio 893 1,188 +33.1% access network o/w ADSL 136 145 +6.7% o/w IT 801 797 -0.6% * See glossary Strong focus on
Slide 42: 3Q 05: CAPEX analysis (2)
3Q 05: CAPEX analysis (2) Evolution of group Capex, m euros Actual figures +400 - 154 - 13 + 302 1,898 1,557 1,403 16.2% 1,186 1,173 1,157 12.9% 11.4% 884 10.0% 10.4% 9.9% 7.9% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 Capex as % of revenues FY05 objective maintained 41
Slide 43: Agenda
Agenda 1 Key messages: France Telecom to date 2 3Q 2005 figures Revenues TOP 3 Conclusion 42
Slide 44: Conclusion: France Telecom, October 2005
Conclusion: France Telecom, October 2005 Strong commercial success Profitablity on track No need for major moves in Europe Towards enhanced shareholder remuneration Confident to deliver NExT 43
Slide 45: Glossary (1)
Glossary (1) Contributive Consolidated Revenues: consolidated revenues excluding intra-grouptransactions Pro forma figures: figures of the preceding period adjusted to reflect the same scope of consolidationand exchange rates as in the current period Market Share of fixed line telephonyin France: ca
Slide 46: 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 47: 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
Slide 48: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANCE TELECOM Date: October 27, 2005 By: /S/ PIERRE HILAIRE Name: Pierre Hilaire Title: Director of Fin