Orange Sa · EURONEXT:ORA
Orange Sa — Investor Day (December 2019)
46 slides from Orange Sa's investor day presentation, Dec 4, 2019
Slide 1: Engage 2025
Engage 2025
Slide 2: Presenters: Stéphane Richard and Ramon Fernandez
Stéphane Richard Chairman and CEO 2023 Ramon Fernandez Deputy CEO, Finance, Performance and Europe 2022 2021 2020 December, 2 4th 2019
Slide 3: Disclaimer
Disclaimer This presentation contains forward-looking statements about Orange, notably on objectives and trends related to Orange’s financial situation, investments, results of operations, business and strategy. Although we believe these statements are based on reasonable assumptions, they are subje
Slide 4: Our journey so far in a changing environment
1 Our journey so far in a changing environment 2 3-step strategic response 3 Financial focus 4 Guidance 4 #Orange I Day 19
Slide 5: Essentiels2020 achievements
Essentiels2020 achievements Leadership in NPS Brand Power Index with 3 clients out of 4 improvement Network leadership Revenues x3 the average data throughput on all our networks 2018 > 2014 Digital transformation Restated EBITDA 50% of interactions in Europe via digital by 2018 2018 > 2014 with a m
Slide 6: Engaged against digital divide and global warming
ENGAGED ENGAGED against digital divide in fighting global warming Sustainable economic performance 6
Slide 7: Be a reference as an inclusive business
Be a reference as an inclusive business Network infrastructure and coverage Social offers Affordable smartphones Orange Digital Centers 7
Slide 8: Engage in fighting global warming
Engage in fighting global warming Orange engagement Renewable energy Energy efficiency plan Carbon neutrality 50% of Group’s energy mix Boost Green ITN program by 2025 7000 electrified vehicles in France by 2025 by 2040 Circular economy 8
Slide 9: Orange, an integrated operator positioned to optimise value
Orange, an integrated operator positioned to optimise value Increase in industry-level Orange evolving with the ecosystem... competition… Passive Infrastructure Active Network Service platforms … and reduction in sector … to deliver barriers to entry optimal value Non-Strategic assets 9
Slide 10: Our journey so far in a changing environment
1 Our journey so far in a changing environment 2 3-step strategic response 3 Financial focus 4 Guidance 10 #Orange I Day 19
Slide 11: 3 step strategic response: The Operator reinvented
3 step strategic response 1 The Operator reinvented - Augmented connectivity - Optimised Infrastructure 2 Accelerate in high- growth segments 3 AI/Data at the core of digitisation 11
Slide 12: Reinvent our differentiation through an augmented connectivity
Reinvent our differentiation through an augmented connectivity FTTH HomeLan Multiservices From Improve in house Major content aggregator, 41 million* connectivity quality from Financial Services, Protected standard WiFi … and Connected home today… to 69M to smart WiFi Towards in 2023 connectable Tow
Slide 13: 5G enables new use cases
5G enables new use cases B2B B2C Critical IoT AR/VR Smart Mobility 5G Cloud Gaming Industry 4.0 x10 Throughput Video Streaming/ 360 Reduced Latency Network Slicing
Slide 14: 3 step strategic response: The Operator reinvented
3 step strategic response 1 The Operator reinvented - Augmented connectivity - Optimised Infrastructure 2 Accelerate on high growth segments 3 AI/Data at the core of digitisation 14
Slide 15: Optimising unique European FTTH portfolio
Optimising unique European FTTH portfolio FTTH lines deployed by Orange, in million France Spain Europe seg. European Leadership Total Private areas PIN 30 ~30m Q2 19 ~10.4m ~0.4m ~14m ~4m Telefonica 22 Vodafone 6 2023 ~19m ~4m ~16m ~6m ~45m TI 4 FTTH deployment, Q2 19 In million 15
Slide 16: Unlocking value in France from 2020 with Orange Concessions
Unlocking value in France from 2020 with Orange Concessions… Number of FTTH lines connectable by Orange in 2023e (in millions) Lines deployed Lines deployed by Orange in by 3rd parties the Private investment area and co-financed by Orange Private investment Orange with a 100% ≈5 area ownership ≈ 19
Slide 17: Working on Fibercos in Poland and Spain
… and working on Fibercos in Poland and Spain FiberCo FiberCo Spain Poland 17
Slide 18: Managing the copper network switch off
Managing the copper network switch off Copper Optimise The copper network (in France) Initiate the copper switch off from 2023 Switch off 18
Slide 19: Unlocking value with new Orange Towercos from 2020
Unlocking value with new Orange Towercos from 2020 ~ 40 K sites owned by Orange in Europe (end 2019) Existing Initiatives in RAN Sharing Current RAN sharing deals 1 Belgium 5 Poland Belgium 1 3.1 K Sites 4 Spain 8 Romania Luxemburg 2 0.2 K sites 5 1 3 France 17.1 K sites 2 4 Spain 7.7 K sites 6 7 Ce
Slide 20: 3 step strategic response: The Operator reinvented
3 step strategic response 1 The Operator reinvented - Augmented connectivity - Optimised Infrastructure 2 Accelerate in high- growth segments 3 AI/Data at the core of digitisation 20
Slide 21: MEA: main growth engine for the Group
MEA : main growth engine for the Group Group revenues split by Main growth levers Our ambition 2020-2023 geography 2018 (*) Spain 4G in all Enterprise countries(**) 18% 13% MEA by 2020 Revenues CAGR @ 5% Multi- services EBITDAaL CAGR @ > 5% 13% > €5bn Data ~900 M€ in 2023 14% 20% of Europe 44% reven
Slide 22: Enterprise whose transformation has been shaped
Enterprise whose transformation has been shaped… Group revenues split by geography 2018 (*) MEA Spain Telco Synergies IT 13% 13% universe e.g. SD-WAN business Enterprise 18% > €7bn 44% 14% France Europe Already more than 1/3 of Entreprise Total 41bn€ segment revenues from IT&IS (**) (*) Statutory da
Slide 23: Grow via core business transformation and 4 growth drivers
…to grow via core business transformation and 4 growth drivers Deep evolution of core business to fiber, 5G and SD-WAN Four major drivers of growth Acceleration of operational transformation 23
Slide 24: Orange Cyberdefense: Global provider and European leader
Orange Cyberdefense: Global provider and European leader European Leader 2022 Global protection with local expertise 24/7/365 A strong organic* growth story Main growth drivers Ambition €1 bn revenues Managed Cloud * Excluding revenues impact of acquisitions from 24 MNC & SME last 12 months Services
Slide 25: Orange Bank: unique, enabled by powerful telecom synergies
Financial Services, Orange Bank: unique, enabled by powerful telecom synergies Orange Bank To come… +500k customers New products e.g. Mobile Insurance Telco New geographies e.g. Europe, Western Africa x-benefits Ranked New markets 1st digital e.g. SoHo customers offering 2018 and 2019 (D-Rating) 25
Slide 26: 3 step strategic response: The Operator reinvented
3 step strategic response 1 The Operator reinvented - Augmented connectivity - Optimised Infrastructure 2 Accelerate in high- growth segments 3 AI/Data at the core of digitisation 26
Slide 27: Transformation supported by AI and DATA
Transformation supported by AI and DATA 27
Slide 28: Augmented customer relationship by 2023: best of human and digital
Augmented customer relationship by 2023: best of human and digital Customer Experience An Experience led by 3 Consumer promise Expertise Responsibility Simplicity Answered with Best of Breed Technologies Digital Data Vocal/AI 28
Slide 29: Our customer experience ambition for 2023
Our customer experience ambition for 2023 2019 2023 1 +20pts in share of digital sales in Europe 10% +20 pts 30% Sales 75% of on-line or in store sales AI powered 2 In France 0% +75 pts 75% 3 - 55% reduced calls in Europe call centres 90M -55% 40M Care 4 +27M My Orange active users group level 20M +
Slide 30: AI and Data driving network efficiency
AI and Data driving network efficiency Network Smart Capex Orange Khiops FTTH Maintenance Value Based Network Extension 75% Accurate Prediction of Root Causes 10 to 20% Optimised CAPEX 20 m€ Savings / year in France “EBITDA” margin of each cell 30
Slide 31: AI improving fraud detection in international voice calls
AI improving fraud detection in international voice calls Al-assisted traffic monitoring tool Internal Alerts Generation. Traffic Filtering. Blacklisting Processes Calling Subscriber Wholesale Carrier Called Subscriber Fraud detection time reduced by 2x Better experience for wholesale customers 150
Slide 32: 2025 HR strategic priorities
2025 HR strategic priorities : the challenge of skills and attractiveness #1 #2 #3 Reinforce tech skills and train our Develop attractiveness Retain talent employees 32
Slide 33: Financial focus
1 Our journey so far in a changing environment 2 3-step strategic response 3 Financial focus 4 Guidance 33 #Orange I Day 19
Slide 34: Financial Focus: growth drivers and cost efficiency
Financial Focus 1 Growth drivers 2 Cost efficiency Initiatives 3 EBITDAaL 4 eCapex/ Organic CF 34
Slide 35: France revenue will grow, compensating legacy decrease
France revenue will grow, compensating decrease in legacy and in national roaming Revenue CAGR 2019-2023* % (not at scale) MEA Strong Growth Enterprise France Europe Leverage network leadership: • Fiber penetration Spain • Premium mix (FTTH/5G) • Multi-services France Slight growth * Four-year perio
Slide 36: Fixed wholesale revenues in France should peak in 2020
Fixed wholesale revenues in France should peak in 2020, with revenues in 2022 at approx. the same level as in 2019 Fiber-related Copper-related 2019 2020 2021 2022 2023 36
Slide 37: Spain back to growth in 2021
Spain back to growth in 2021 Revenue CAGR 2019-2023* % (not at scale) MEA Strong Growth Enterprise Spain Europe Back to growth in 2021, thanks to • Multi Brand portfolio • B2B growth Spain • Wholesale** France Slight growth * Four-year period spanning the end of 2019 % (not at scale) to the end of 2
Slide 38: Europe will accelerate thanks to convergence
Europe will accelerate thanks to convergence Revenue CAGR 2019-2023* % (not at scale) MEA Strong Growth Enterprise Europe Europe • Mobile Data • Convergence • B2B, ICT Spain • Multi-Services • More for more France Slight growth * Four-year period spanning the end of 2019 % (not at scale) to the end
Slide 39: Revenue growth ambitions shaped by our strategic choices
Revenue growth ambitions shaped by our strategic choices Revenue CAGR 2019-2023* Enterprise: high single digit in % (not at scale) MEA IT & IS Strong Growth Enterprise MEA: around +5% Europe France: slight growth Spain: back to growth in 2021 Europe: will accelerate thanks Spain to convergence Franc
Slide 40: Cost efficiency
Cost efficiency Our track record shows that greater efficiency is a key focus for us Efficiency initiatives Deeper transformation Focus on benchmark €3.5bn Orange Polska .one 2018 Benchmark campaign Gross saving over 2015-2018 -14% Best in class: Marketing & Product o/w €2.7bn opex Indirect cost net
Slide 41: New transformation cycle in France & Spain to improve efficiency
New transformation cycle in France & Spain to improve efficiency address environment challenges and maintain growth transform our way of working and increase EBITDAaL margin Targets by 2023 compared to FY19 basis Targets by 2023 compared to FY19 basis x7 digital commercial acts Sales: 40% digita
Slide 42: €1bn net savings ambition by 2023
€1bn net savings* ambition by 2023 €1bn Net savings 2023 vs 2019 On an indirect cost base of € 14bn* at FY 19 estimated € Shared services/ Agility, central- Digitisation Smart Spend platforms local Local Operating Model Transformation * Estimated 14 bn€ Indirect cost base FY19 excluding MEA (fast gr
Slide 43: Progressive acceleration of EBITDAaL from 2021
Progressive acceleration of EBITDAaL from 2021 EBITDAaL CAGR 2019-2023* Enterprise: back to growth by % (not at scale) end 2021 Strong Europe Growth MEA MEA: high single digit figure Not at scale France: slight growth Enterprise Spain: above 200 bps increase in Spain EBITDAaL margin Europe: strong g
Slide 44: eCAPEX/Sales moving from 17.2% to circa 15% in 2023
eCAPEX/Sales moving from 17.2% to circa 15% in 2023 eCapex/Sales 17.2%* ~15% Guidance eCAPEX peak in 2018 confirmed, i.e. excluding RAN sharing 2018 2019e 2020e 2021e 2022e 2023e Fiber rollout eCapex amount including RAN Sharing 44 * Comparable basis
Slide 45: Guidance
1 Our journey so far in a changing environment 2 3-step strategic response 3 Financial focus 4 Guidance 45 #Orange I Day 19
Slide 46: Short and mid term guidance
Short and mid term guidance 2019e** 2020e 2021e 2022e 2023e CAGR: EBITDAaL, yoy Slight growth Flat + 2% to 3% eCAPEX incl. RAN sharing circa + €50m circa + €200m Flat Decrease deals, yoy Organic Cash Flow circa 3.5 to > €2bn > €2bn Growth (telecom)* €4bn Net debt / Around 2x in the medium term EBITD