Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Merger or Acquisition (January 2005)
27 slides from Orange Sa's merger presentation, Jan 24, 2005
Slide 1: Proposal to acquire full ownership of Equant
Proposal to acquire full ownership of Equant January 24, 2005
Slide 2: Disclaimer
DISCLAIMER ¾ 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 France Telecom’s proposal to acquire full ownership of Equant,
Slide 3: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Transaction Terms & Structure - How? ¾ Impact for France Telecom ¾ Conclusion 3
Slide 4: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Transaction Terms & Structure - How? ¾ Impact for France Telecom ¾ Conclusion 4
Slide 5: Enterprise: A key building block of the integrated operator model
Enterprise: A key building block of the integrated operator model IT & NETWORK Enterprise PE E M division RS HO Enterprise also relies on ON division Personal and A Home L leverages OurIP products with FT integrated their IT&N, Clients own services Sales&Services SALES & SERVICES ENTERPRISE Enterpri
Slide 6: Enterprise: A strong contributor to FT performance
Enterprise: A strong contributor to FT performance €8bn of France & Poland revenues Leader ÎFixed, Mobile and Internet services to all market segments (estimated) Domestic markets Belgium, UK, Switzerland, Netherlands and some Eastern €1.8bn of Challenger European countries revenues Î Managed data a
Slide 7: Enterprise: a clear strategy
Enterprise: a clear strategy ¾From an IP-VPN core, deploy integrated nomadic and voice Integrated IP based offers in Europe Offers •Business Everywhere •VoIP / ToIP services ¾Provide network related IT services Upstream towards • Consolidation of data centers network related IT • Messaging & Hosting
Slide 8: Enterprise: a segmented strategy
Enterprise: a segmented strategy In countries where we are In countries where we are For MNC customers leaders challengers Upstream Upstream Upstream Upstream Upstream Upstream towards towards towards towards towards towards network network network network network network related related IT IT relat
Slide 9: Equant: An attractive positioning
Equant: An attractive positioning ¾ An unmatched geographical coverage – seamless network reach in 220 countries and territories and local support in approximately 165 countries ¾ Control of key technologies – Market leader in IP-VPN ¾ Dedicated teams to better serve each customer ¾ Strong customer
Slide 10: Why something has to change for Equant?
Why something has to change for Equant? ¾ IP and high bandwidth at low cost becoming the standard across increasing number of geographies A Changing ¾ Significant erosion of addressable market in core connectivity services, with increased pricing pressure Market not being compensated by higher volum
Slide 11: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Proposed Terms & Structure – How? ¾ Impact for France Telecom ¾ Conclusion 11
Slide 12: Why now?
Why now? Create a stronger ¾ Leverage businesses through product portfolio cross Enterprise fertilization segment ¾ Common resources and better cost sharing (IT&N) as soon as possible ¾ Leverage existing client base (offers to SMEs) ¾ IT CAPEX requirement for IT & Network transformation Additional f
Slide 13: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Proposed Terms & Structure – How? ¾ Impact for France Telecom ¾ Conclusion 13
Slide 14: Terms of the proposal
Terms of the proposal Key Highlights Premium to Average Share Price ¾ Proposal to purchase all the Share Price Premium assets and liabilities of Equant for €564m in cash for Spot €3.60 16.7% minorities (for 45.8%) 1-Week €3.55 18.3% ¾ Represents an implied share price of €4.20 per share * 1-Month €3
Slide 15: Proposed Transaction Structure: Summary Description
Proposed Transaction Structure: Summary Description Stage 1 Stage 2 France France France France Free Free Float Float Free Free Float Float Telecom Telecom Telecom Telecom 54.2%(1) 45.8%(1) Cash 100% Cash distributed to minority Equant Equant shareholders Equant Equant NV NV Finance Finance BV BV Eq
Slide 16: Proposed Transaction Structure: Key Features
Proposed Transaction Structure: Key Features Structure ¾ Acquisition by France Telecom of all assets and liabilities of Equant for proposed total cash consideration of €564m for 45.8 % of Equant ¾ Distribution of sale proceeds to Equant shareholders, subject to any withholding or similar taxes ¾ Del
Slide 17: Why a cash proposal?
Why a cash proposal? ¾ More favourable impact on EPS and FCF yield Value than a stock deal ¾ Cash amount is consistent with France Telecom's use of cash policy for acquisitions Scope and debt reduction objectives as reiterated to shareholders in June 2004 ¾ Faster execution process by simplifying as
Slide 18: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Proposed Terms & Structure – How? ¾ Impact for France Telecom ¾ Conclusion 18
Slide 19: What are the benefits of integrating Equant?
What are the benefits of integrating Equant ? ¾ New IP based offers including Business Everywhere launched Integrated IP based Offers in Europe ¾ Single product development resource for all markets ¾ A combined portfolio of offers and resources for ¾ Hosting ¾ Security Upstream towards network ¾ CRM
Slide 20: Estimated financial impact on France Telecom Group of the proposal
Estimated financial Impact on France Telecom Group of the proposal Pro-forma transaction impacting 2005-06 Consolidated Slightly accretive FCF Yield Cash EPS Slightly dilutive Net Debt/ EBITDA Marginal impact, TOP objectives maintained No No impact impact on on France France Telecom's Telecom's cash
Slide 21: Expected timetable
Expected timetable ¾ Announcement Jan. 24 ¾ Advisors appointed ¾ Legal and business due diligence start ¾Fairness opinion issued by Equant’s financial advisors ¾Opinion issued by independent expert appointed by France Telecom TBD on fairness of terms to Equant’s minority shareholders ¾Decision by Eq
Slide 22: Content
CONTENT ¾ Transaction Rationale – Why? ¾ Transaction Timing – Why Now? ¾ Proposed Terms & Structure – How? ¾ Impact for France Telecom ¾ Conclusion 22
Slide 23: Conclusion: Key rationale for the transaction
Conclusion : Key rationale for the transaction ¾ Key set of assets and skills to strengthen the Why? Group’s value proposition to enterprise customers Why ¾ A reassessment triggered by changes in now? market fundamentals, customer expectations and by Equant’s refinancing needs ¾ An optimized transac
Slide 24: Proposal to acquire full ownership of Equant
Proposal to acquire full ownership of Equant January 24, 2005
Slide 25: Glossary (1)
Glossary (1) ¾ Contributive Consolidated Revenues: consolidated revenues excluding intra-group transactions ¾ Pro forma figures: figures of the preceding period adjusted to reflect the same scope of consolidation and exchange rates as in the current period ¾ Market Share of fixed line telephony in F
Slide 26: Glossary (2)
Glossary (2) ¾ 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
Slide 27: Glossary (3)
Glossary (3) ¾ REAA: Operating income before depreciation and amortization of tangible and intangible assets and before amortization of actuarial adjustments in the early retirement plan ¾ Capex: acquisitions of intangible and tangible assets, excluding GSM and UMTS licenses ¾ Opex: operating charge
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