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.