Orange Sp/Adr

Good morning and welcome to our Q3 2021 results presentation. And we're going to jump to slide four, which presents the key highlights of the quarter. You can see that Africa Middle East is still the main growth engine for Groups Revenue with a double digit top line increase this quarter. You can see that in France, retail services kept accelerating at plus 3.7% excluding PSTN, and we have extended our 5G coverage reaching close to 700 municipalities. In Spain, a new milestone in the recovery action plan has been reached with the simplification of our portfolio from five to three brands, while one Spanish out of two has coverage with our 5G network. The other European countries pursued their solid commercial momentum, fueling retail service revenue growth at plus 5.7% this quarter, while completing two key strategic projects, namely the T-Car Air acquisition in Romania and the Polish FiberCo. Regarding the enterprise segment, we pursue the development of our growth relays with Orange Cyber Defense. obtaining one of the most demanding cybersecurity certifications in the market delivered by the French Information Systems Security Agency, ANSI, and with OBS, partnering with Siemens, to develop opportunities linked to the convergence of IT systems with operational technology systems to prepare the future of the industry. Last but not least, we now own 100% of Orange Banque, which reaches 1.6 million customers, while we keep our focus on value, with nearly all customers acquisition over the quarter in France done via a paid offer. Orange Bank Africa now counts 600,000 customers in Ivory Coast. A word on our infrastructure project, slide 5, just to confirm that everything is on track. Our Fiber Co., joint venture in Poland has been finalized this summer, and we will complete in the next weeks both Orange Concession and Totem. Regarding our financial achievements, we posted this quarter revenues at 10.5 billion euros, down by 0.4% due to a negative base effect on co-financing in France, and the slowdown of equipment sales after a peak in Q2 linked to the lockdown exit. Excluding co-financing, revenues would have grown this quarter by 1.3%, driven by Middle East Africa, other European countries, and an acceleration of retail services in France. The group EBITDA at 3.6 billion this quarter declined by 0.7%, impacted by co-financing. Excluding this impact, EBITDA strongly improved by 4.5%, thanks to a solid commercial momentum and cost-efficiency efforts. After a catch-up in H1 due to the context of the pandemic in 2020, Group E CapEx decreased by 1% this quarter to 1.7 billion, in line with our full-year guidance between 7.6 and 7.7 billion. Now, let's turn to our business review, starting with France. where the strong acceleration of retail service revenues excluding PSTN at plus 3.7% enables revenues to be almost stable excluding co-financing proceeds. If you take away this base effect of co-financing, revenues in France are at minus 0.4%, which is a very slight decline of 16 million euros, so basically stable for France. The back-to-school period was still competitive, but without reaching the low price points of the previous quarter, a trend that is still improving. In this context, we pursued our strong commercial momentum with 121,000 mobile net hands, while mobile ARPO increased and churn reached a particularly low level. Our volumes mainly came from Orange Brand convergent offers, and also reflected the continued growth of our B2B customer base. The solid commercial trend continued for the fixed broadband as well, with 80,000 net amps in Q3, fueled by 343,000 fiber net amps. As a reminder, more than half of our new fiber customers are new customers for the group. The main part of our fixed broadband customer base subscribes to a convergent offer for which ARPO improvement accelerated sequentially at plus 1.6% this quarter, which represents more than plus one euro. Leveraging both on the renewed traction on the orange brand, we reshuffled in early October our portfolio in order to strengthen the attractiveness of our core brand and accelerate migration to 5G, enhancing orange ARPO. In this context, we launched a new more-for-more offer following the three first actions of the year. Let's now turn to Europe, where we achieved a solid commercial performance with mobile net ads excluding M2M of 188,000 in Q3. and fixed broadband net ads of plus 66,000, out of which 122,000 in fiber. This uptrend in fixed broadband is supported by all countries posting positive net ads. Total Q3 revenues are down by 1.1% after a positive Q2, impacted by activities with low margins such as a decrease in fixed wholesale international traffic in Spain and Poland, and the slowdown in equipment sales compared to the catch-up during last quarter after the end of lockdowns. Excluding Spain, the other European countries, what we call Europe 6, revenue grew by 2%. Meanwhile, retail services are on a recovery trend at minus 1%, supported by a slightly improving trend in Spain. and an accelerated growth in the rest of the footprint at plus 5.7%. It's also worth mentioning that this quarter we closed the acquisition of the fixed business of Tecar in Romania, which will allow us to continue developing our convergent strategy. Let's move to Spain, where the recovery plan is on track with a positive commercial momentum. We continue to post positive net ads in convergence, mobile contracts, fixed broadband, including FTTH, with a decreasing churn on all these segments despite the back-to-school promotional period. Alongside the renewal of football for the current season, Orange increased its prices by 2 and 5 euros for its non-football and football offers respectively. Regarding our financial performance, there is a slight improvement in retail services compared to the previous quarters, but total revenues are impacted by low margin activities such as the slowdown in equipment sales and the fixed wholesale international traffic. Also, After the successful migration of Republica Mobile customers towards Simio, we have started migrating the customers from Amena towards our Orange brand. This move will allow us to pursue the simplification and transformation initiatives already underway by reducing our portfolio from 5 to 3 brands. We continue to differentiate the high-end services provided to our customers by launching a fiber commercial offer at 10 giga in the five largest cities. Let's now turn to the continued outstanding performance of Africa and Middle East, which delivered this quarter a plus 12% revenue growth, driven by strong retail services, especially fueled firstly by mobile data, thanks to a continued increase of our 4G customer base. Secondly, by the continued very solid momentum of fixed broadband and also the strong trend of B2B. All those drivers will remain in the coming years a strong source of growth thanks to the increase of demographic, smartphone and fixed broadband adoption. All countries grew this quarter with 10 out of 16 operations in double-digit range. Last, a word on Orange Monet that is facing a tougher competitive environment in a limited part of our footprint, for which initial actions are being deployed to provide a quick and efficient response. We will present you more details on our action plan during the full year results, but this is not the first time we have to face a new competitor in that footprint, and we have always successfully managed it. The key point I would add here is that this has no impact on our Africa Middle East guidance provided last July, as other drivers are growing faster than expected. The enterprise segments. recorded revenues up by 0.4% over the first nine months of the year despite a minus 1.4% decrease in Q3. The quarterly change mainly stems from the decrease in voice revenues, which is not compensated by the growth in mobile and IT and IS this quarter. The pace at which our clients are migrating to fully digital solutions has accelerated the decrease of the voice business. which now only accounts for 14% of the enterprise revenue. The growth of our IT and IS business is supported by cybersecurity, up by 14% in the nine first months of the year, as well as by both cloud and digital and data growing above 8%. Last but not least, slide 14, we fully reiterate all the elements of our 2021 guidance, as well as all our 2023 objectives. Now, with my EXCOMM colleagues, we will answer to your questions. Thank you.

Thank you. We are now available for your questions. In order to give time to everyone, please ask only one or two questions. To ask for the floor, please press the star or asterisk key followed by digit 1 on your telephone keypad, please ensure that the mute function on your telephone is switched off to allow your signal to reach our equipment. If we do not have time to take your question, then please contact our investor relations team after the call. If you find that your question has been answered, you may remove yourself from the queue by pressing star 2. please press star one to ask a question, and please use the handset, not the phone speaker. Thank you. We'll take our first question from Nicholas, Code Coalition from HSBC. Please go ahead. Your line is open now.

Thank you. Hi. I've got two short questions. The first one is about fiber in France. You're building at a good pace. Can you just remind us the total number of premises in you are targeting and when do you expect to reach peak fiber capex in France? My second question is also on fiber and around the market share dynamics in the medium dense area. Obviously you had a peak of co-investment from competitors in 2020. So how does this translate on the ground from a retail market share point of view and maybe linked to this, what's the revenue trend for wholesale excluding co-investment? Thank you.