Orange Sp/Adr

Good morning, ladies and gentlemen, and welcome to Orange's Q3 2024 conference call. The call will be hosted by Ms. Christelle Heydemann, the CEO, and Mr. Loro Martinez, Chief Financial Officer, with other members of the Orange's Executive Committee for the Q&A session that will start after. Thank you, and let me hand the call over to Ms. Christelle Heydemann. Please go ahead, ma'am.

Good morning, and thank you for joining our Q3 results presentation. Following a summer marked by the success of the Olympic Games, where we demonstrated to the world our unparalleled expertise, we are pleased to report strong Q3 results and confirm our full year guidance. In France, despite the competitive market on the low end, we have delivered a good commercial performance. Middle East and Africa strongly contributed to our Q3 results with the sixth quarter in a row of double-digit growth. I will seize this opportunity to zoom in on this. Let's start with a few words on the Paris 2024 Olympics, which was a great opportunity to demonstrate our technological leadership by providing full connectivity for this unprecedented event. Whereas in Tokyo for the Olympics in 2021, there were five operators connecting the event, Orange was the only operator for these games with over 1,000 technical experts mobilized. we played our role perfectly as a trusted partner with record traffic peaks on our networks. To give you an idea, 5G traffic in Paris doubled during this event compared to last year. We are proud of this success, which has strengthened our brand image, and I'd like to thank all our teams who contributed to it. We will capitalize on this legacy to develop our activity, especially on B2B. Let's now zoom in on our France business. In Q3, the French competitive environment was broadly stable compared to Q2. The mobile market was still competitive at the low end, but mobile-only services represent only 13% of revenues for us in France. The fixed broadband market competition dynamic was stable in Q3. In October, almost all players launched new convergent offers to foster customer loyalty and value. We pursue our volume value strategy with segmented commercial strategy for customer acquisition, continued upsell and the launch of new offers to fuel convergent base and globally further increase value. Our strategy continued to drive retail excluding PSTN growth at plus 2.8% in Q3. And for H2, we expect retail services excluding PSTN to grow by more than 2.5%. This Q3 financial performance was sustained by a solid commercial performance. Moving to the next slide. This quarter, we delivered plus 83,000 mobile net ads and fixed broadband net ads were back to growth at plus 6,000 with sustained strong fiber momentum with more than 1 million FTTH net ads in the last 12 months. These good commercial results on fixed broadband and mobile will fuel our convergent upsell potential. We continue to drive a solid convergence momentum with convergent revenues up by almost 5%, which represents 80% of the Q3 retail excluding PSTN growth. This is driven by robust convergent ARPO growth, which reached almost 78 euros and improving convergent commercial trend in Q3 compared to H1. Convergence is a pillar of our strategy. It's all about customer retention and value creation, as demonstrated by ARPO's continued growth and very low term. On average, our convergent customers stay with us more than 10 years. Going forward, we target to stabilize the convergent base in Q4 while continuing to drive value on our mobile and broadband-only customer base. Now moving to MEA. MEA delivered the sixth quarter in a row of double-digit growth, and I'd like to take the opportunity to highlight the strength of our position. We are providing an essential service on a continent where there is still a huge market potential. The population on our African footprint is expected to grow by 13% or nearly 60 million people in the next five years, while data usages and 4G penetration will continue to increase. The growth of MEA is based on 16 countries benefiting from leadership positions, 160 million customers, and four growth engines, data, mobile, 3G and 4G, fixed broadband, orange money, and B2B, with a strong untapped potential. We have a very efficient operating model with shared services centers and high network quality, allowing us to deliver strong customer experience together with innovative offers, such as Maxit, our super app, with now 12 million customers as we speak. The risk inherent to the continent is mitigated thanks to a well-diversified country portfolio with no country representing more than 15% of Middle East and Africa revenues, and we have a solid local anchorage. Currency risk is also mitigated with 70% of our revenues in currency pegged with Euro or US dollars. MEA is self-financed with debt mainly in local currency. This successful strategy fuels MEA and group cash generation with EBITDA minus eCAPEX average growth of nearly 16% between 2019 and 2023 in reported figures. We definitely believe in the strength and the potential of our business. Now moving to our Q3 financial results. In the third quarter, revenues were up 1.6% year-on-year to 10 billion euros versus plus 0.9% in Q2, primarily driven by the sustained growth in retail services by 2.5%, which offset the minus 3.3% decline in wholesale. From a segment perspective, Middle East and Africa has continued to deliver an outstanding double-digit growth, while France's growth accelerated to 1.3%, supported by solid retail growth. Orange business revenues decreased in the quarter due to the current complex IT market conditions. As in the previous quarters, Europe revenues slightly decreased year on year due to low margin activities, while retail services grew by 1.3%. In line with our full year guidance, Group EBITDA grew by 2.7% this quarter, at 3.3 billion thanks to the strong performance in retail services. Finally, eCAPEX accounted for 14% of sales in Q3, aligning with our target of around 15% this year. I will now hand over to Laurent for the review by business segment.

Thank you, Christelle. So starting with France, with revenue up 1.3% this quarter, driven by continued solid retail performance, with retail XPSTN up at 2.8% fueled by convergence. Wholesale, as expected, continues to decline, but to a lesser extent than in previous quarters, mainly thanks to seasonality. France remains committed to operational efficiency and cost optimization. As a result of this good performance, we expect to grow retail services XPSTN by more than 2.5% in the second half, and confirm that we will deliver a stable EBITDA in 2024. In Europe, retail services growth accelerated to 1.3%, while low margin activities revenues continue to decrease as expected, in particular on wholesale. Retail services performance was fueled by positive commercial momentum with very solid net add and improving churns. This allows us to confirm with confidence our low-to-mid single-digit EBITDA outlook for 2024. Moving to MEA, with 10.5% growth this quarter, MEA achieved excellent double-digit growth with reported figures at almost 6%, driven by solid growth in retail services, over 11%. quarters of high customer increase, with an impressive 4 million mobile additional customers during this quarter. Growth drivers are at full speed, specifically on the 3G, 4G, accelerating with seven countries, going by more than 20% in the third quarter, and orange money with 21% growth. Looking ahead, we do confirm our ambition of double-digit EBITDA growth in 2024. So moving to Orange Business, revenues for this quarter decreased by 2.6%, primarily due to the expected decline in voice. This was partially mitigated by sustained dynamic growth in cyber defense, up to 10% this quarter. Our leadership in Europe on cyber has been recognized recently by ISG, IDC, and Omni. Digital services, was slightly down in the context of complex current IT market. We continue to drive our transformation plan, and we are implementing the voluntary departure plan as targeted. Our objective remains, as you know, to half the EBITDA decrease in 2024. Completing with Spain, with, as you know, Mass Orange is deconsolidated since the second quarter, We maintain our leadership in a market which remains competitive by focusing on value management with steady positive convergence and churn down. Total revenue is up 1.1% year-on-year in these third quarters, with an accelerated retail up 1.4%. Momentum of Mass Orange since March has been remarkable, with a number of key achievements in the last six months. first materializing synergies we are definitely on track to achieve at least 500 million euro in cost synergies from four years post closing with 85 million realize up to september and the target of around 100 million euro for 2024. second we leverage our premium content on the iron market notably on football and we are leaders in terms of commercial acquisition share third we are putting network front and centers with the launch of our FiberCo initiative with Vodafone Spain and our 5G coverage now reaching 86% of the population. Last, on efficiencies, we did sign a redundancy departure plan aiming at an 8% reduction of the workforce. I will now hand over Christelle to conclude this presentation.

Thank you, Laurent. I would like to conclude this presentation simply by reaffirming that these strong Q3 results reinforce our confidence in achieving our 2024 and 2025 full-year guidance, which remains unchanged. Thank you for your attention. With Laurent and the entire Executive Committee, we are now ready for your questions.

Thank you very much. We are now available for the analyst questions. Please note that there will be a separate Q&A for journalists that is planned shortly after 10.30 on the same web access and phone number. Please stay connected or reconnect at 10.30. In order to give time to everyone, please only ask one or two questions. If you have a question, please press star two on your keypad. That's star two on your keypad. And wait for your line to be unmuted. Please ensure the mute function on your telephone is switched off. We'll now give a minute or so for questions to come in. Thank you. Our first question comes from Mr. Andrew Lee from Goldman Sachs. Please go ahead, sir. Your line is open.

Good morning, everyone. Thanks for the presentation. I just had a question around convergence, really. As you described clearly in your presentation, convergence is a core pillar of your growth strategy in France, and obviously the trends were pretty strong in Q3. So I wondered if you could just help us understand how you think about the impact from the new convergent tariffs launched by a couple of your competitors in recent weeks. Any kind of first glimpses of run rate of impact of those tariffs would be great for us to understand and also how we should think about it more structurally. And then maybe how the convergence competition that we've seen recently compares to some of the price rises put through in mobile by Puig in recent weeks. How should we think about the changing competitive dynamics that all of that adds up to? Thank you.

Thank you, Andrew, for your question. So as you know, the convergence has been the pillar of our strategy, and at the core, it's really focusing on churn, retaining customers, and we know convergence is a fantastic enabler. We take actually as positive that in a very competitive market on the low end in France, competitors are launching convergent offers because remember that the first driver of growth for convergence, and I'm going to come to maybe what your question is, which is do we see increased turn on our convergent base? But the first driver of convergence is when we acquire customer, I mean, whether it's broadband-only or mobile-only customer, the first driver is to add the mobile path or the broadband path to move them to convergent offers. And we see this as the trend of our new competitors' offers, our new offers from our existing competitors. And for us today, and I will hand over to Jean-Francois to talk about this, obviously maybe post Q3 results. But we take it as positive because that means our competitors are focusing on increasing value from our customers, and we know that the low-end part of the market with very aggressive offers because of the purchasing power situation, there's a focus on then upselling and bringing customers up. You see we have the lowest churn on the market, and obviously focusing on retaining customers is really what drives us. And we don't see, of course, an increase of churn on our convergent base. But I will hand over to Jean-Francois maybe to give more colors on this churn, or I would say convergent markets.

Thank you for that. Yes, Andrew, thanks for the question. If you remember well, in the second quarter, I mean, you spotted that we had actually minus 17K net ads on convergence. We already explained that we were going to work on that. I mean, you see the results are slightly better. Over a base of 6 million, this is obviously a base which is stable, and we are not yet happy with this because we are planning really to bring back that base to stability in the second quarter. And actually, what we told you in Q2 was that we were going to work on that. We've been working on that. And that was the launch of the 10th of October that you've seen of the new convergent offer for Orange. So in a nutshell, what is this new offer about? This is enabling in a high-end package actually to have, let's say, a discount when you add mobiles of €5, which was not the case. And this is also enabling our mobile base, when they're taking a fixed broadband, to have a convergent discount, which was not yet the case before. And thirdly, we have also added the possibility for our customers. We want to push them to take actually their OTT subscription, such as Netflix, with us. And if you take Netflix with Orange, actually you have also an additional discount of €5, which makes it very attractive. So this is actually what we plan and what we launch the 10th of October. I mean, indeed, you're right. You have seen that week I've done a launch, I think a few weeks before us, and free a few days before, a week actually. But just to make it very clear, I mean, our offer was not an offer made in reaction of that move. That was an offer we planned long time ago. How do we see that we offer? Basically, we see it attractive indeed when you would add a lot of mobile to that broadband base. But as a reminder, the number of mobile the average number of mobile in our convergent base is 1.73 so as you can see we are actually pretty happy with this move our of our competitors uh we see it as a let's say a move to try and get more uh mobiles in their own convergent page which which which which we understand and we are uh i'll say um Looking at that with a lot of serenity and we are not worried about these moves on the market. And by the way, in the first weeks, it's of course very early to say anything, but we don't see any move at all on our churn. So really, we are very reassured by this move. And again, our convergent move was planned long before and is really here to help us stabilizing our convergent base in the next quarters.

Thank you. That's really clear. Can I just follow up, just a quick follow up on your comments. You're not seeing any moving churn at all. Is that, obviously, I think you're referring specifically to convergent customers, but you see any impact across your business at all from this shift in, compared to the strategy?

No, we don't see any impact.

Thank you.

Thank you very much. Our next question comes from Mr. Nicholas Collison from HSBC. Please go ahead, Nicolas.

Thanks. I've got one follow-up question on convergence. Just an explanation on why you think the convergent base was down in the first three quarters. Was it because the convergent customers were leaving you on the broadband side of things or because they were detaching the 1.73 lines they had with you on average? And my second question is on Africa, Middle East. I can see an acceleration of subscriber growth, but also a kind of a continuous slowdown in ARPO growth. So obviously there's a mix of many countries, but is there something to read into these trends in terms of a commercial strategy? And if you could also update us on the degree of competition intensity in mobile money. Thank you.

Thank you. So, I'll start with the second one. On MEA, we really have two dynamics. We have country mix, and as you know, when we add new customers, and especially voice customers, that's mainly in a low ARPU country, where it's the impact of our capex and the coverage, and we've had a very solid growth in some of those countries. So, that's what driving the maybe driving the ARPU the ARPU but we are very confident in the mobile data growth and when we see customers adopting mobile data actually the ARPU when we zoom on the detail the ARPU is really the driving up and there's no doubt that this is probably our biggest growth engine compared to I mean amongst the four that we highlighted So there's no impact of orange money on the ARPO, and it's really the different growth engine dynamics. And I would say more than that, it's really the country portfolio. But maybe if, Jérôme, you're on the line, you want to comment further. I'm not sure if we can... I will now move to the next question on the convergent base, and I will ask Jean-Francois to comment.

Yes, thank you very much. On the convergent base, I mean, the fact indeed that we have very, very slight negative net at minus 14K. I remind you, this is negligible versus a customer base of 6 million. There are a lot of movements indeed. Explaining that, I mean, you can have people moving from a house to another and there is eventually no availability. You can have people abandoning their mobile and basically staying with fixed broadband. There is not one movement which is a specific trend. So I would say, again, I mean, minus 14K in a quarter versus a base of 6 million, this is a negligible movement. We can say our base is stable.

Okay, I get that. And do I understand correctly that you are intending to turn around the trend in Q4?

Look, turn around is a big word because we are trying to. We are intending clearly with the new launch in October to stabilize the base.

Stabilize the base. Okay, thanks.

Okay, thank you very much. We'll be moving to the next question. It comes from Mr. Jacob Bluestone, BNP Paribas. Exan, please go ahead, so your line is open.

Hi, good morning. Thanks for taking my questions. I've got two fairly quick ones. Firstly, can you maybe just give us an update on your expectations around tax? You obviously reiterated your 25 cash flow as well as 24, but just sort of interested, given the fiscal tightening in France and the new measures, what you can say on your tax expectations, tax paid. And then just secondly, on your wholesale revenues in France, quite a big improvement in wholesale revenues. I think you said that was down to seasonality. Your wholesale revenues is a mix of quite high margin stuff like co-financing payments and low margin stuff like interconnect. So can you just help us understand, was the improvement in wholesale an important contributor to your EBITDA. It looks like your interconnect costs fell by about 40 million at the group level. So presumably the improvement in wholesale didn't really help your margins, but just sort of interested in any color around that. Thank you.

Thank you. I'll ask Laurent to comment on your tax question. I suspect your question was related to the France environment. And as you know, the discussions are still ongoing in the parliament. But Laurent, the... Yeah.

So good morning, Jacob. So on the tax side in France, as you know, the budget is not yet voted. So there is no final word on these subjects. If I just look at the project which is being discussed in the Parliament as we speak, the impact will be relatively limited for orange. We are talking, if we consider the same level of the taxable income in France than last year, around 60 million euros for 24 and around 30 million euros for 25. But all of that, of course, is depending on what will be the final outcome on these subjects.

On the wholesale dynamics, so in Q3 we have some seasonality effect, mostly from non-recurring items, so it's visitor roaming, for instance, but overall for the full year we expect Q4 to be in line with our first nine months for the full year, to be in line with the first nine months. So no specific high margin or low margin. It's really stability on the full year. And we reconfirm all the trajectory that we had announced during our capital market day on the 2022-2025 trajectory. Understood. Thank you.

Thank you very much. We'll be moving to the next question. The next question comes from Mr. Akhil Dattani from JP Morgan. Please go ahead, sir.

Hi, morning. Thanks for taking the questions. I've got one on France and one on Spain. On France, if I could go back to the topic I guess we've been discussing for the first few questions, which is around the pricing environment in France. I guess what I'm trying to understand is, your KPIs are improving in the market and the performance has been pretty robust. But obviously, as you can see from the share price, the market's a little bit nervous around the pricing dynamics we've been seeing from you and your peers. So can you maybe just help us understand big picture? What do you think is driving such reactive news in the market right now? And I guess if we step back and think about this price versus volume mix, how do you think about what this means going forward? So you're guiding us that the convergent base should stabilize into Q4. But I guess if we're looking at revenue in EBITDA, consensus is modeling next year a flat to slightly growing base. I just wondered if you can give us some high-level comments on whether you're confident that you can sustain France being flat to slightly growing. So that's the first one. And then the second one on Spain is that we've had a lot of press speculation in regards to yourselves and Vodafone Spain signing a FIBA contract JV, and some of the press reports are suggesting that you could raise three to four billion euros from that. I just wanted to understand on a high level, can the number at least directly be as big as that? And if we think about that, to what extent could that pull forward your decision on what you intend to do with that asset? Obviously, in the past, you've said leverage needs to come down to three and a half times before you make that call. Just trying to understand, does this materially pull forward that decision making? Thanks a lot.

Thank you. So on the France dynamic, I mean, it's difficult to comment, of course, on our competitor strategy, but we continue to see that we gain customers from SFR. And I think that's the case from other players, at least you should ask them. But indeed, we've seen, and I think this is something we had described in Q1 and Q2, we've seen one of our competitors changing a lot It's pricing in the market and with limited impact on the ability to acquire customer. So our strategy has been very focused on being focused on value, focused on network quality, customer experience. Of course, we want to be positioned, as we've said several times, on the low end part of the market with our SOCH brand. And you've seen the results, both in our Q2 and Q3 results. But our strategy is really focused on having the broad portfolio of offers where we can attract all type of segments and then very targeted segment approach on younger customers. of course focusing on some specific needs, and then the ability to upsell. So again, our number one focus remains churn, churn, churn, focused on retaining customers. We have the largest customer base, but also very targeted and segmented approach for acquiring customers. So yes, there's been a lot of comment in the market, I would say, on the price point, entry price point in the low end part of the market, which are indeed very low. But we see this is a market that's not contaminating the rest of the market base. So that's why we will continue to drive mix of volume value upsell to our existing customers, be focused on churn and some of the offers that Jean-Francois mentioned, be it the 5G plus offers that we launched for fixed wireless access, be it some of the new offers focusing on convergence where indeed this is the value and you see that in our ARPO. This is what makes us confident in our ability to continue to grow our retail services. On the Spanish environment, so again, the FiberCo project that we've announced back in July, and we're still in negotiation with Vodafone Spain. Indeed, there's going to be a financial, I would say, structuring, but this has no impact on our agreement with our shareholders of Mass Orange, of course. This would have an impact on the leverage of Mass Orange, but this does not change the objective that we have to deleverage Mass Orange and the horizon that we have to deliver the synergies. And the primary focus of the Mass Orange team is, of course, to deliver synergies in a market in Spain that remains extremely competitive, as you know.

Maybe, Akhil, I just add that in terms of the quantum of what will be the kind of dividend upstream early days, but it will be a very material number. So I'm not confirming any numbers you have been quoting, but we are talking potentially about material numbers, having in mind that the closing of the operation of this project will be not before end of H125.

Sorry, Laurent, just to understand that. So what you're saying is that as a function of the cash proceeds that the unit will get from the FiberCo, you're saying that there will be a dividend upstream to the two parent shareholders. Is that right?

I'm talking about a cash upstream from the transaction to Mass Orange, which will be used 100%, as we said, to deliverage Mass Orange.

Very clear. Thank you.

Thank you very much. We'll be moving to the next question. Next question comes from Mr. Titus Cran from Bank of America. Please go ahead, sir. Your line is open.

Good morning, everyone. Thanks so much for taking my questions. Just on my side, maybe the first one very quickly on your broadband netapps that are now back to growth. And as we can see, a big driver, a small driver that explaining the delta has been fixed wireless, which you have also just mentioned on the call as well. And I think the second relatively strong quote on this one, maybe could you talk a little bit on your strategy there and kind of what you could see as a natural ceiling and what we should expect over the next couple of quarters and maybe one or two years. And then maybe secondly, as a question, just following up on the Deutsche Telekom Capital Markets Day, we had this month talking about their towers as a potential kingmaker in Europe. Of course, you have been much more sceptic about, I would call it, maybe financial engineering to some extent, but would you see operational synergies of consolidating those towers with DT, with other players, as kind of pan-European tower consolidation anyway, after those comments? Thank you.

Thank you. I will hand over to Jean-Francois to comment. My comment on the new fixed wireless access, remember we launched those offers on October 10th. So the comment I was making on our recent offers has absolutely no impact on our Q3 broadband performance. But I will let Jean-Francois comment.

So just to give you the details that you have in the back on our fixed broadband net ads for Q3, we had net loss of 267K ADSL customers, which is absolutely normal, compensated by 259 positive net add-on fiber and 1414 fixed LTE, actually. So this is indeed an integral part of our strategy to have fixed wireless access. You can imagine that in a certain part of France, there is no fiber. So basically, that's the reason why Christelle was saying we've launched a new fixed wireless access offer on 5g plus on 10th of october where we had it on 4g before so you're right i mean this is but this is absolutely part of our strategy and as you can see this is a very very limited part of our net that's 14k over 259k net ads on fiber

On the capital market day of Dutch Telecom, of course, I won't comment on their tower strategy. As you know, we continue to drive totem Focusing on value, so increasing the tenancy ratio. As we've always said, we truly and we value infrastructure. So we like having infrastructure business. We're not interested in pure financial engineering options. But of course, all type of synergy we can drive. But again, the first and foremost synergy that we drive today with Totem are increasing the tenancy ratio on our existing footprint. So no comment on... And as you know, we don't operate in the same markets as Dutch Tech.

Perfect. Thank you.

Thank you very much. Our next question comes from Mr. Stefan Bezian from Odoo. Please go ahead, sir. Your line is open.

Yes, thank you. I've got two that are possible. The first one is on orange business. I mean, clearly the market is lower. It's obviously not just orange. It's the overall market. So I was just wondering if I'm talking about the IT segment, the IT part of it. I was just wondering whether that slowdown could derail your plan, which is to stabilize the APDA in 2025. And my second question is regarding the use of AI in customer centers. Telecom has been mentioning that they have some targets by 2027. I was just wondering whether you, on your side, you have anything to say about that. And perhaps if you could tell us how much of your customer centers is internal versus external. Thank you very much.

Thank you for the question. Indeed, we see the QIT segment under pressure. Now, when we look at our portfolio, and you see that from our cybersecurity business, actually, we have a very solid performance, again, in Q3. And so we don't... I mean, we don't look at all the markets in the same way, but indeed, we do not deny the fact that there's one part of the market we address and that enterprises take more time to make decisions on some large projects. But of course, we are very focused on turning around the orange business activity, and we've mentioned we are focused, of course, on all the portfolio pruning, cost reduction, so a lot of the drivers for us to turn around the business are internal drivers and things we are focusing on. Of course, the market is what it is, but again, a big part of our, I would say, growth areas to rebound is, in particular, cybersecurity that is very solid across the board, be it on large enterprises as well as smaller enterprises. On the AI dynamic, we are of course very focused. We have more than 150 use cases already in production leveraging AI and we will probably double the number of use cases Moving forward, many more are under exploration and that's both for internal efficiency as well as network management and customer service. A lot of the AI we are focusing on is to make our networks more efficient, so preventing maintenance, detection of issues, optimization of field intervention, et cetera, CapEx optimization as well. When it comes to customer service, I don't think the fact that our call centers would be insourced or outsourced would have an impact on our ability to deploy AI because actually for customers it's transparent and we do want, of course, we offer the same experience whether customers call an agent that's an employee from Orange or from one of our partners. So this has no impact. The mix, whether it's internal or external, really depends from one country to another, and we work with many partners. So we leverage the fact that we have third-party partners because they also work with other sectors, and that's helping us accelerate on our AI adoption. But this is definitely an area on which we've already launched a number of use cases, and we will continue to do so.

And if I can just follow up on that, the fact that on the telecom side, you know, they mentioned 15% reduction in calls by 2027 didn't feel very impressive to me. Would you say that, you know, chatbots are still not ready today to really address largely the customer service? I mean, it still requires quite some time to be ready.

I think, I mean, what we see as a real use case, it's, of course, we've been focusing on reducing the number of calls for years. So this is not specifically AI driven, and we will continue to do so. But we also see customers calling our call centers as a fantastic upsell opportunity, and we don't want to miss that. And actually, when we look at the chatbots initiative that we have, they are still not doing this part of the work. So this is why we do believe there's going to be a very balanced approach to using AI, and AI will be used in some use cases. The first use case that we see is actually when customers call our support centers, there's a lot of wasted time on the phone with our agents because, you know, It takes time to process the data, to type the data in the files, etc. And we see AI as a fantastic enabler as well of reducing the length of the calls, which is productivity as well for those support centers.

Thank you very much. Thank you.

Okay, thank you very much. The last couple of questions. Next question is for Mr. Mathieu Robillard from Barclays. Please go ahead, sir. Your line is open.

Yes, good morning. Thank you for the presentation. I had a question about energy costs and how they can play out in 2025 and also in 2026. I know that's a bit far ahead, but when the RN program changes in nature. So I think this year you have tailwinds in France only of about 200 million euros on your EBITDA. If I look the current price of energies, you may have another small tailwind next year. But I was wondering, assuming let's say it's 30 or 50 million euros, how do you manage to stabilize it? Because this year with 200 million tailwinds, you're just basically slightly up. And next year, the tailwinds are going to be much reduced. So maybe if you could share any of the initiatives you have in-house in terms of reduction of cost to offset that reduced tailwind. And in Psalm 26, I don't know if it's too early to give an impact of what the potential changes in the RN pricing will have. And then the very last one in terms of Poland, I note that the IT services revenues are down and you flagged in the past that with the change in the government in Poland, there's been less demand, that's really delays in some projects. But at the same time, I can't ignore the fact that Germany, sorry, Dutch Telecom in Poland seems to be pretty well on that segment. So I was wondering if you were losing market share there or if you were confident that you could recover a growth trajectory in IT in Poland. Thank you.

Thank you, Mathieu. On the energy, I'll hand over to Laurent, but the tailwind is not 200 million euros this year, just as an intro.

Yep. So good morning, Mathieu. So the tailwind in 2024 is much less than that. We say a few tens million euros. That's not more than that. And if I look at 2025, we are roughly stable in terms of energy costs. When it comes to R&26 and the trend in 26, it's a bit early days. But that's basically the kind of numbers we are looking at for 2024 and 2025.

On Poland, I will ask Marie-Noëlle to comment.

Hello, thanks for your question. We were discussing in Warsaw on Tuesday morning, two days ago, and we are very solid on our market share. So there is a slowdown in the market, especially due to this public sector, which is a little bit stagnating, but we are very strong on market share, so we're not losing ground towards competitors.

Thank you very much. Sorry, I may be confused, but I think at some point you had said that the energy tailwind in 2024 was quite significant. Has that changed, actually?

Well, we said in Q1 that we would have a few tens of million euros. There is no change on this perspective. The 200 you have been mentioning was a negative we had in 2023. That was That was Edwin in 2023. That was the numbers of 200 million.

Okay, thank you. Thank you very much.

Okay, thank you very much. The next question comes from Mr. Roshan Ranjit from Deutsche Bank. Please go ahead, sir.

Great morning, everyone. Thanks for the questions. I've got two, please, going back to France. So we've seen another acceleration in the ARPO growth. I'd be interested to get a sense of the mix between the upselling and any kind of targeted price increases that you have been deploying through the quarter or rather through the year. And secondly, Christo, you mentioned the good 5G volumes you saw over the summer. And I think you've now ended the free 5G service for customers. Can you give us a sense of how many customers decided to opt in and keep the 5G within the plan? And just added on to that, I think since we last caught up in Q2, one of your other peers have removed the €5 premium. How confident are you able that you can keep that 5G, €5 premium within your plans? Thanks.

So on the convergent and overall on the ARPU growth, I mean, this is mostly driven by our convergent customer base. And as we've said, it's a mix of volume and value, but I will let Jean-Francois comment further.

So, Rochane, on the ARPU growth, you're right. I mean, most of it is linked to two effects. The first one is the The targeted price increases we did last year, as we explained, they were targeted, but they were still pretty massive. One second was, I remind, the reduction of the promotion period from 12 months to six months, because this is really paying off now. This is the explanation. And there is a little bit of volume now as well, which we are happy with, because as you've seen in the previous quarters, we've increased our mobile base. and kept our base flat so the volume effect is slightly back, but very slightly. On the 5G, it's a very good question. I mean, we're just in the moment where we have offered 5G to all our base, including the ones that were only on 5G during the Olympic Games. We prolonged that in September. So we are just going out of that period. It's a bit early to tell you now how many people have been adopting. We've seen an increase during the summer period of the number of people that used to go purely from 4G to 5G, more or less been doubling. But now, what is the effect of going out of that period? It's too early to say, so we will update you next quarter.

Great, thank you. And just on the 5G premium, do you think that's sustainable going forward? Is that kind of what you guys are expecting to do for the rest of the year or coming quarters?

Yes, I mean, we are still on the same trend as Christelle was saying. We are pursuing very much value-based strategy by segmenting the base and using our premium on network, on mobile network, to generate value.

Great, many thanks.

Okay, it looks like we have no further questions. I'll pass the line back to Christelle and her team for the concluding remarks.

Thank you all for attending our results call. So again, the strong third quarter results demonstrate the soundness of our strategy, the great competence of our teams, and the role we can play as our customers' trusted operators. Thank you all, and look forward to our next call end of this year.

Thank you very much. Thank you very much. This concludes our conference call today. We'll be continuing with the media call at 10.30, so please stay on the line. Thank you very much. Goodbye.