Slide 1: Orange financial results H1 2018
#H1_2018 Orange financial results Stéphane Richard Chairman and CEO Ramon Fernandez Deputy CEO, Finance, Performance and Europe 26 July 2018
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there c
Slide 3: Section one: H1 2018 highlights
Section one H1 2018 highlights
Slide 4: H1 2018 Group achievements
H1 2018 Revenue Adjusted EBITDA* Group € 20.3 bn € 6.0 bn achievements +1.7% +3.3% +1.2% +1.2% +2.2% +2.1% FY’17 FY’17 H1’18 FY’17 FY’17 H1’18 yoy : comparison with the same period of the previous year, on a (IAS18) (IFRS15) (IAS18) (IFRS15) comparable basis unless otherwise specified All Group leve
Slide 5: Solid commercial momentum driven by VHBB and 4G
Solid commercial VHBB customers in million 4G customers* in million momentum driven by VHBB and 4G 5.5m 50m +37% yoy +38% yoy 5.5 48 50 5.1 46 4.8 43 4.3 4.0 36 3.7 33 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 VHBB > 100 Mbps TV in million 9.2 Broadband Mobile contract
Slide 6: Convergent B2C customer base: the bedrock of our strategy
Convergent B2C customer base in million Convergence, % of broadband B2C customer base France Spain Poland the bedrock of 6.04 6.10 3.09 3.09 3.08 3.14 3.13 1.09 1.14 our strategy 5.85 5.98 60% 83% 86% 0.95 1.03 54% 5.71 0.86 58% 43% 3.5 bn Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18
Slide 7: Sustained investment efforts to keep our competitive advantage
Sustained 4G coverage investment Population covered in %, yoy evolution in pts efforts to keep 99.8% 99.7% 98% 98% 97% 95% 91% our competitive +0.1pt +6pts +4pts +8pts +10pts advantage in Poland Belgium France Moldova Spain Romania Slovakia connectivity VHBB connectable homes* yoy Spain 12.7 m +19%
Slide 8: Section two: Financial results overview
Section two Financial results overview
Slide 9: Revenue kept growing
Revenue kept Q2 revenue growth contribution (yoy in €m) growing Fixed only narrowband +60 -72 Fixed only broadband -13 & others +47 -38 -13 +141 +169 Convergence Mobile only IT & integration Fixed only Wholesale Equipement Q2’18 services services sales & others growth Q2 2018 H1 2018 Q2 yoy revenue
Slide 10: Adj. EBITDA growth driven by revenue and cost control
Adj. EBITDA H1 Adjusted EBITDA growth per segment Telecom, yoy, in m€ growth driven 57 -21 -30 6,043 -12 by revenue and 72 cost control 159 5,819 H1 2017 France Spain MEA Europe Enterprise Others H1 2018 cb Q2 2018 H1 2018 +159 H1 2018 yoy +3.4% yoy +3.9% +39 Cost decrease €3bn Adj.EBITDA* Gross sav
Slide 11: Net income improved thanks to EBITDA growth
Net income +€155m improved 267 -167 116 879 thanks to 724 -61 1 2 EBITDA growth H1 17 Net Reported D&A, income tax Impairment of Financial result H1 18 Net income EBITDA cb paid & others goodwill & assets income consolidated consolidated Group Group yoy H1 2018 +21.4% Net income +€155m €0.9bn 1. Adj
Slide 12: Net debt to Adjusted EBITDA ratio in line with guidance
Net debt to Net debt* – telecom activities (€bn) Net Debt/Adjusted EBITDA Telecom Adjusted EBITDA 24.6 23.8 25.3 ratio in line with the medium term 1.87x 1.96x guidance H1 2017 FY 2017 H1 2018 Maturity profile** as of 30 June 2018 - telecom activities Liquidity position (telecom activities) in €bn,
Slide 13: Section three: Business review
Section three Business review
Slide 14: Q2 2018 France
Q2 2018 France 5th consecutive quarter of total revenues growth, driven by convergent services in €m Q2 18 yoy cb H1 18 yoy cb Revenues 4,460 +0.6% 8,952 +1.4% Convergent B2C ARPO Retail services 2,723 +1.6% 5,483 +2.6% Quarterly ARPO in € ePresse/Audio Book Convergent services* 1,096 +11.4% 2,196 +
Slide 15: Q2 2018 France: commercial performance
Q2 2018 France : commercial performance Strong mobile and resilient broadband net adds in a very promotional environment Mobile contract net adds (in ‘000s, excl. M2M) Fixed Broadband net adds (in ‘000s) Total mobile contract Quarterly churn rate in % FTTH ADSL and others +320 +85 +108 +57 +36 +73 1
Slide 16: Q2 2018 Spain
Q2 2018 Spain Value strategy delivers double-digit growth in adjusted EBITDA (+10.1% yoy) and OpCF (+18.5% yoy) in €m Q2 18 yoy cb H1 18 yoy cb Revenues 1,324 +1.8% 2,634 +3.0% 86% Convergence as % of broadband B2C customer base +3pts yoy Retail services 973 +2.7% 1,920 +2.7% Convergent services* 53
Slide 17: Q2 2018 Europe
Q2 2018 Europe Convergence driving better trends in retail services and in adjusted EBITDA in €m Q2 18 yoy cb H1 18 yoy cb Mobile contract customer base, ex-M2M (in ‘000s) Revenues 1,388 +0.3% 2,775 +1.2% Convergent Mobile-only Retail services 874 +2.0% 1,729 +1.6% +1.2% Convergent services* 112 +57
Slide 18: Q2 2018 Africa & Middle East
Q2 2018 Africa & Middle East Continued revenue growth at +5.2% driven by Data and Orange Money in €m Q2 18 yoy cb H1 18 yoy cb Revenues 1,279 +5.2% 2,524 +5.7% Retail services Mobile only services 1,052 948 +7.7% +8.5% 2,068 1,858 +8.1% +9.0% 12.9m** x2 Fixed only services 101 -1.1% 204 +0.0% 4G cus
Slide 19: Q2 2018 Enterprise
Q2 2018 Enterprise Revenues back to growth thanks to IT&IS performance and better resilience in Data in €m Q2 18 yoy cb H1 18 yoy cb Revenues Fixed only services 1,804 1,007 +1.3% -2.2% 3,530 1,996 +0.0% -2.5% Cyberdefense H1 revenue growth +14% yoy Voice 349 -4.6% 698 -3.1% Data 658 -0.9% 1,299 -2.
Slide 20: Section four: 2018 guidance
Section four 2018 guidance
Slide 21: Short and mid-term guidance
Short and mid-term guidance 2018 2019-2020 Adjusted EBITDA Higher growth rate vs 2017 Growth CAPEX €7.4bn (peak) Decrease Operating Cash Flow * Higher growth rate vs 2017 Growth Net debt / Adjusted EBITDA (telecom) Around 2x in the medium term €70 cent** ( +€5 cent) Dividend December 6th, 2018*** Ne
Slide 22: Appendices
Appendices
Slide 23: Appendix: B2C + B2B Orange customers in France
Appendix: B2C + B2B Orange customers in France Mobile KPIs (in thousands) Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Mobile customers (excl. MVNOs) 28,966 29,508 30,033 30,489 31,150 31,624 31,777 32,012 32,482 Contract 25,069 25,759 26,486 27,090 27,842 28,433 28,821 29,184 29,720 M2M 4,
Slide 24: EBITDA adjustments
EBITDA adjustments in €m Q2 17 cb Q2 18 H1 17 cb H1 18 Adjusted EBITDA 3,282 3,379 5,792 5,984 restructuring and integration -72 -46 -75 -62 litigations -75 -34 -60 -32 labour related -33 -11 -58 -24 o\w Senior Part Time -53 -11 -78 -24 portfolio review and others - - - - Reported EBITDA 3,102 3,288
Slide 25: Group operational efficiency plan supports increase in adjusted EBITDA margin
Cost efficiency program Non exhaustive list of KPIs program total gross saving in 2018 H1 Customer management efficiency program Group operational efficiency plan % digital interactions in France and Europe 51% in Q2 (+6pts yoy) €67m supports increase # of customer service calls in France and Europe
Slide 26: Change in net income
Change in net income H1’17 historical H1’17 cb H1’18 actual (in millions of euros, on a historical basis) (IFRS 15) (IFRS 15) (IFRS 15) Adjusted EBITDA 5,832 5,792 5,984 Adjustments* (200) (193) (118) Reported EBITDA 5,632 5,599 5,866 Depreciation & amortization (3,351) (3,457) Impairment of goodwil
Slide 27: Change in net debt
Change in net debt FY’17 historical H1’18 actual (in millions of euros, on a historical basis) (IFRS 15) (IFRS 15) Adjusted EBITDA - CAPEX (telecom activities) 5,592 2,694 Change in CAPEX payables 307 (264) Change in working capital requirements 83 (526) Licences and spectrum paid (617) (81) Net int
Slide 28: Revenues yoy evolution
Revenues yoy evolution +2,0% +3,9% +1,4% +3,2% +1,2% +1,2% Group Europe +2,0% +0,3% FY’17 FY’17 Q1’18 Q2’18 FY’17 FY’17 Q1’18 Q2’18 (IAS18) (IFRS15) (IAS18) (IFRS15) +2,1% +6,2% +5,2% Africa +3,0% +3,0% France & +0,8% Middle-East +0.6% +0.6% FY’17 FY’17 Q1’18 Q2’18 FY’17 FY’17 Q1’18 Q2’18 (IAS18) (I