Bouygues

Ladies and gentlemen, welcome to WIGG's first quarter 2021 results conference call. I now hand over to Karine Addo-Cruzon, Head of WIGG 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.wig.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 its 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 Olivier Roussard, CEO of Bouygues.

Thank you, Karine. Good morning to all of you and thank you for joining us to discuss the Bouygues first quarter 2021 results. With me in the room today, there are Pascal Granger, deputy CEO and CFO of Bouygues, and Christophe Lecoq, CFO of Bouygues Télécom. Following our comments, we will be answering your questions. Let's begin with the slide 4. Q1 2021 results reflected a solid start to the year with a sharp improvement compared to the Q1 2020. This Q1 2020 was negatively impacted by the beginning of the pandemic. As usual, given the nature of our activities, especially the road activity, Q1 was impacted by seasonality. Let me stress the main highlights for this quarter. First, we experienced a significant growth in group sales compared to Q1 2020. Second, the group current operating results and margins were close to Q1 2019. Third, net profit attributable to the group was positive, which is quite unusual, considering the seasonality of the business. Fourth, our financial structure remains very robust. And lastly, based on Q1 results, Bouygues Telecom is able to revise upwards its EBITDA after lease target for the full year. In conclusion, In an environment still uncertain and affected by the pandemic, the group confirmed its outlook. Let's turn now to the group case figures on slide 5 to review more in detail this performance. Group sales were 7.7 billion euros, up 7% year-on-year. The good news for the first quarter is that all our business segments delivered growth compared to Q1 2020, thanks to solid commercial activity. The growth was particularly strong in France, as larger activity was impacted by a strict lockdown from mid-March 2020. In international markets, sales were affected by an unfavorable exchange rate effect, life for life, and at a constant exchange rate, revenue was down by only 3%. Current operating results improved by €165 million compared to one year ago. At minus €77 million, results were close to Q1 2019 level, which is a good performance. And finally, it reflects first A favorable base effect as Q1 2020 was negatively impacted by the beginning of the lockdown. And second, the positive results of ongoing strategy plan and the operational action laid by the business segments. Therefore, Q1 2021 current operating margin was close to Q1 2019 level. Operating results improved strongly benefiting from this solid operational performance and 60 million of non-current income at Bouygues Télécom essentially related to the disposal of data centers. Finally, at 21 million euros, net profit attributable to the group was positive. It includes a 120 million euro contribution from Alstom, who was detailed in our press release published last week. Let's turn to slide 6 that highlights the Group's strong financial position. I now give the floor to Pascal.

Thank you, Olivier. At end March 2021, available cash was at the high level of 11.5 billion euros compared to 10.3 billion euros one year ago. It included 3.6 billion euros in cash and 7.9 billion euros of undrawn medium and long-term facilities, of which 7.5 billion euros were without covenants. As you can see, the debt maturity schedule is well balanced with no debt wars. Moving to slide 7, net debt was 2.6 billion euros at the end of March 2021. It is the lowest level for a first quarter in 15 years. Compared to end March last year, net debt was down 946 million euros, a significant reduction. The strong cash generated by operations of 1.5 billion euros covered both the payment of dividends and the acquisition of EIT, which has been renamed Brick Telecom Business Distribution and is now referred to as BTBD. Moreover, NetDebt benefited from the positive impact of the disposal of Alstom's share capital in November 2020, and March 2021 for a total of €0.9 billion. Net year-end decreased by 9 points over the same period to 22%. Compared to end December 2020, the increase in net debt is moderate €662 million as the usual seasonality effects were partially offset by an improvement in operations. The group relies on a particularly strong financial position, which remains a major asset to strengthen its business segments and accelerate their growth over the next few years. Let's now turn to slide 8 to see the net debt evolution between end December 2020 and end March 2021. You can observe that the moderate increase in net debt since the end of last year is mostly explained by the two following items. First, the positive impact of €492 million of proceeds from the sale of 12 million Alstom shares in March. And second, an outflow of €1.1 billion from operations decreasing by €189 million year-on-year that I will explain on the next slide. Turning to the breakdown of operations for the first quarter 2021 on slide 9, you can observe that. First, net cash flow, including lease expenses, increased by €179 million year-on-year, significant improvement reflecting the increase in activity in all businesses. This level is even better than in Q1 2019. Second, net capex was down 110 million euros mainly due to higher disposals in the first quarter at BRIC Telecom related to data centers. And third, You can see on the chart that working capital requirements related to operating activities increased by around 80 million euros compared to the same period of last year. I would like to stress that the management of working capital by the business segments in 2020 was remarkable. We started the year with the working capital requirements already optimized and with stronger activities than one year ago. To date, we do not observe any slippage. I will now turn to the review of operations, starting with the construction businesses. Let's begin with the backlog in the construction businesses on slide 12. At 33.4 billion euros, the overall backlog at end March 2021 was up 2%, at constant exchange rates and excluding the main disposals and acquisitions compared to the same period of last year. It also remained at a high level compared to the last six years. The share of order book in international markets is stable year on year, representing 62% of the backlog at brick construction and collapse. Let's now look at the backlogs by geography on slide 13. As you can see, the international markets remain dynamic with a 4% increase in backlog at end-March year-on-year at constant exchange rates and excluding the main disposals and acquisitions. Colas has notably won significant contracts in the road sector in West Africa and Eastern Europe. In the Greater London Region, Big Energies and Services was chosen by the operator Vertis to design and build its mega data center in Haze. In France, the backlog was down slightly year-on-year at end March 2021. Brick construction's backlog was up 3%, driven by a good commercial dynamic in medium-sized projects. The decrease of COLA's backlog reflected delays in public orders due to the pandemic. In roads, orders resumed, and in rail, new orders are expected in the second half of the year. Colas already responded to tenders for the Grand Paris project, whose results are expected in the coming months. At Bouygues Immobilier, reservations in a residential rose by 15% compared to last year, reflecting solid customer demand. However, delays in obtaining building permits are still very long due to the pandemic and municipalities agents working from home. We therefore have a lower supply of units available. Regarding commercial activities, clients are in a wait and see mode. As a result, the backlog was down 12% year on year. Let's now look at the construction activities key figures on slide 14. The construction businesses started 2021 on a strong note. Activity was up 6% like for like and at constant exchange rates driven by old business segments. In France, revenue was up 16%, partly reflecting a favorable comparison effect as the lockdown, which began mid-March last year, led to the closure of most of our work sites. In addition, we benefited from a steady demand in residential and a good activity in roads in March. This level of activity is close to the one we had in Q1 2019. Like for like and at constant exchange rates, international sales were down only 3%. The last activity, particularly in Central Europe and in the United States, was impacted by unfavorable weather conditions in the first quarter. The profitability improved significantly compared to Q1 2020. Current operating results increased by 155 million euros and current operating margin was minus 3.5% at the level of Q1 2019. This was led by, first, an increasing margin at Bouygues Energies and Services compared to Q1 2019. Second, better progress at work sites at Bouygues Immobiliers. And third, an earlier start of COLAS activity in Canada and the positive results of the ongoing strategic plan, including notably the organization in France on the optimization of industrial activities. Please remember that like every year, Q1 earnings are not indicative of first half and full year results due to the usual effect of the similarity. Looking ahead, our construction businesses have promising growth prospects as the essential needs of housing, energy, and transportation remain intact. Moreover, our businesses will benefit from the stimulus plans announced in the country in which they operate. Let's have a brief look at those plans across the world on slide 15. We have already shown you this map, which represents the percentage of sales of our construction businesses by region in 2020 and the underlying stimulus plans that have been announced for each of them. We updated the chart with the $2.3 trillion plan recently announced in the United States by President Joe Biden. This new plan would incorporate $621 billion for transportation infrastructure, notably including the modernization of bridges, highways, roads, and public transportation, airport renovation, rail upgrade, and port and waterways improvements. This plan will be financed over 15 years. It is too early to know precisely what will be approved by Congress, but this plan should bring good opportunities for collapse in the US. Greek construction could also benefit from good prospects in building activities and public works as they are developing in the region. The Portuguese Tunnel in the state of Rhode Island illustrates this potential. In Europe, and particularly in France, while there may be some delays, we still expect to see the positive outcomes in H2 2021. Let's talk briefly about TF1 as results were released at the end of April. We will discuss the proposed merger at the completion of the Q1 2021 results presentation. First, TF1 released a good set of results as highlighted on slide 17. The improvement in sales and current operating profits was driven by all three business segments. In Q1 2021, TF1's audience share among key targets improved compared to Q1 2020, highlighting the attractiveness of the group's TV channels. First quarter advertising revenues were up 1% year-on-year at €358 million. We saw the return of advertising spending in several sectors, such as food and retail. As a whole, sales were up 3% year-on-year. Performance at studios and entertainment was also very good, driven by new ones, which saw revenue boosted by some catch-up in productions originally planned in 2020. Current operating profit showed significant improvement reaching 57 million euros in the first quarter thanks to the good control of broadcasting schedule costs amounting to 211 million euros, which remained almost stable compared to the first quarter of last year. As a result, current operating margin was up 2.7 points to 11.2%. In this context, TF1 confirms its full-year outlook as you can see on slide 18. As recently announced, and in line with its strategy, Nguyen recently took a controlling stake in Aizen, a leading player in Spanish production. This strategic move is consistent with Newen's ambition to grow its activity in international markets by generating a significant part of its 2021 sales outside France and by increasing its backlog with pure player platforms. Moreover, TF1 expects Unify to increase its sales and achieve a positive current operating margin in 2021. Note that this outlook is based on information known to date and excludes any further deterioration due to the pandemic. Now, let me turn the call over to Christian Lecoq.

Thank you Pascal and good morning everyone. I hope you are all fine and in good health. Starting with slide 20, you can see that we achieved a significant step in mobile in the first quarter. At end March 2021, BOOT Telecom had 14.3 million mobile band customers, including N2M, following the integration of 2.1 million BTBD customers. Commercial activity remained dynamic during the quarter, despite the closure of around 220 stores, due to the health crisis considerations. As a result, BOOT Telecom won 141,000 new planned customers in Q1. Thanks to this performance, Good Telecom only achieved 54% of its ambitious 2026 target to reach 4 million additional mobile customers, including M2M. We are therefore confident in our ability to meet the target. My presentation will also show you that mobile ADPU continue to grow at the same time we expanded our customer base. Now, let us turn our attention to our fixed customer base on slide 21. As you can see, we had 4.3 million fixed customers at end March 2021, including 98,000 won in the first quarter. In FTTH, NetApp continued to grow as 190,000 customers joined us during the first quarter. With a total of 1.8 million subscribers, FTTH customers represented 42% of our fixed customer base compared to 28% one year ago. Having achieved 6% of our ambitious 2026 target in one quarter, we are on track to deliver our goal of 3 million additional FTTH customers. Once again, I would like to stress that this increase in volume is not detrimental to ABPU. Indeed, as shown on slide 22, our more formal strategy is being fought. Please do keep in mind that the ABPU figures on this slide do not include the GTBD. Mobile ABPU and fixed ABPU were up year-on-year in the first quarter of 2021. Mobile ABPU increased by €0.6 to €20.2, we stated for the rooming impact, and fixed ABPU increased by €1.1 to €28.2. This growth in both volume and EVPU resulted in solid top-line growth in Q1 2021 and unrestricted on slide 23. Total sales were strong and up 17% year-on-year in Q1 2021. Self-formed services were up 13% over the period of 4% exceeding VTBD. This performance was achieved both through mobile which was up 15% including BTBD, and through fixed revenue, which grew by 9%. Other sales increased by 35%, a strong performance reflecting the acceleration of ETTH's connection and the growth in B2C trade news. EBD after lead-in for the first quarter was up 10% year-on-year at 330 million euros, Performance is better than what we expect for the full year 2021. Please remember that in Q2, we have an unfavorable comparison effect on EBITDA after leases, coming from two high trends. First, 17 million euros of capital gain from the disposal of FTTH premises to DAIF, and second, 20 million euros of renewable savings related to the 2020 lockdown. The EBD actuality margin was down as expected, affecting first, the dilutive impact from the BTBD integration, second, a negative rooming impact of around 20 million euros in the first quarter 2021 versus first quarter 2020, and third, a mixed effect relative to the FTTH warm-up notably in medium-dust and beam areas. Regarding current operating profit at 76 million euros, I would like to say that it included 6 million euros of depreciation and amortization of intangible assets acquired from BTBD following the provisional purchase price allocation. Operative profit was higher than in Q1 2020 at 136 million euros thanks to a non-current income of 16 million euros essentially related to the disposal of data centers. I now want to add a few words regarding our recent BTBD acquisition on slide 24. The integration started positively Employees are fully committed, a new senior management team has been put in place, and the EIT integration plan is on schedule. BTBD launched its first commercial campaign in March and April, and it has been successful as BTBD sales performance was higher than one year ago. Meanwhile, the commercial trends remain dynamic for trademark licenses. We initiated the first BTBD customer migration to Boot Telecom Network during the quarter, and we are pleased to have no impact on churn weight. We will continue to migrate BTBD customers slowly and progressively to maintain good service quality. The first switch of customers to Boot Telecom offers will begin by the end of 2021, 12 months earlier than planned. To summarize, The BTBD integration is one track to success. Let me end with our outlook on Skype 25. Thanks to the performance achieved in the first quarter, Boot Telecom raises its EBD after leases target for the full year and is now expecting an increase of around 7% including BTBD. Furthermore, Boot Telecom confirms its 2021 cell phone services and net capex objectives. Now, I'm pleased to hand over the floor to Pascal.

Thank you, Christian. I would like to briefly comment on the financial statements on slide 27. We have already discussed first quarter revenues and current operating profit at the beginning of this call. Other operating income and expenses were positive at 56 million euros in the first quarter. It notably included non-current income of 60 million euros at Bouygues Telecom, as Christian explained already, and a negative 4 million euros at Bouygues Immobilier, related to some adaptation measures. You can also note that cost of net debt decreased slightly year on year due to lower interest expense on our bonds, as we reimbursed a bond in July 2020 and issued a new one at a lower rate in April 2020. Regarding the income tax line, the effective tax rate was 20% in the first quarter of 2021, compared to 28% last year, in line with a smaller operating loss and a decrease in the French tax rate. The share of net profit of joint ventures and associates was 105 million euros. It included the contribution from Alstom as explained previously. We will now turn our attention to the group outlook on slide 29. Olivier, I give you the floor.

Thank you, Pascal. On slide 29, in a macroeconomic and COVID-19 crisis context that remains uncertain, the group confirmed its outlook already announced in February 2021. Obviously, this outlook is based on information known to date and excludes any new and favorable change due to the pandemic. To conclude this presentation, I'd like to come back to the Monday night announcement regarding the merger project between TF1 and AM6. Slide 31. As announced three days ago, Bouygues, Ercel, Groupe TF1 and AM6 have entered into exclusive negotiations to merge the activities of Groupe TF1 and Groupe AM6 to create a major French media player. Bouygues says this unique opportunity to reinforce its position in the French media market, which offers long-term growth prospects. The new combined group will be strongly positioned to compete in the evolving global media landscape, thanks to the first 360-degree multimedia presence in TV, radio, content production, and digital, benefiting from strong brands. Second, a combined entity with performance sales of 3.4 billion euros in 2020 and strong investment capacity in content and technology. This entity will strengthen the supply of French quality content and allow the acceleration of the development of a French swimming champion. Merge Company will be a leading player in Europe. Third, this merger would provide an enriched experience for the general public, who will gain an enhanced premium and local content offer and a customized digital experience. Furthermore, Advertiser will be offered a wider range of choice benefiting from cutting-edge technology in training and addressable TV advertising. Lastly, This transaction would result in strong value creation for all shareholders. The annual run rate at Ista Synergy has been estimated between 250 and 350 million euros. The new entity would therefore be positioned as a benchmark for the sector. we highlight the main steps involved in this transaction. The first step will be a carve-out of the activity of Group AB6 between those related to broadcasting authorization that we call on the slide AB6 edition and the rest of the activity that we put in AB6 services. We do this due to the French regulation Because of the French regulation, it's not possible to put in the same entity two channels with an audience which is over 8% at the nationwide point of view. For this reason, we need to create two entities, one for ANSYS and the other entity for the rest of the group. The activity of M6 services would merge with TF1 in exchange for a new TF1 share, based on a merger parity reflecting the overall economic exchange ratio of 2.1 TF1 share for 1 M6 share. Following this, WEG would acquire an 11th stack of the merged entity from RTL Group, for 641 million euros. And finally, RTL Group will contribute its 48th stack in AMSIS addition to the combined entities. Following these steps, Bouygues will own around 30% of the merged entity and will have exclusive control over it, acting in concert with RTL Group as a strategic shareholder. Both Bouygues and RTL Group are committed to support the combined entity over the long term. This project was unanimously approved by the board of the four companies. Looking at the final slide, this operation will be accretive for Bouygues and bring significant valuation potential. Slide 33. As a matter of fact, as you can see on the slide, thanks to the ANSYS group's high profitability, the current operating margin of the MERV entity will have been 30.7% in 2020 on a pro-forma basis, higher than the TF1 margin, which was 9.1% in 2020. This transaction will also increase earnings per share. This transaction will have a limited 600 million euro impact on the net debt before consolidating AMCIS net debt or circular closing, and it will not affect our ability to consider other opportunities to reinforce break in other business segments. Moreover, The value creation potential will be significant thanks to the annual EBITDA synergy. The project is very attractive for Bouygues from both the industrial and financial side. Slide 34 The transactions are subject to the usual condition precedence. and more specifically the approval of the French Antitrust Authority and the Media Regulator. Its completion is expected by the end of 2022. Meanwhile, neither KF1 nor AMCEX will be at risk during this period because it will be business as usual and competition as usual for each entity. Like all industrial and synergistic operations, Its objection is more complex than a simple financial deal, but we are very confident in the outcome of the discussion we will have with the Amstrad Authority and the media regulators that will allow this operation to be completed under satisfactory conditions for all stakeholders. This concludes our 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, please. The first question comes from the line of Mr. Nicolas Cote-Colisson from HSBC. Please go ahead.

Hi, thank you. I start with a question on telecoms. I'm interested in your views on equipment supply constraints, if any. And also, how do you take the decision from Ilya to eventually enter the premium markets? Because both of you are now having high ambitions to become a long-term leader behind Orange. So I'm interested in your views on the risks of a resurgence of a price war after almost two years of, I would say, relative peace. And on the construction side, back to your slide 15 on the stimulus plan, can you help us on the phasing? I was wondering if you could Tell us if there are any regions that could materially impact your business as early as 2021. Thank you.

Hi, Nicolas, about your first question. I think it's mainly about the trend we saw today on chipset, chipset supplies. Today we have these difficulties on ships and supplies doesn't have any impact for us on the radio network equipment or in general network equipment, I will say, neither on sunset. What we see is that we have more difficulties for set-top box and box. with two impacts. The first one is a bit higher prices for these equipments, but very small impact for us, less than 10 million euros for the year, for example. And the second impact is that we have to anticipate our supply So today I think that we have already ordered all our books for the next coming years. So from now to mid of next year. So we are very confident on this point. So no big deal for us. The second point was about the possibility of price war in France. That's why we saw, I would say, more promotions in the Q1 of this year. I think it was mainly because the shops were closed and so we had to attract the customers to the digital channels. I imagine two things. didn't put in place the first promotions. During Q1 it was mainly SFR and we decided to follow as usual. This is the first point. And the second point is that this is very limited promotions limited to the Simondi weaponry offers and so no big impact for us. Today our shops have been reopened today, so today or yesterday. So I think that Q2 will be much better for this point. And about EVIAD on the CCD market, well, no comment. They used to do that, I think, they have used to do that for now two years or three years with refurbished onset. So with, you see, You saw that in our figures. You see that in our figures. No big impact on our volume. Thank you.

As far as stimulus plans are concerned in the construction business, I would say that probably in the U.S. it will be next year, but we could expect in Europe, and especially in France, first effect during H2, 2031. So here we... in particular for collage projects, smaller rail projects and probably some cycling roads and so on and so forth.

Okay, thank you very much.

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

Hi, good morning. Thanks for taking the questions. I had two questions, please. Firstly, I'd be interested if you could comment a little bit about your thinking on the balance sheet on the back or post the TF1 M6 transaction. I appreciate it's quite a late closing, but do you think there's still balance sheet capacity for further acquisition, assuming the deal goes through, or do you still have a sort of slightly under-levered balance sheet, or is this essentially done? And then secondly, can you perhaps comment a little bit around the margins for Colas? I mean, operating profit improved by almost 100 million year on year. I think you had a 75 million COVID drag in Q2 last year. So it looks like there's sort of a fairly healthy ex-COVID development in Colas. So just interested in what are your expectations around margins for Colas? Do you still expect margins to sort of end up at the 2019 level for this year or Given the performance in Q1, do you think it could be a little bit better? Thank you.

Okay. For the first question, if you consider our balance sheet, we can consider that we have a very, very low level of debt end of last year, but also end of this year. I remind you that if you cover a one-year period, the operational... have covered first the dividends and only the acquisition of EIT. So the proceeds related to Alstom have improved our net debt for the same amount. So it's a good achievement of our operational activities. So, you know that we have structured the TF1-M6 operation in a way in which we will have a company after merger with a very, very low level of debt and no impact for the consolidated debt of the group and we will have to disburse 644 million euros to buy to RTL Group 11% of their stake. So there is a very important room to develop our other businesses. I remind you that we have already said that we consider several fields for development. First, roads for Colas. We have targeted two, in particular, three particular regions, Northern Europe, Germany, and the UK. And we have energy and services in which we want to, the third region, sorry, Northern Europe, Germany, and Northern America, especially US. And we have also targeted energy and services in which we consider that we have room for development and improvement in margins. So we consider that our branches are sufficiently strong to develop these different projects. The second question was related to Colas margins. You have seen that we had achieved a quite good performance during the first quarter of 2021. And we are very satisfied about that figure because if you consider the level of activity in 2021 compared to 2019, we are a bit lower, but we have maintained the level of margin, which is very good news and which, in fact, illustrates the actions we are developing in Colas Group in order to optimize some activities, in particular quarries and bitumen activities, and the efforts which have been made to restructure French road activities. So, we are quite confident for the year. Frankly speaking, it's very early to know precisely what will be the margin for the current year. we remain optimistic to be not far from the 2019 level. Probably not at the level of 2019, but in fact, we have to wait one quarter to see how things develop.

If I can just ask a quick follow up. Just on the M6 transaction, given you expect to retain exclusive control, can we assume that the accounting treatment of TF1 within the BRIC group will remain unchanged, so you'll continue to consolidate it?

You are perfectly right. We will be integrating the whole group on the global method.

Thank you.

Thank you. The next question comes from the line of Mr. Eric Lemary from Brian Garnier. Please go ahead.

Yes, good morning. Thanks for taking my question. I've got two. The first one regarding Wiganergy and services. On the sales of Bright by Engie in these sectors, do you expect any positive impact on market discipline in terms of pricing after this operation will be done? A second question regarding the new workplace. There is a lot of talks currently, discussion around the new workplace, post-pandemic, I would say. Do you got some specific offers in the BRIC group? I was thinking in particular of BRIC Immobilier and BRIC Energy and Services. And it would be nice, if I may, if you can provide the revenues and margin of BRIC Energy and Services if you want, please. Thank you.

First, considering Bright, in fact, we do not expect any impact on the market related to this operation. Let's say that, as you know, we have an important action plan in order to recover some better margin at the energy and services level. And the same in fact for the rights group because you consider that they are at a level which could be improved if you compare to their competitors, our competitors, but no market effect of this operation. Secondly, the margin improved. I don't compare the profitability of Q1 2021 to 2020. As you know, the lockdown last year impacted drastically the margin. But we are on the way of improvement of the profitability of Bouygues Energy and Services. from 1.2% in Q1 2019 to 2.2% at Q1 2021. We have set an action plan. It takes time to have the results of that because as I mentioned in different circumstances, we need to change the organization of the company. to change the geographical mix of the company and we have to change the activity mix of the company. We are doing so. We are quite satisfied about our action plan and the results we obtain. The margin is increasing. We intend to reach at this year a level which would be comparable to the average level of This is the first step and then we will have to reach the level of our competitors. And your third question was related to workplaces and you were asking if we had some specific solution to propose to our clients. There are different things to say in that respect. We are sure that a lot of companies are actually in wait-and-see period because they don't know. We are not in a normal situation. So people are working from home today, but it's due to the pandemic and it's not a long-term policy. We will have to wait. we will adapt our products in order at big immobilier level to propose some new kind of offices. And we have already our Wojo activity, which is related to co-working places. And obviously, they stopped their activity in large extent during the last 12 months, but we will consider that they will recover rapidly. You know that the Wojo company is a company which is a cooperation between Accor, GV, between Accor and Brigham Immobilier.

Thank you. Thank you very much for these answers. Very interesting.

Thank you. The next question comes from the line of Mr. Jerry Daly from Jefferies. Please go ahead.

Yes. Good morning. Thank you for taking my questions. First question relates to your construction activities. I'd be interested to understand how a more inflationary outlook might impact your cost base, the various elements of your cost base, and what ability you think you might have to pass on higher inflation to customers. Second question.

Sorry, sorry, please go ahead.

Okay, thank you. The second question was just on the telecom guidance. You've raised the EBITDA guidance obviously this morning, but the revenue target is unchanged. So the reasons behind the EBITDA upgrade would be very interesting, please. And then just finally, on the RTL MCIS transaction. I'd be interested to understand please how RTL will be compensated for contributing the 48% stake of MCIS edition into the merged entity. Thank you.

I will start with the inflation question in the construction businesses. Firstly, we have to separate to the reconstruction activity probably and COLAS activity because in average COLAS activity are based on a short-term contract. So, you know, when we submit our offer, we have not very long to wait before realizing the work. So, there is no real inflation issues. when there is inflation and some raw materials and so on, we increase our offer price. So there is no particular risk in that respect. With construction, the situation is a big difference because the period between the day we submit our offer to the day we are realizing the works, we have far longer to wait. and there is in fact two particular mechanisms in order to transfer that risk to first to our clients with formulas and in some contracts we have some formulas price index in order to cover that risk and secondly when we offer firm prices then we ask our suppliers firm offers for the for the equipment and materials. So this is our strategy. So the remaining part of the risk remain more marginal. This is for the inflation.

Probably Christian will answer to... Yes, for Book Telecom BDA, the change of guidance means that we'll have 30 million more BDA than expected before. The main impact is the fact that BT-BT integration is better than expected. So that means that we have a better level of synergies than we expected before. So this is the main impact. The second impact is when, in terms of OPEX, we are spending less OPEX, a bit less OPEX than expected. And this is the second impact. is we could have some small rooming revenue at the end of the year due to vaccination campaign and to expect that the COVID impact could be lower at the end of the year. That is the three main impacts for India, but the main one is the VTBD synergy.

And your third question was related to the structure of the M6 TF1 diva and how RTL Group will be compensated for their 48% stake in M6 edition. That's quite clear. They will be remunerated with TF1 shares. And when we mentioned the 16% stake of RTL Group, This includes the compensation for their participation in the M6 edition. Is it clear?

That is clearer, but it's still not clear to me the basis on which M6 edition will be valued. Is it possible to shed some light on that, please?

No, at that stage, it's too early to give you some details on that. But obviously, all the mechanism has been designed in order to make sure that the level of valuation of MSIS edition will be integrated in the remuneration of RTL Group.

Thank you very much.

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

Yes, good morning. If I start with the question on construction, could you give us a little bit of color in terms of the intake at Colas during the quarter and also how you now view the quarter that has passed and the outlook compared to maybe your views at the end of last year where you were quite cautious. So that would be the first question. Also on construction, I saw there was some big order intake in France in the quarter. I may have missed comments on that during your scripted remarks, but if you could give a bit of color there, that would be great. And then lastly on telecoms, You were asked before about the competitive environment, and your message is that it has deteriorated a bit on the very low end, but I guess what you're saying is that it still is solid for the rest of the market. So I wanted to know if you were able to continue to do more for more initiatives on your back book since the beginning of the year, and you still think you can do during the rest of the year as you did in 2019 and 2020. Thank you.

So I re-answered the third question on telecommunication. Yes, of course, our goal is to continue our foremost strategy during the year and the years after. We already did that during Q1, despite the fact that we had, of course, some permissions on the OAN market.

So we will continue to do that. As far as your first question is concerned, which is what is the color and commercial activity for Colas during Q1 2021? Let's say that we were obviously a bit anxious at the beginning of the quarter due to the fact that it's quite difficult for civil servants to organize competition and call for tenders from home, and we are quite satisfied about how the The situation has been, has evolved during the quarter. Call short-handlers increased by 15, in average, has increased by 15% in Q1 2021 compared to Q1 2020. But it remains lower than the average level of Q1 2019, but we had a quite satisfactory last month, I mean in March. So we are considering new calls for BIT from municipalities, which are at the beginning of a new electoral cycle, and we consider that it will have a positive impact on Q2 and H2. And then we will have in addition the impact of the stimulus package. So we are quite satisfied about this commercial activity. And I'm very sorry, but I have not got your question.

Sorry, it was about the order intake on construction in France. There seems to be a 35% increase. So maybe you explained it during the call before and I missed it, but if you could give us a little bit of color as to why it progressed so well in construction France.

In fact, there is always a bit of volatility in our figures in France for reconstruction as we are considering major and medium-sized projects. Let's say that during the first quarter, we had two important projects, which are the real estate renovation project in Boulevard des Capucines, which is quite important. And we have been awarded also for some stations for the Grand Paris. But in general, we can say that we are quite satisfied about the order book in France and the order intake. related to medium-sized projects.

Great. Thank you very much.

Thank you. The next question comes from the line of Mr. Joseph Bujal from Kavya Shivra. Please go ahead.

Yes. Hello. Good morning. I have two questions, both on the TF1-M6 deal, please. The first one is on the synergies, which are an important part of the deal. Could you help us understand the main areas where you expect the synergies and also the split between the merged entity and the pure channel M6 where most of those synergies will be? And my second question is about what you mentioned earlier about this long-term commitment of RTL and, of course, yourselves to support the deal. Could you be more precise about what long-term does it mean? How long are they, I would say, engaged in supporting, I would say, this entity? Thank you.

Okay, starting with your second question, let's say that we have negotiated effectively a long-term cooperation agreement, so there is no date for which is forecasted for them to leave, so it could, obviously they will see, and I think that Thomas Haber, because he's mostly a question for Thomas Haber, he explained that in the Figaro today, that he is actually committed for a few years, and then after, if the cooperation goes well, he intends to stay. He mentioned that Bertoltzmann is... is a group of family owned which is committed on the long term, so they do not intend to leave. That is for your first question. And the second question was related to synergies. Most of the synergies are cost synergies which are related to to optimization of stock and utilization of tools and obviously all the programs which are both externally and this is the main part and there is a few revenue synergies which are related to the way we can propose new offers to our clients and to advertisers.

Thank you. The next question comes from the line of Noah Cristini from Morgan Stanley. Please go ahead.

Thank you very much for taking my questions. I have two on telecoms, please. Firstly, starting by B2B, following Iliad's launch in March through the S&E market. Would love to know if you've seen any impacts at the moment and what you see generally in the marketplace. Have you seen any particular reactions triggered by this influence? So that's the first question. My second question is linked to the subsidized offer. seen that in the digital and environmental roadmap that the government published in February, they seem to mention this as a potential route to try to work on the carbon footprint coming from smartphones. It would be helpful to get your view on this. Do you see any potential risk coming from regulation in the subsidy market?

Thank you very much. Right. About your first question and the You don't see any impact on the market. As you know, IAD offers what we call the pro segments, so the small office, home office, or very small business, and not the small and medium enterprise. So we do not have any impact today. We already have, at the telecom level, some offers for this growth segment at quite the same price as Iliad, if we included in Iliad offers all what we have already in our offer, like, for example, premium services and so on, and also the mobile line. So no impact, no impact for us. I remind you that Iliad was probably always present in the pro segment via mass market offers like us today. you have many pros that in fact use B2C offers, normal B2C offers. So that's the point for that. About the subsidy, we do not consider that smartphone subsidies have an impact on the renewable weight of mobile. Today I think that On the market, more than 75% of the customers can change their handsets today, so are free to change their handsets, and they do not that quickly, it seems. So we do not think that this has an impact. I remind you also that Good Telecom has a big program in terms of renewal of the handsets. We were the first operator to launch such a program many years ago now and so we are very happy with this program and the last point we are quite surprised that at the same time the government demands us a 5G network deployment or 5G network rollout while trying at the same time to slow down the equipment of the customers in a new 5G compatible handset so good to have a 5G network but if people cannot get any 5G handset, because you know 5G handset now, the price is more than 1,000 euros. So it will be difficult to equip everybody at such a price. So without subsidies, I don't think that we could have a big 5G effect in France.

That's helpful. Thank you.

Thank you. Just another reminder for the participants, you may press star 1 to ask your question. Thank you. Thank you for holding while we expect our next question. We have no further questions, so I'll hand the call back to our speakers to conclude the call for today. Thank you.

Thank you. Thank you for joining us today. We'll be announcing first half 2021 sales and earnings on 26th of August 2021. Should you have any questions, please contact our investor relations team. The contact information is on the press release on our website. Have a good day.

Ladies and gentlemen, this concludes the first quarter results conference call. Thank you all for your participation. You may now disconnect.