Bouygues

Ladies and gentlemen, welcome to BRIC's nine-month 2020 results conference call. I'll now hand you over to Karine Addo, Head of BRIC Investor Relations. Please go ahead.

Thank you. Good morning, ladies and gentlemen. I would like to remind everyone that you can find on the company website at www.bric.com the earnings press release, the presentation we will be commenting on during this conference call, an Excel file with historical key figures for the group and each business, and the company financial statements. Statements made on this call are forward-looking statements. Such statements reflect objectives that are based on management's current expectations or estimates and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements. I will now turn the call over to Pascal Granger, Chief Financial Officer of Bouygues.

Thank you, Karine. I would like to welcome everyone to our conference call to discuss Bouygues' nine-month 2020 results. With me in the room are Richard Vielle, CEO of Bouygues Telecom, and Christian Lecoq, CFO of Bouygues Telecom. Following our comments, we will be answering your questions. Let's begin with slide four. The most striking point about the nine-month 2020 results is the group's excellent performance in the third quarter compared to last year's third quarter, which was already at a high level of activity and profitability. Q3 2020 results marked a major improvement compared to the first half of the year, which was strongly impacted by the health crisis. Current operating profit reached 813 million euros in Q3 2020, up 22% year-on-year, while current operating margin increased to 8%, up 1.5 points. Furthermore, the group financial structure remained robust with a high level of liquidity. Available cash at end September 2020 was €10.1 billion. Given this strong performance in Q3, we have revised our H2 2020 outlook upwards. Looking at the construction businesses on slide 5, the backlog remained at a high level of 33%. at end September 2020, offering good visibility. Activity returned to a normal level in most countries. Thanks to the strong performance of the three business segments in Q3, current operating profits returned to a positive level for the nine months. At TF1, performance of the broadcasting segment was very good, in Q3 2020. And finally, commercial momentum at WIC Telecom was good in both mobile and fixed, and top line growth was solid in the first nine months since 2020. Sales from services were up seven percent, better than expected, and the EBITDA after lease margin remained stable despite the drop in roaming due to the health crisis. Briggs Telecom therefore confirms it will generate around 250 million euros in free cash flow for 2020. Let us now turn to group key figures on slide six. Let me start by saying that given the resumption of activity, it is no longer possible to isolate the change in performance that would be attributable to COVID-19. As such, we will no longer quantify that impact. Nine months 2020 results reflected a major improvement in earnings in the third quarter following the significant impact of the COVID-19 crisis in the first half. Like-for-like and at constant exchange rates, sales improved strongly in the third quarter, growing by 1% year-on-year after declining 8% in the first quarter and 21% in the second quarter. Sales benefited from catch-up of activity in the construction businesses as well as advertiser spending at TF1 and from steady growth in sales from services at Brick Telecom. Profitability improved significantly compared to the first half of the year with current operating profit reaching 681 million euros in the nine months compared to a loss of 132 million euros in the first half of 2020. Current operating margin rose to 2.7% in the nine months versus minus 0.9% in the first half. Net profits attributable to the group also returned to a positive level. It included a contribution from Alstom of 51 million euros in the nine months of 2020 versus 238 million euros in the same period last year. The nine months 2018 contribution included a net capital gain of 172 million euros of the sale of 13% of the share capital of Alstom. Please note that the nine months 2020 contribution did not include two elements that will be accounted for in the four quarters. The 87 million euros Capital gain linked to the disposal of 11 million of Alstom's share. And the 30 million Euro gain associated with Alstom's capital increase as announced two days ago. We will now move to slide seven to focus on the strong Q3 performance. You can see that all business segments contributed to the sharp rise in current operating profit and margin compared to the third quarter of last year. This significant improvement was better than expected. First, Q3 2020 sales were stable year on year after a fall in Q1 and Q2 and were driven by strong activity in all businesses as discussed previously. The performance is particularly remarkable in France as sales were up 5% compared to the substantial level of Q3 2019. Second, all business segments implemented cost saving measures. Moreover, the construction activities also benefited from compensations linked to worksite shutdown in Q2. Those factors contributed to a major improvement in current operating profit in all business segments and current operating margin reached the very significant level of 8%. Let us now turn to slide 8 that shows the group's strong financial position. The chart highlights available cash at the high level of 10.1 billion euros at end September 2020 with 2.4 billion euros in cash and 7.7 billion euros of ungrown medium and long-term facilities of which 7.1 billion euros were without covenants. Please note that in July 2020, the group reimbursed a 1 billion euro bond at its maturity. As you can see, The debt maturity schedule is well balanced with no debt war. Moving to slide 9, you can see that net debt was nearly 3.7 billion euros at the end of September 2020, a decrease of 982 million euros compared to last year in September. Net gearing improved by 9 points over the same period. This robust financial position remains key, especially during the crisis. Please note that the net debt at 8 September does not include 450 million euros in proceeds from the sale of 11 million of Alstom's shares, the acquisition of EIT by Brick Telecom expected by early 2021, and the first instalment of the 5G frequencies for 90 million euros. Let's now turn to slide 10 to see the net debt evolution between end September 2019 and end September 2020. On slide 10, you can observe that the increase in net debt since the end of last year is mostly explained by the following four items. An outflow of 55 million euros in acquisitions and disposals, resulting mainly from the acquisition of Greenlight contracting by Colas in the US. Second, an inflow of 30 million euros, mainly linked to the exercise of stock options and the remainder of the BRIC Confiance Capital increase reserved for employees. The outflow related to the payment of dividends in September 2020 for 687 million euros. And finally, an outflow of 727 million euros from operations decreasing sharply year on year that I will explain in the next slide. Turning to the breakdown of operations for the nine months 2020 on slide 11, you can observe that. First, net cash flow, including lease expenses, was down 248 million euros year on year, reflecting the impact of the health crisis on the group's first half results. Second, net capex was down 142 million euros year on year due to early adjustments in investments in the construction activities due to the COVID-19 crisis, and then higher disposals in the first nine months of the year at Bouygues Telecom related to the sale of STTH premises to SDIF, the Asterix project. And so, you can notice on the chart that working capital requirements improved strongly compared to the same period of last year. Most specifically, the change in working capital requirements linked to the activity was lower by almost 1 billion euros from the first nine months of 2019, much better than what we were expecting in this environment. This performance was driven by the efforts made by all business segments, and most notably brick construction and collage. In addition, the change in working capital requirements related to fixed assets was affected, as we already mentioned in the first half, by the sale in June by Brick Telecom of FTTH premises to SDIF, for 222 million euros, which was monetized into cash in July. I will now turn to the review of operations starting with the construction businesses. Let's begin with the backlog on slide 14. The backlog in the construction businesses remained at a very high level at end September 2020. As you can see on the chart, it is very close from the record level reached in September 2018. Commercial momentum at brick construction and to a lesser extent at collage continued to be good. The overall backlog at end September was up 3% compared to the same period of last year. Let us now turn at the backlog on slide 15. The French backlog in the construction businesses was down slightly at end September 2020 year on year due to the health crisis and the impact of the municipal elections. Overall, good construction backlog was stable. It was down 1% at Colas with rail experiencing a 15% growth while roads in mainland France was down 8%. Indeed, the environment to roll out bids and contracts remained difficult with local authorities even though the French government implemented supporting measures. can be expected to continue in Q4 and maybe into the beginning of 2021. At Bouygues Immobilier, the backlog was down 3%. Residential reservations increased by 16% year-on-year, as delays in obtaining building permits linked to the municipal elections resulted in a lower supply. This, in fact, was mitigated by some block sales . To date, the resumption of the insurance of building permits in the residential property market is very slow, while housing demand remains solid. As you can see on slide 16, International markets remained dynamic and the good international backlog was up 6% year on year at end September. This good commercial performance was driven by civil works, energy and services, and oil. Thanks to this performance, 62% of the backlog at reconstruction and collapse was related to international markets compared to 61% at end September 2019. Let us now look at the construction activities key figures on slide 17. As I've already mentioned, the construction businesses returned to a positive current operating profit in the nine months after the strong negative impact of the COVID-19 pandemic on first half results. Activity solidly rebounded in the third quarter compared to H1 2020 thanks to a catch-up of activity in France during the summer and a return to normal business levels in most countries. This achievement was made possible thanks to the strong commitment of our employees. In France, a group-wide collective agreement was concluded allowing employees to take a portion of their paid leave during the first lockdown. We also adapted our working hours and working days to facilitate catching up our activity levels during the summer months. As you can see, profitability resumed thanks to the strength of our three business segments. Current operating profit was 133 million euros in the first nine months versus a loss of 437 million euros in H1 2020, and current operating margin was 0.7% versus negative 4% in H1 2020. This improvement was led by stronger activity which allowed a better resolution of our fixed costs and benefited from cost-saving measures as well as compensations linked to worksite shutdown in Q2. Now, let's talk briefly about TF1 as its results were released at the end of October. First, I would like to highlight on slide 19 that TF1's audience share among key target was maintained at a high level during the first nine months. As the lockdown ended, TV usage in the third quarter of 2020 was up 16 minutes year on year. Moreover, after being severely impacted Severely hit by the COVID-19 crisis in first half 2020, TF1's performance in the third quarter was very good in the broadcasting segments. Third quarter advertising revenues were up 7.5% year on year thanks to both longer viewing time and the return of advertising spending in several sectors such as food, retail, personal care, e-commerce and automotive. Current operating profit showed significant improvements reaching 58 million euros in Q3 compared to 21 million euros in Q3 last year. This improvement was linked to the adjustment of programming schedules and the optimization of programming costs which were 138 million euros in nine months 2020, including 31 million euros in the third quarter. Given the low feasibility and uncertainty of the COVID-19 pandemic evolution in France, TF1 did not set new objectives for 2020 or 2021. Now, let me turn the call over to Christian Lecoq,

and Richard Vielle. Thank you, Pascal. Starting with slide 21, you can see that we benefited from a good commercial performance during the third quarter 2020. In mobile, excluding M2M, we won 181,000 new plan customers in the third quarter, totaling 455,000 since the beginning of the year. In FTTH, NetAds continues to grow with 169,000 new customers joining us during the third quarter. With a total of 1.4 million subscribers, FTTH customers represented 34% of the fixed customer base at end September 2020, compared to 22% one year ago. Overall, and excluding M2M, at end September 2020, Boot Telecom serviced 12 million mobile plan customers and 4.1 million fixed customers. Let's have a brief look at our FTTH rollout on slide 22. As you can see, Boot Telecom has been accelerating its FTTH rollout since the end of 2019, going from 11.8 million market premises to 15.8 million at the end of September 2020. The acceleration is particularly noticeable in very dense and medium dense areas thanks to our partnership with CityFast and SDIF partners. We also have decided to accelerate in the public initiative network area. And we are now in a position to revise upward our objective of smarter premises from 22 million to 27 million by the end of 2022. As you can see on slide 23, mobile eBPU and fixed eBPU were up year on year in the third quarter of 2020. Mobile eBPU increased by 0.4 euro to 20.3 euro restricted for rooming impact and fixed eBPU increased by €1.5 to €28.1, reflecting both the success of our pricing strategy and lower competitive intensity. As a result, self-formed services were up 5% year-on-year in the third quarter of 2020. This performance was better than expected. Mobile revenue was up 3% year-on-year, driven by growth in the customer base and eBPU, and despite the loss of 33 million euros of room-in-room use linked to the drop in intercontinental travels. Fixed sales from services were up 10%. As shown on slide 24, Blue Telecom delivered solid top-line growth in the first nine months 2020. Sales were up 6% year-on-year, with a 7% increase in sales from services, despite a 63 million euro decline in roaming revenues over the period. EBITDA after leases for the first nine months was up 7% year-on-year at 1,123 million euros. Let me remind you that this figure includes one off-brand and advertising expensive of €20 million, recorded in the first quarter, and a COVID-19 impact estimated at €20 million for the first half of the year. The EBITDA after leases margin was stable at 30.9%, despite the negative roaming impact, which is a very good performance. We studied for this roaming impact its margin reached 31.9%. As shown on the chart over the last five years, the margin has increased by 11 points, a truly remarkable achievement. Operating profit of €460 million was slightly down compared to the same period last year due to a lower volume of site disposals versus last year. CAPEX was 837 million euros in the first nine months of 2020, an increase of 103 million euros year-on-year, in line with our strategy to strengthen the quality of our networks. Over the same period, disposals amounted to 222 million euros, with a very large part related to the sale of FETH premises to FDIF, in the first half of 2020. As you may have noticed, 3.5 GHz frequencies are available since yesterday. I will now turn the call to Richard Vielle, who is going to explain you how fast this process is, starting with slide 26.

Thank you, Christian. Since its inception, BrickTelecom has always been pragmatic regarding the implementation of new technologies and the rollout of its networks. In keeping with this approach, BrickTelecom will deploy its 5G network progressively, in line with customer benefits that will arrive in two stages. As you know, the quality of our mobile network is a core pillar of our growth strategy and a major component of our success. Our goal is to maintain this high quality to remain one of the best mobile networks in France. Therefore, our priority is to deploy a reliable 5G network while maintaining the quality of our 4G network. First, 4G will remain the main technology used by customers for many years to come. This means that we will continue to strengthen the coverage of the capacity of our 4G network. And second, the quality of the 5G network will rely upon the quality of the 4G network. I will explain why in the following slide 27. The first reason is technical. Until 2023, the 5G will use a 4G core network and will require a 4G N-core frequency band to operate. The second reason is commercial. The rollout of 5G-compatible terminals will take time. As you may recall, it took some while for the 4G technology to be adopted by customers, even though it was offering a new experience and immediate benefits. it is likely that the acceptance of our new technology could also take time. Our willingness is to route 5G under the best conditions, maintaining a constructive dialogue with stakeholders. Third, network densification is necessary in 5G and in 4G, both in capacity and coverage, particularly in very dense areas. This network densification is even more important for high frequency bands. Therefore, 5G on the 3.5 gigahertz frequency will require more radio sites to ensure deeper indoor coverage. Consequently, our target is to have more than 28,000 sites by 2023. To conclude, The quality of our 5G network will rely upon the quality of the 5G network at least for the next three years. Let's now see on slide 28 how we will roll out the 5G network. To roll out, we will have two things in parallel. First, we will use the 3.5 gigahertz bond to improve capacity, and second, We will gradually migrate our existing frequency band using in 4G to provide 5G coverage. As we recently announced, we acquired a 70 MHz block of 3.5 GHz spectrum at a reasonable price, allowing us to double our existing available range. Therefore, we will now benefit from about one quarter of about the French spectrum. We will use a 3.5 GHz band to improve capacity, notably in the very dense urban area, which will require installing new antennas dedicated to 5G. At the same time, as shown on slide 29, we will migrate our existing 4G frequency band to 5G to provide 5G coverage. The high frequency band ranging from 1800 and 2600 will be gradually transferred to 5G, starting with the 2100 band. We consider that the 2100 band is the best combination between performance and coverage to rapidly reach 15 megahertz. In 5G, without deteriorating, the 4G network quality. Moreover, the 2100 is a frequency band most referenced in the 5G handsets. Our 700 and 800 bands will remain to 4G for several years to maintain a solid 4G quality. As mentioned previously, 5G benefits for customers will arrive in two stages. Let me explain that on slide 30. The first stage, through 2023, 5G will help maintain good quality service in very dense area. Otherwise, as a rise in data consumption will require increased network capacity. This is what is called the non-standalone where 5G used a 4G core network to operate. A second stage, which we call standalone 5G, will be starting in 2023. New services for individuals and especially for companies thanks to its new features such as low latency, higher speed, and ability to connect many objects. This 5G will be used to core 5G network. Of course, we do not yet know all the new usage and opportunities that will be provided by the 5G technology. Turn to slide 31. I'm pleased to announce that the fall 5G commercial launch will be at the beginning of September, beginning of December. Okay, and on that day, We will introduce a dedicated portfolio of offers with a wide range of 5G handsets and enhance content based on our strong partnerships. Our objective is to reach national coverage within one year. Thank you, and Pascal, I will now return the call to you.

Thank you, Christian and Aisha. Now, I would like to briefly comment on the financial statements on slide 13. We have already discussed nine months' 2020 revenues and current operating profit at the beginning of this call. Other operating income and expenses were negative 45 million euros in the first nine months. It notably included non-current charges of 61 million euros at Collas due to the reorganization of the road activities in France and the ongoing dismantling of the Dunkirk site. The decrease of 95 million euros compared to the first nine months of 2019 is explained by the lower volume of site disposals at Bouygues Telecom this year. You can also note that cost of net debt decreased by 13 million euros year on year due to lower interest expense on our bonds as we reimbursed two bonds in October 2019 and July 2020 and issued a new one at a lower rate in April 2020. Regarding the income tax line, the effective tax rate was 46% in 9 months 2020 compared to 33% last year. As we already explained in H1, the difference in the tax rate is related to some losses abroad that did not result in the accounting of active deferred taxes and some losses in France recognized at the tax rate lower than the current one. The share of net profit of joint ventures and associates was 109 million euros in nine months 2020. It included the contribution from Alstom of 51 million euros, which was much lower than the previous year when we sold 13% of our Alstom stake and recorded a net capital gain of 172 million euros in September 2019. We will now turn our attention to the group outlook on slide 35. First, strong Q3 results confirm the group's expected return to significant profitability in H2. Given that performance, we upgrade our outlook for H2 2020 and now expect the group current operating margin to be slightly higher than that of H2 2019. Brief Telecom raises its sales from services guidance and confirms its free cash flow objective for 2020 while maintaining a high level of investment to strengthen its network. First, Growth in sales from services is now estimated between 5% and 6% versus around 4% previously, despite the sharp decline in roaming sales due to COVID-19. Second, we forecast growth capex of 1,250,000,000 euros, which will include expenditures necessary for the integration of EIT but will include the acquisition of 5G frequencies. And last, we confirm the free cash flow objective of around 250 million euros. Please note that this outlook is based on information known to date and excludes any new unfavorable change due to COVID-19. In this unprecedented context, Briggs remains convinced that the need to implement a new phase of its climate strategy as mentioned on slide 36. So group confirms its 2020 target to reduce greenhouse gas emissions by 2030 compatible with the Paris Agreement on the establishment in 2020 of actions plans for its five business segments. I am pleased to announce that we will hold our first climate market day on December 16 to discuss with you our goals. You will very soon receive an invitation for this event. This concludes my presentation. Thank you for your attention. Operator, please open the floor for questions.

Of course. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad. As a reminder to our participants, please limit yourself to two questions. So again, the star 1 on your keypad. The first question comes from the line of Nicolas Cote-Colisson from HSBC. Please go ahead.

Thank you. Hi, everyone. First question is on telecoms. Yesterday, the ERSEP asked SFR to cancel some of its wholesale tariff increases after you've complained. Can you tell us a bit more about this and how the new tariffs compared now with Orange Exalign Rental seems to be cheaper at SFR now? And also, if you have any precisions regarding the way you, or actually Asterix, arbitrate between co-investment and rental, it would be great to have two. And my second question would be around construction. What's the trend around energy and services in the context of lockdown and whether the margin is or can be in the recovery phase? I also wonder if you see inorganic growth as a necessary step to establish long-term profitability. Some assets could be up for sales. I'm just thinking about energy in particular. Thank you.

Hi, Nicolas, this is Christian. I will answer to your question about telecom. So SFR types in the medium-dense area were very high, at I think more than 16 euros per subscriber for winter. Asset asked SFR to be at the same level or at a lower level than orange, and the level of orange is I think 13.2 euros. So we will see now what FFR will do in terms of TAIF, if it will be 13.2 or less than that. About Asterix, you know Asterix is a scheme we put in place with, yes, robot infrastructures, and it concerns only the orange area in the medium dense area. And so SFR is not concerned by the . So no change for .

As energy and services are concerned, yes we confirm that we are, the trend is the improvement of margins in this energy and services segment. Obviously the first half of the year has been affected crisis and the lockdown but during the third quarter we are online with what we were expecting previously. So yes, we are in the trend of improving our margins in terms of energy and services. consider any opportunity to grow in that segment. We told you that in terms of an organic growth, energy and services was one of the sector for which we were considering such an organic growth. You know that some assets are for sale at the moment, so we consider that situation, but please note that when Mr. Clamadieu speak about the subject is considering more probably a private equity way or a spin-off way.

Okay. Thank you.

Thank you. The next question comes from the line of Frederic Boulon from Bank of America. Please go ahead.

Hi, good morning, everyone. So two questions on my side. The first one is on your outlook and trying to understand a bit what's going on. So for instance, in telcos, you dropped from 5% to 4%, and then back 5% to 6%. So what's going on there? And then secondly, at the group level, your outlook for the year, at least for Q4, seems fairly prudent, considering what we've seen in Q3. So, again, any special factors we should have in mind. And if you could give us an update on the commentary you provided with Q2 results around the shape of recovery of margins in the three construction divisions, that would be very helpful. And then maybe a second question on the border activity prospects in construction. If you could give us an update on perspective, especially your ability to benefit from some of the border stimulus plans which have been announced. Thank you.

About telecom service revenue, we met the forecast we gave you at the end of August at the beginning of summer. At this time, it was very difficult to know what will be the impact of the COVID-19 on the rooming, of course, but also we didn't know if we would be able to continue to apply our more formal strategy and to increase the time for new clients and also for our existing clients. And so that's why we were very cautious. the situation is now much better than expected and that's why we decided to revise the guidance.

As far as the question you raised concerning the group, first of all, Our overall guidance for Q4, you have to consider that during Q3, part of the activity is the result of catch-up of activity we have done during the summer for the construction activities. As you see, we want to have this catch-up again on Q4. We are in a situation in which we are working in all our divisions The current sanitary situation is also of use to manage and certainly at the construction level we consider that probably we will have some decrease in activity at the CODAS level due to the fact that the municipalities in France face some difficulties to implement the bids and so on. So globally, effectively, we consider that we have a fairly good, the fourth quarter, but at a lower level than what we had at the third. Concerning margins and the evolution of margins of our construction activities, let's say, I just spoke about energy and services. Now, considering good construction, we consider that we will come back to a normal level of activity in the next period, so no doubt about that. you know that they will have a form of decrease of activity during Q3 and probably beginning next year. So probably the profitability will be affected by that factor. But on the other side, you know that we are developing some strategies in order to be more industrialized in two aspects, first the quarries and secondly the bitumen activities and another point is the fact which will enhance the profitability is the impact of the reorganization we are implementing in France. We consider that probably in the first half of the year, the collapse margin will be under pressure. Concerning Bouygues Immobilier, the situation is the following. You know that before the crisis, we had quite low level of units to sell. And we are currently facing some difficulties to obtain building permits. So probably the activity will remain quite low and the profitability quite low during the whole period, end of 2020 and 2021. and we are developing new projects and we expect to see the situation being better and better during next year. The third question was related to the stimulus plans. We were quite optimistic of what we could obtain from this stimulus plan. especially at the COLAS level, but we think it will take some time to implement it. Probably from the political decision which is already done to the first call for tenders, it will last, let's say, six months or so. We will see that in the activity second half of next year. And may I precise that you know that in all these stimulus plans, the part which is related to green solutions is very important. And this is the reason why we will be very happy to present to you what is our policy in terms of green solutions, but also what we do at our level for developing our own activity during the climate market day on the 16th of December. Thank you.

Thank you. The next question comes from the line of Andrew Lee from Goldman Sachs. Please go ahead.

Yeah, good morning. I had a question on the telco business and then a question on construction. So on telcos, you have clearly guided for better revenue trends following a strong Q3. Just wondered why that's not translating into better free cash flow for the full year, given the capex elements. What exactly are these greater investments? in capex given a lot of your infrastructure is off balance sheet I'm presuming that a lot of it is related to 5G but it would be good to get some colour on that And then just on constructions, you've clearly pointed to COLAS and the public tend to slow down and immobilier's week permitting. Just wondered if you could just give a bit more colour on your outlook for construction over the next few quarters. Is there anything that stands in the way of continued strong improvement there? I heard you say back to normal activity to the previous question. I think you said in the next period. I wasn't sure what that really means in terms of timing and whether it was just a margin comment. Thank you.

About Book Telecom cash flow, we decided to maintain the level of free cash flow level at 250 million euros. It includes 20 million euros of capex related to the integration of EIT. Why we decided to do that? Just because we now expect gross capex to be at the level of 1,200. So it's a bit higher than before due to two points. First, more CapEx in 5G and second point, more CapEx also in FTTH due to the better rules we have now in FTTH and so we need to increase the level of CapEx to cope with that.

As far as the construction activities are concerned, the level of profitability we can expect, let's say, at the construction level, we consider that probably we will be not far from the 2019 level in 2021, globally, but you will see during the second half of the 2020 year that that the profitability is already very good, fairly good on improving. And for COLAS, as I mentioned previously, we have a form of lack of activity during the first months of 2021. So probably we'll stay at a lower level than in 2019 during 2021. coming to a fairly good level in 2022. And for Bouygues Immobilier, as I already mentioned, we will see an improvement in margin in 2021 compared to 2020, but probably at a very low level. But we expect to recover in 2022.

Yes, very helpful.

Thank you. The next question comes from the line of Joseph from . Please go ahead.

Yes, hello everybody. Two questions on my side, please. The first one is on these compensations for unemployment that you got in Q3, that you booked in Q3. Could you tell us the total amount, how this compares to the 148 million euros of EBIT improvement in this period, and if you can split by division or by activity, it would be great. And my second question is on FCTH, I would say competition. You had mentioned early that it was becoming a more competitive market with some players offering, doing lower offers. How this compares the current situation here today in November compared to what you saw in August, September? Has it changed? Has it improved a little bit? Or is it still as competitive? Thank you.

Okay, I start with the telecommunication. It's Richard. Well, more than competitive situation, what we've seen after the second lockdown is an acceleration of the demand. So the acceleration of the demand, we see that now in October, November, as we've seen on Q3, and you've seen the numbers of everyone on Q3. So what does it mean? That it means that in fact the demand when you are in lockdown on having more fiber, more capacity at home to support, I would say, telework and all those kind of things, for sure, it's not accelerating the demand at FTTH. Secondly, about pricing position, I would say that in general, what we see is two things. We see fiber revenue potential, which has to be bigger because, in fact, the pricing of the fiber is higher than the pricing of the DSL. But you see in parallel some promotion activity arriving, which contribute to accelerate this level of growth in FTTH. Is it clear?

I don't hear you very well.

Sorry.

Yeah, sorry, sorry. What I, if I rephrase in my words, yeah, and then we can say if I understood it or not, is that the promotional activity remains the same as after the lockdown. Yeah. Okay. Yeah. Okay. Thank you.

As far as compensations are concerned, due to the shutdown of some sites, let's say that the situation is quite difficult to analyze for different reasons. If you consider in France, public clients, you know that we had some recommendation from the government to have the contractors compensated for for these events. At that date, amounts which have been recovered are quite non-significant. We are not convinced that we will have very material amounts during the next few months. So nothing material in our accounts. Concerning private clients, you know, we are negotiating globally generally with these clients. So it's very difficult to isolate such compensation. But there is no, in that part, we don't have anything very material in that respect. Concerning the compensation for workers which were locked down during the period, We had different situations in France and abroad. Let's say that in France, the compensation has been directly paid during the Q2. And during the, for other countries, we had some compensation during the third quarter, but it is not at all in the range of the improvement of the margin during that period. It's a small part of it. The major part of the improvement of the margin is related to catch-up of activities.

Understood. But can you be more precise? Are we talking about 20, 30 millions maybe in this Q3?

The range. Thank you.

Thank you. The next question comes from the line of Jacob Bluestone from Credit Suisse. Please go ahead.

Hi, good morning. Thanks for taking the questions. I've got two questions as well. Firstly, can you maybe just comment a little bit around the networking capital? It's improved by about a billion euros year to date. Could you maybe sort of realize it's something you've been working hard to improve? Is that sort of sustainable or is there something funny COVID related within that? So maybe if you could share with us what should we expect for the full year? And then secondly, thank you for the presentation on 5G, which was very interesting. I had a question on the 28,000 sites you mentioned by 2023. Can you maybe expand a little bit or give a little bit more detail on those 28,000 sites? First of all, how do you intend to get there? Is that going to be through built-to-suit? Because I think that's above what you've already announced, or should we be expecting higher CapEx? And then also, is that for 4G and 5G sites combined, or is it just for 5G standalone? Thank you.

When we start, concerning your first question, when we started in 2020, We had a very important action plan in order to improve our working capital, especially in the construction activities because we consider that there is always room for improvement in that respect, having people being invoiced very rapidly and then when invoiced being paid in due time. It's a fairly important work to do. When we worked end of March and when we thought about the impact of the sedentary crisis, we feel quite complicated situation in that respect. And this is the reason why we mentioned at that time that we were fearing a deterioration of that working capital during the 2020 period. and probably having a recovery during 2021. The very good news of what we see, of what we have seen end of June and now end of September is the fact that the mobilization of our teams have been very efficient in order to maintain our working capital and the impact being very limited, and we have even an improvement in that working capital evolution during the period. The factors, obviously there is an impact of the COVID crisis, but this is not major. I think so, but the factor which is major is the action plan done by reconstruction and COLAS in particular. to have their invoices paid. What we can say for the future, I have to mention that the working capital is really, really due to invoice paid by our clients and not by some who have to be paid to our clients. suppliers and subcontractors. This is very important. And what we can expect for the end of the year? Unfortunately, we don't see that it will be possible to maintain that one billion difference at the end of the year. But, of course, the mobilization is 100% on this subject and all our teams are focused in that respect. And we expect to keep, let's say, a part of it. I have no figure to mention, but it would be in a range of, I would say, some hundreds of million euros.

Okay. On your question concerning the coverage and the number of sites, you need to integrate the fact that... probably in the next five years the traffic will be tripled. And for all those reasons, we need to integrate that. Good news, as we expressed to you in the 5G, we double our capacity with frequencies, so we have this capacity to support the double of the traffic, so that's easy. But it's not enough to make tripled, you know? So you need to increase your number of antennas. We will have a concentration on the sites where we need more capacity. So in very dense area, it will be around 2,000. Today, we are 21,000. So there is 7,000 new sites to be built. So 2,000 in very dense area, the others will be in a non-dense area. So for those reasons, it's a split of what we have to do in the two areas. First, strategically, it's very important in the very dense area because it's where You have the major risk of saturation. And then you have the coverage in the non-dense area, which is planned with some of the political engagements that we have had in the past on the fact that we need to cover small cities, roads, and all this kind of stuff. Now, about how we will do that, well, we will be very pragmatic as we do all the time. To do that on the loan approach or to do that on the building capex approach, we are thinking of it case by case as we did in the past on a regular basis. Okay?

Thank you. The next question comes from the line of Thomas Coutry from Brian Garnier. Please go ahead.

Yes, good morning everybody. Thank you for taking all questions. I have two on network concerns. First, thanks again indeed for the presentation on your 5G rollout plan. I have a question on the frequencies here. Does what you explain mean that you will use the dynamic spectrum sharing technologies because these technologies put forward by Ericsson in particular or Nokia are supposed to be rather disappointing in terms of quality. So is this what you intend to do? And more specifically, you said that you would reuse the 2100 band for 5G. Why not using 700 or 800 megahertz band since they are better for coverage indoor? Is this because you don't have enough 700 megahertz? Is it because 800 megahertz will not be available enough on the 5G smartphones? I would be interested to have your view on that. And the other question I have still on networks is regarding network sharing. It's becoming, let's say, more and more obvious that we could expect something between Iliad and Orange in the same way that what you did in ranch sharing with SFR. This type of agreement enables to accelerate and improve coverage in the less dense areas as you did, again, yourself with SFR. Do you fear that such an agreement between Iliad and Orange could, let's say, help Iliad reduce the gap in terms of coverage and network quality in this area? And would you have any specific, let's say, regulatory type of concern versus such an agreement? Thank you very much.

Okay. I think inside your question, you have three questions. So I will try to answer to all of them. First about the DSS. DSS is a technology normally to optimize, in fact, the sharing of preferences between 4G and 5G. So the DSS, on the principle, is an interesting approach. There is no reason why Witelecom is not looking at it. What we've seen at the beginning is depending on the suppliers, the quality of the DSS is different between the suppliers. And the second point is, when you do that, you take a part of your bandwidth. which is declining. I mean, if you have 100 megahertz frequencies, when you do the DSS, you lost 10 to 15% is depending on the sub broadcast. So that's the first reason why we are very careful about that. So second point is about why not to use the 700, 800 to 2100 and the others. First, to have a good 5G, you need to have an excellent 4G. And if you try to substitute some frequencies which is dedicated to your 4G now to replace that with 5G, you create a disaster on your 4G customer and you're impacting strongly the quality of your network. That's the reason why we didn't decide to use the 700. Probably the 700 can do a show-off approach. to say to the customer, blah, blah, I have the 5G here, but it will not be a good one, and it will destroy your 4G, and from our experts, it's not a good path. And as with telecom, as always perceived as good engineers able to have a good optimization of the network, we consider it was a wrong approach. And we decided to go to the 21, for sure, as I expressed to you, because that 21 is more on the set, But it's a good, I would say, it's a good medium between small spectrum that anyone has on the low bound frequencies, such as 700 and 800, that today we dedicate to the 4G, to have best quality of the 4G, and the very high frequencies, 3.5, which have some indoor issues. And the reason why we decide to go just in the middle with the 2100, And we have a lot of experience of that. Don't forget that we did it with the 4G with the 1800. So with this experience of the 1800, we know that the 2100 is a good frequency to do it. That's the reason why we decide that. Is it clear? And about the sharing network, well, I don't know how you can make sharing networks It depends of your technology. You need to move your antennas to the other ones. I don't know how they will do that. I don't know the kind of agreement they can have. To be honest with you, it takes three years to put telecom to make it happen with SFR. And I'm not so sure it will be easier in the other case. So I have no idea. Will it be for 4G, 5G, 3G, whatever? I don't know. So for me... I'm waiting what could happen. You know, when we start to do some savings, you're impacting for sure cash because you need to do a work before.

Thank you very much.

Thank you. The next question comes from the line of Mathieu Robillard from Barclays. Please go ahead.

Yes, good morning and thank you. First, I had a question on the real estate I think you mentioned in the presentation that you had some good contributions from B2B contracts. I don't know if you can quantify that. And more importantly, when we look ahead, are there big projects that could materialize in the coming quarters? I'm not sure if in the end finalized. So that was the first question. Second question on the telecom side. I was curious about the breakdown on the non-service revenues, which we covered quite nicely in Q3. I think in Q2, there was a positive contribution from Asterix. My understanding is that that's not the case anymore in Q3, but maybe if you could give us a little bit of a breakdown, what is handset, what is built to suit, and if there's any material impact on margin, I mean, by material, I mean out of the normals. And then thirdly, on the IFTTH, so you upgraded the number of homes you want to cover. Can you remind us on the PIN areas? Are you still planning to do it essentially through wholesaling, or are you considering to be more engaged with co-financing, for example, either through Asterix or another venture? Thank you very much.

So I will answer, please. I think your first question was about what we call the author of news, so the difference between the total of news and the service of news. You know you have three kinds of items in the author of news. First, this is the concept of news. They have been impacting during the first lockdown in Q2. We will see what it will be now. Of course, our shops are open now, but the traffic is at a lower level than last year, so we could have some little effect in Q4. The second thing is the construction of Hume. Higher revenue in Q2 mainly due to Samalo because we closed Samalo in Q2 and at this time we were able to sell to Samalo project what we have built during the last year in advance to the building. And then you have some, I would say, a mix of other revenues. with other operators, you have FTTH revenue due to customer links, and so on. And what you have to know is that these revenues, these other revenues, have no impact or very little impact on EBITDA. So we have no margin on all this volume except for the onset because we have some subsidy and the subsidy is accounting for .

Okay, to the little about the fiber and all the aspects of the fiber that you expressed. As you know, we said that the fiber will accelerate. As the fiber is accelerating, We said before that in 2022, we will have a 22 million access point. And you need to understand now that we're planning to have 27 million access points. So that means that, in fact, due to the acceleration of this market, we see more and more plugs and households available on the market. And we want to be everywhere. So we are accelerating these connections to be in line with the market trend. So due to that, for sure, we will have a pragmatic approach between wholesale and buy, whatever. But you know that the pragmatic you need to have all the time, and I repeat that at each meeting, it will depend of your market share you have locally. And in the rural area is not where Big Telecom has the biggest market share. So we will probably use the wholesale. But outside of that, you need to know that for any customer connections, you have capex expenses concerning box, you have expenses concerning installation or this kind of thing. So that will impact definitely outside of the wood cell, some capex, whatever. Okay?

Very clear. Thank you.

Thank you. The next question comes from the line. Oh, apologies.

Please go ahead. In fact, We have to consider that in terms of B2B business, we have signed three commercial projects during Q3 in Paris, Lyon, and Toulouse, but this was not major. We have signed 1st of October the project we have in Cour Albert Premier, but we do not expect any other B2B project for this year.

Thank you very much.

Thank you. The next question comes from the line of Giovanni Montalti from UBS. Please go ahead.

Hello, good morning. Thank you. Sorry, just a quick follow-up on the previous question about the Fiber Rollout. So when I look at the September 2020 numbers, can you please confirm what's the mix there? Well, I see this 4.8 million for very dense areas. I guess this is a mix of something that you have rolled out directly and CityFast, but I don't know if there is any rank in there from all angles so far, if you can help us. And same rationale for the 9.2 and the 1.8, please. Thank you.

So about the fiber rollout, just to remind you, you have six 6.4 million premises in very dense area. Half of them are made with Cityfast and the other half was made with SFR mainly in the past. Then you have the medium dense area, around 10 million premises with Orange.

Sorry to interrupt, but just to understand. So you say 6.5 in very dense, but here you have indicated 4.8. And you were saying that 6.5 half is done with SFR, half is done with Cityfast. So why we have 4.4?

SFR has been done, I think, a few years ago. And now the difference between 4.8 and 3.4 is due to Cityfast. And we have some little...

Sorry, and the difference between the 6.5 of the total very dense and the 4.8? That will be made with CityFast.

Right. All the rules in the very dense will be made in the future with CityFast.

So everything that remains will be made with CityFast. And the existing 4.8 is either with CityFast or with SFR.

Or a little with Orange.

Right. But of this 4.8, how much is... through Cityfast and how much is through basically renting with Orange?

To be, if I'm taking the example of 6.5, you have 3 million with SFR, we have already 1.8 with Cityfast, we go until 3, and then we go plus .5 with Orange, and you have the 6.5, is it clear? Yes.

Yes, no, but I mean, I guess here the question is, you know, just trying to understand what is your business model moving into fiber and what is, you know, your value chain, what are the costs associated with fiber connections? Because, I mean, you are taking a pretty – as you say, pragmatic approach, but you have a mix of different strategies, right? I mean, I understand there is some very limited portion that has been done directly by yourself in different areas. There's lots of renting that you plan to do also in the PIN areas, and there's something that is off-balance sheet. I would just like to understand what are the, let's say, costs you incur on average in the different areas. Is it sensible to assume that in any case you're going to pay you know, in the vast majority of the areas, a wholesale fee comparable to the one RCEP has now indicated as, let's say, a cap to SFR. Is this a proxy we could take for you migrating customers to Fiber on average in the entire country, or should we have, let's say, a more detailed approach? Thank you.

Well, First of all, about the migration of the market, you need to realize if you're looking at SFR, Orange, no, we know the numbers of free Orange and Brick Telecom. As a trend today, SFR has 38% of their customer base with already fiber. Orange is 35% and Brick Telecom is 34%. So we are in the same category. There is no one accelerating more than the other. It's a trend of the market. So that's the first point. Second point are the margins that you speak about. While the fiber is interesting, the revenue of the fiber will be higher than the revenue of the DSL. Does it cost money to migrate the DSL to fiber? Yes. It will depend on the areas, but if you're looking at, I would say, the non-dense area, it's mainly loan approach to everyone, because except Toronto, which has a very big market share, all the others are small ones, because you have of those kind of things. So the price is roughly the same at every one. If you're looking at now the conditions that we have in the medium area, it's much more better due to SFR position now, which is back to orange level and quite good conditions. That means it's a little bit higher than the DSL, but not so far. And then you have the very dense area on which we have a direct integration with our partners, SFR its own, and if you're looking at with CityFast, it's a very good pricing approach, so we have no problem there. Is it clear?

And just one point, just I would like to remind you that for CityFast, we don't pay a price per subscriber. This is a fixed price, and so it does not depend to our market share. Okay, thank you.

Thank you. The next question comes from the line of Jerry Dulles from Jeffrey. Please go ahead.

Yes, good morning. Thank you for taking my questions. I had a question on telecom capex, please. I'd be interested in your guidance on the level of gross capex going forwards and how that will vary based on your decision as to whether to build the new 5G sites or to outsource that build. Following on from that, I'd be interested in the level of asset disposal proceeds that we might anticipate going forwards as well. Second question has to do with the non-standalone 5G. Be interested in your thoughts on the performance of non-standalone 5G relative to your legacy 4G network, and whether you expect Orange in particular, which is not encumbered by legacy Huawei equipment, to also deploy 5G in the non-standalone form. And then finally, I'd be interested in the technical solution that you are applying in this non-standalone rollout. Are you essentially putting non-Huawei 5G RAN on top of a legacy Huawei 4G RAN? Thank you.

So about, I will answer to your question about CAPEX and the WESHA We'll speak about your other points. So about CAPEX, so today it's too early to give you any guidance for 2021, but I will give you some more information. In 2021, we'll have to take two decisions. The first one is the speed of fallout of 5G network. And the second one is to the FTTH acceleration, either in the PIN area and also to, I would say, to build the last meters to link our customers to the FTTH network. These two things could impact our CapEx in 2021. It will depend on the speed of that. So today is too early to give you an indication for that. At the same time, I would like to remind you that we will, of course, continue to roll out new sites to cover all over the earth. We will continue to add 4G capacity, and we will also add to integrate EIT, and we already said to you that it will cost us 140 million euros of capacity in our radio network to do that next year. We will also start the swap of Huawei equipment. The government asked us to change, to move Huawei out of 3,000 sites before 2028. So we'll begin to do that. And it could cost us around 40 million euros next year to do that. Well, so very difficult to answer to you, but I gave you, I think the main point about that. Okay, so about disposals, I will just, for this year, our main disposal was with the project. We sold 100 of 5% to SDIF. We add also some disposals of sites, telecommunication sites to CELNEX. So now 222 million euros, it should be a bit higher than that at the end of the year, but no big difference. For 2021, we will sell our existing switch center to CELNEX, according to the option agreement, we have signed with them, I think it was two years ago, and this will lead to around 200 200 million euros of disposal for 2021. And Richard will answer to your question.

Okay. Concerning the good understanding about the WIC Telecom architecture network, you need to realize that in fact today WIC Telecom have a core network which is mainly on different technology components which are on Cisco, Ericsson, and Nokia. This is a core element of the core network. And then you have the radio part on which WIC Telecom has historically a mix of Ericsson and Huawei. It's now a decision from the government about the fact that we have only a list of some cities in dense area on which we have to change the Huawei, I would say, radio approach with an Ericsson or a Nokia radio approach. So it's planning, it will take eight years, and it's only 3,000 sites on top of the 28,000 sites we speak about. So it's a part of that, it's a work we've already done in the past. We did that for Nortel, we did that for Crozon when we did it, so we know how to do it. It takes time and we need to do that carefully to have no impact on your customer. If you're looking at between standalone and non-standalone. It will be a standalone architecture based probably on Ericsson because it's where we have our core network, rather than to have a non-standalone which is already in Ericsson. But I would say the main difference of that is that if you have a standalone architecture, it takes time because you have to deploy data centers into your network to be able to speed up two things, the latency and then to have acceleration of capacity to support machine-to-machine technology. So it's a question of software release is only that and the way you're managing the radio because you have some other features to speed up the capacity of the 5G network using a feature called beamforming or when you dedicate to somebody a part of your frequencies in a short time to accelerate the feeling to the customer to have higher speed. So all those things take time. That's the reason why you speak about 2023. So technology will be able probably during 2021, but it will take between 12 to 18 months to make it work. That's the reason why we speak about 2023. So don't forget, it's not an issue about Huawei. And I could tell you, standalone or non-standalone, it will be a core network based on Ericsson and with some elements of Nokia, but you have nothing to see with Huawei. Huawei is only radio on the antennas. Is it clear?

Yes, that is clear. Thank you. Perhaps if I could just follow up on one point, which is that currently consensus is modeling telecom capex, if we exclude the EIT, of about 1.0 billion net for 2021 and 1.1 billion in 2022 and 2023. Are those levels of net capex will be telecom likely to be sufficient in your view?

To be honest with you, it's a bit early now because we don't know exactly two elements. We don't know exactly about the speed up of the 5G. We don't know exactly how the stakeholders will accept the fact that we deploy the 5G. You know there is some bashing in France about the 5G. There are a lot of cities, so we don't know how it will react. The perception of the customer, we don't know today. We will be looking at. So to be honest with you, unfortunately, it's early. I think you need to wait a quarter to have a better understanding about what will be our plans in the future. But for that, we never know. We speak to you about the acceleration of the FTTH. This is sure we know, and we know how it will work. And the fact we don't know yet today, to be honest.

Thank you very much.

Too early. We haven't launched it, you know. It's not launched.

Understood. Thank you very much indeed.

Thank you. The next question comes from the line of Eric Lemery from Rangonia. Please go ahead.

Yes, thank you. Good morning. Thanks for taking my question. I've got four, but very small one, please. First one, we're getting COLAS. Should we expect for COLAS further non-current charges due to either reorganization or Dunkirk going forward? and particularly in 2021. Phil, on COLA and this reorganization, what kind of impact should we expect from this reorganization on current operating margin next year, for instance? Third question on big energy and services. Could you be more specific regarding the level of current operating margin generated by big energy and services in Q3, please? And the last question, regarding this Dijon smart city project you've been participating in, could you give us any sense of the revenue generated so far by this project? Thank you.

Okay, starting with your last question concerning Dijon, the impact on revenue is very, very small. We are sharing that contract with several companies. So, you know, it's not significant at the big energy level. Secondly, what is the margin of energy services? In fact, we are, during the third quarter, I think that the margin is a range of 3.5 percent, which is significant. in terms of improvements considering the past level of profitability in energy and services. And then the question was the non-current charges as far as Colas is concerned. No, we don't have any plan in order to increase the, to have new non-current operating charges in 2021. You know, it's fairly normal because Should we have any project in that respect, we should have done that and put that in our accounts already. But that doesn't mean we won't have some non-current charges next year. We will see. It will depend country by country what is the level of activity and what we need to do in order to enhance the profitability.

I understand that. But Dunkirk, for instance, will it be over next year or do you expect further charges from Dunkirk?

Sorry, not yet. It's a long-term process. You know that we are developing how to... to revamp the site, to depolute the site. As we are discovering new things, we are putting charge in that respect. But, you know, it will be in the... We will see. We don't have any... Okay.

We will see. And regarding this reorganization on collapse, do you expect positive impact on margin due to that?

The first thing, it will mitigate part of the lack of revenue we will have during the first quarter, the first half of the year. Obviously, on a medium and long-term basis, it's one of the ways we have identified in order to enhance the margins of collapse.

And could you share with us the impact, I don't know, in terms of basis point we should expect from that?

No, you know, we are in the middle of the story. All right.

Fair enough. Thank you.

Thank you. The last question coming from the audio line comes from the line of Alexandre Rancier from Xen. Please go ahead.

Hello, and thank you for taking my question. I've got just two, if I may. First, just to come back on the Huawei switch, I think it was last week or this week that you had some positive comments from the rapporteur public to actually help you probably get compensation from the government. So I was just wondering if you had any news or any call around that. And then secondly, perhaps, regarding and more broadly your dividend, given that the special was canceled earlier this year, The recent capital and equity raise from Alstom now ended. Are you thinking differently about shoulder remuneration heading into next year? Thank you.

Okay. About I would say the position of the about our request concerning the non-equity on this project concerning 5G, Huawei, and so on. What I would say, we want a battle, but we don't want the war already. It will take two other stages. Normally, it will go to the Conseil Constitutional, so it will take some weeks or months at least. Now that they recognize that there is a difference between two actors and the others, so we're expecting some remedies and some compensations. We will be looking at that if the Conseil Constitutional is agree on that point, then the government will have to negotiate with us. So I would say it's good news. It has been a normal thing, I believe. We were thinking of it. And it would take some months, but we expect to have some revenues, yes?

As far as Alstom is concerned, however, you know, We won't tell you precisely what we'll do with the procedure in the future, but, you know, we have already repeated the same things. Our priorities are clear. We aim to develop our existing businesses. We want to maintain... a strong financial structure and then we will see what we could do in terms of return to shareholders. You know, we tend earlier this year to have a specific return in that respect, but, you know, we'll see when we have, we'll see in the next future what we do.

Okay, that's very clear. Thank you very much.

Not already decided. Perfect, thanks.

I'll now hand over for the webcast question.

We have a webcast question coming from Akhil Dattani. Please go ahead.

What is the question?

So what are the drivers behind the Record Q3 callous EBIT margin of 10%? Are there any one-offs in there? There remains speculation around your potential M&A interest. across the construction and energy segments. Can you update us how you think about your potential acquisition interests across these areas, and if you have any specific geographic focuses? And there is a third question, always from Akilda Fanny. Can you discuss the latest views on government infrastructure stimulus spend you anticipate in Europe and the U.S.? ? as well as the extent to which you expect to be able to take advantage of this opportunity.

Thank you. As far as M&A is concerned, you know that we have two priorities within our construction activities. The first one is to develop energy and services. I spoke earlier about this issue earlier. We intend to enhance our activity in that respect. And we intend to develop our COLAS activities. And we have some priorities in terms of geography. I would say that we would like to develop ourselves in Northern Europe, in Germany, and in North America. that's the main priorities we have in that respect. You know, I mentioned different times, as far as the margin is concerned, within COLAS for the Q3, I mentioned that several times. You know, we have a very specific Q3 this year, which is, to the resumption of activity beginning of summer and then a catch-up of activity, which is quite important with NICOLAS during the Q3. As you know, they have a lot of fixed costs. So when you have extra activity, you enhance considerably the margin. And secondly, they had some compensations. I mentioned that earlier. And then they have implemented some action plans in order to make savings in their organization. And the cumulative effect of these three type of facts induce the very high level of profitability during the third quarter. And your last question was related to stimulus plans in France and elsewhere. Let's say that we have some plans which are announced in Europe, France and the EU budget. And we have also important plans in the U.S. We don't know precisely how it will be implemented due to the election, We are sure that something will be done in that respect. So we are confident that these similar plans will enhance the activity of COLAS and good construction in the future. As I told you, not during the first half of 2021, probably during the second part of the year.

Thank you.

I'll hand now over to the speakers for any concluding remarks.

Okay, thank you for joining us today. We will be announcing our full year 2020 sales and earnings on 18th of February 2021. Should you have any question, please contact our investor relations team Their contact information is on the press release on our website. Thank you.

Ladies and gentlemen, this concludes Week 9 Month 2020 Results Conference Call. Thank you all for your participation. You may now disconnect.