Orange Sp/Adr

Good morning, ladies and gentlemen, and welcome to Orange's Q3 2025 results conference. For your information, this conference is being recorded. During the Q&A session, in order to ask for the floor, please raise your hand in teams. Please ensure that the mute function on your device is switched off to allow us to hear you when it is time for us to take your question. The call today will be hosted by Crystal Edmund, CEO, and Laurent Martinez, CFO, with other members of Orange's Executive Committee for the Q&A session that will start after the presentation. Thank you, and let me hand over the floor to Crystal Edmund.

Good morning and thank you for joining our Q3 results presentation. Before getting into our Q3 results, I would like to mention that last week we submitted together with Bouygues Telecom and Free Groupe Iliade a joint non-binding offer to acquire a large part of Altice activities in France. In a challenging competitive environment, this deal would allow us to strengthen investments in France while maintaining a competitive ecosystem for the benefit of consumers. This non-binding offer amounts to 17 billion euros, of which 27% for orange. There is no certainty that we will reach an agreement, and we are willing to engage in a constructive dialogue with the Altice Group. Back to our Q3 results. We remain fully focused on our business execution, and we are really pleased to report strong results driven by a robust commercial performance in France, Europe, and the Middle East and Africa region. In France in particular, we are proud to reaffirm our leadership in fiber with over 10 million customers and plus 1.1 million new customers in the last 12 months. We have become the first operator in Europe to surpass this milestone in the domestic market, marking a major achievement in our state-of-the-art network commercialization. In Spain, Mass Orange has announced an agreement with Vodafone Spain and GIC to create the largest fiber company named Premium Fiber. With 12 million premises and 5 million customers, this fiber core will provide considerable benefits for the Spanish market. Our continued focus on cost efficiency is reflected in the EBITDA growth of 3.7% this quarter, along with a 0.7 point improvement in margin rate. These robust results enable us to once again upgrade our full year guidance with a full year EBITDA now expected to grow by at least 3.5%. Let's review our strong Q3 results on slide 5. Revenues increased by 0.8% in the third quarter, driven by robust retail performance of 2.6%, which offsets the expected decline in wholesale. From a segment perspective, revenue growth is led by Middle East and Africa, achieving double-digit growth for the 10th consecutive quarter, and Europe back to growth thanks to retail services and IT and IS. In France, retail excluding PSTN grew 0.2% as expected and was offset by the anticipated decline in wholesale and equipment sales. EBITDA reached €3.4 billion, growing by 3.7%, giving us confidence to upgrade our full-year guidance to at least 3.5%. This growth is driven by our solid performance as well as our continuous efficiency initiatives, fuelled by advancements in procurement, AI and operational efficiency ambitions. In line with our e-CAPEX discipline, we maintain the CAPEX to sales ratio of approximately 15%. I will now hand over to Laurent for the business review, starting with France on slide 7.

Thank you, Christelle. Good morning, everyone. In France, in a market which is overall flattish in value, the competitive environment remains generally stable with sustained competition on the low end. In this context, we continue to uphold our efficient commercial strategy grounded in extensive and innovative segmentation from customer loyalty and value. This strategy led to a robust commercial performance with 138,000 mobile net ads, best quarter since the fourth quarter 2022, 274,000 on Fiber and 20,000 on Convergence. This performance is driven by increased momentum on orange brands and effective churn management, with mobile churn improving by more than two points year-on-year. Convergence ARPO continued to grow, increasing by 1.1% year-on-year in the third quarters, while mobile and fixed broadband ARPO slightly declined year-on-year, reflecting the mixed effect related to the competitive landscape over the past year. TIX broadband has slightly improved on a quarter-to-quarter basis. Moving to the financials, for France, our disciplined and efficient commercial strategy led to 0.2% growth in retail ex-PSTN revenues as expected. Revenue continues to be impacted by the structural anticipated decline in wholesale. Globally, we remain committed to cost optimization and confirm our objective of growing EBITDA in France in 2025 slightly more than in 2024. Let's turn to Middle East and Africa, which continues to deliver a very strong performance, demonstrating once again our positive momentum. Revenues are up double digit for the 10th consecutive quarter, driven by our four key drivers. Looking forward, on the back of this performance, we are fully confident in our ability to achieve double-digit EBITDA growth in 2025. Let's turn to Europe. Revenues are back to growth in Europe this quarter at 4.7%, driven by services growing at 1.4% thanks to a balanced volume value strategy and an exceptional IT and IS quarters, notably in Poland. NetAds remains very robust in both mobile and fixed broadband, with mobile customer base reaching 22 million. Convergence revenue showed once again a strong performance, increasing by close to 6%. Looking ahead, we do confirm as well our 2025 outlook with a low single-digit EBITDA growth. Moving to orange business, revenues are impacted by last year's portfolio pruning, by the difficult IT market, and by the French macro environment. In that context, orange cyber defense growth remains solid at over 6% in the first nine months. In parallel, we are accelerating our transformation initiatives, focusing on growth areas such as sovereignty, security, while stepping up our effort to optimize our cost base. Nevertheless, considering the complex condition of the global IT market and the French market macroenvironment, the ambition to have EBITDA decrease in 25 versus 24 is difficult. Let's complete with Masse Orange. Our joint ventures, which continues to create value with a strong focus on delivering synergies, which are close to our 300 million euro target by year-end. In this competitive market, we achieved strong net ads in the mobile segment and maintained stable volumes in fixed. Revenues are up 1.7% this quarter. Services revenues benefiting from strong growth in both B2B and our new business initiatives which offset the negative mix effect in a challenging telco market. We have been as well able to close strategic alliance with Tier 1 partners in energy, insurance and alarms. The positive momentum on equipment sales also fueled growth in third quarters and is helping to extend the lifetime value of our customers. Lastly, we do confirm our outlook for 2025 for Mace Orange. Back to you, Christelle, for the conclusion.

Thank you, Laurent. I would like to conclude this presentation by confirming that our robust Q3 and 9-month results make us very confident in reaching our objectives. In addition, reflecting our continued focus on efficiency and operational excellence, we are upgrading our EBITDA guidance to at least 3.5% after a previous upgrade in H1. Thank you for your attention. The floor is now open for questions.

In order to give time to everyone, please ask only one or two questions. As a reminder, to ask for the floor, please raise your hand in teams. Please ensure that the mute function on your device is switched off to allow us to hear you when it is time for us to take your question. If we do not have time to take your question, then please contact our investor relations team after the call. As a reminder, journalists will have a separate Q&A in French at 10.30 a.m. Journalists, please stay connected after the presentation ends. Today, our first question comes from Akhil Datani from JP Morgan. Akhil, please unmute yourself and ask your question.

Hi, good morning. Thanks for taking the questions. I've got two, please, if I can. The first is on French consolidation. Christo, you mentioned the non-binding offer that you as a consortium have now submitted to SFR. I guess the details are limited, but the one thing that stood out was that the percent of the total transaction price that Orange will pay is 27%. which seemed higher than people might have assumed, given expectations that there is relatively small portions of SFR that you'd likely buy. So could you just start by helping us maybe understand at a high level how that price was determined and maybe any colour you can give us on how we should understand what bits of SFR you could buy. And you mentioned within that in your commentary that you are willing to engage with Drahi and the creditors. I just wondered if any sort of engagement has now kicked off so far. So that's the first question. And then the second one, I guess, sticking with the event-driven aspects of these things is Maz Orange. In the last few weeks, there's been a lot of speculation around your engagement with your private equity partner's around a potential buyout of the 50% of the asset you don't own. Any sort of updates on what is actually going on and what you can share? And I guess more broadly, is there any sort of timeline we should think about by which when you would need to make this call and then alternatively move to an IPO process? So is there any sort of timeframe we can understand? Thanks a lot.

Thanks, Akhil. So on the French consolidation and the non-binding offer, I won't provide you more details on the split than what has been already communicated. But as we've said, the B2B business would mainly be towards Bouygues Telecom and Iliad. So we are looking at B2C spectrum and assets. And of course, we've done the estimates based on the level of synergies we would generate. and based on what we could purchase. So it's really a value-driven split. And, of course, it's too early to provide you a more common given. It's still a non-binding offer, and we're still, of course, we haven't reached an agreement with the seller, as you know. On the engagement so far, I won't comment. As you know, we made public the fact that we have submitted a non-binding offer given the importance of this transaction for the French market. and for us, Orange, a listed company, and of course for Bouygues as well. Our main priority, of course, we know we would like to move as fast as possible in a process that could be long, but of course it's for the seller to decide. They have different options. We don't expect to make public every single discussion we would have if we want to move fast, but of course we know there's a lot of media attention. On Mass Orange, there's a lot of speculation in the press. As you know, we are preparing our strategic plan for Orange. And as part of this discussion with our 50% shareholder in Mass Orange, we are planning and we are working on the strat plan, the financial plan for Mass Orange. And as part of the discussion, of course, We are fully in line with what's provided for in the shareholder agreement, and you know there's a lock-in period before an IPO can be triggered in April 26th. But we are also investigating all of the options. As we said, they always remain open. So there's no... Specific timeline, and there's for sure no rush for us to reach an agreement, but clearly the discussions we have on the financial forecast for the company and the ambitions we both have for the company is probably what's generating a lot of media and speculation, I would say.

On the French side, of course, the price that we would put is consistent with the asset and the value we would purchase, obviously. Great. Thanks.

Thank you. Our next question is from Andrew Lee from Goldman Sachs. Please unmute yourself and ask your question.

Yeah. Good morning, everyone. I had two questions. One was just to see if we push a little further on, as Ethel put it, the event-driven opportunities for Orange. I know there's not much you can say on French consolidation, but can you just talk? You said obviously you want to accelerate or you want to move fast. Could you talk about your confidence in the approval process around consolidation more broadly in France in terms of both the EU competition authority approval and French authority approval and what's giving you the confidence to launch this bid and then if there are any timing implications around moving fast there? As a follow-up to that, just on the Massarange side of things, is the speculation around Spanish consolidation complicating the timeline to kind of you reaching a conclusion on what you plan to do with that asset? And then just as an operational question, in France, it looks a little bit like the competitive intensity at low end mobile has filled a bit into low-end fix. Is that true? And if you could just articulate what's going on there, that would be helpful. Thank you.

Thanks, Andrew. On the French consolidation, first of all, as you know, there's a process where Altice France has been restructured and the owner actually wants to sell. So that's the driver of all those discussions, number one. And, of course, in that environment, we do believe that a French group of companies providing synergies is the best solution to create maximum value. Now when it comes to the regulatory process, the political environment, it's really too early and we know that authorities will have to review that in detail. But in any case, if you look at the option which is a piecemeal on one side or solution amongst other telcos, we do believe that not only our proposal is the best one to protect the intensity of competition, but also to protect the ability of the industry to invest, and we know our networks require investment for security, for AI, and for resilience. I mean, we know the antitrust authorities are what they are. We know what happened in the UK with the CMA approval. We don't have any signal from antitrust authorities that they would approve such a transaction. We know, based on our experience with both Belgium and Spain, that they would review carefully. It could be EU or French processes, actually. Given we have three companies bidding for the main part of Altice France, it would probably be three antitrust processes. And so depending on any of us, the three, it can be France or Brussels. then, of course, antitrust authorities can decide to take the whole approach. But there's no doubt that both authorities would work together, I would say, on the assessment. The main rationale for us on why this deal makes sense, first of all, it's something we've been pushing and we are absolutely convinced that Europe needs consolidation, national consolidation, but it's really... when you look at the intensity of the competition on our mobile markets, I mean, the ability to create synergy and efficiency for us on mobile is also the ability to sustainably compete and offer low prices to consumers. So that's really the driver, and that's going to be the core of our explanation, I would say, with antitrust authorities. Not to forget that this is a French group of companies in an environment where we are talking about highly critical assets. But again, there's no certainty that this deal would be approved until it is. On Mass Orange, no, all the rumors and speculation on Mass Orange or all the speculation on what could happen in the Spanish market have no impact. I mean, we looked at the valuation of Mass Orange in a standalone, I would say, view. And of course, we work actively to improve, I would say, our position in the Spanish market. That's the reason why we signed and we launched a premium fiber. because we know there's a lot of players. I do believe that consolidation in Spain will probably come first from smaller players. And we know some of them, some of them are actually partners of us. But clearly the market in Spain remains super competitive and will remain super competitive for quite some time. The comment I was making on antitrust authorities, for France would be exactly the same for Spain and we would not expect anything to happen soon or to be concluded to reach closing for Mass Orange. So we don't take that into account of course for us. When it comes to the competitive intensity in France, The low-end market remains very competitive, but it's true that in Q3, we've seen a number of entry price points increasing, and we are more around the 10 euro for mobile. I mean, they're still red, which is the SFRB brand, cheaper than that. but we've seen a 1, 2, 3 euro difference compared to what we had seen especially in the end of Q1 and Q2. And on broadband, there's also promotions for the low-end broadband, but the market remains stable compared to what it was before. And last but not least, of course, you know how important our convergence strategy is, and that's really for us the fuel and the growth engine in our retail market in France.

Thank you. That sounds very helpful.

Next up, we'll hear from Josh Mills, BNP Paribas. Josh, please unmute yourself and ask your questions.

Hi, guys. Two questions from my side, please. The first was just around Orange's group leverage. Would you be able to give us a bit of color about how you expect the SFR deal, if it goes through, to impact your leverage profile? And following on from that, does the leverage post the SFR deal still leave you with enough headroom to pursue other transactions, such as buying in Mass Orange, as an example? And somewhat related to that, Given that the French consolidation deal, if approved, won't complete until the second half of 2027, how should we think about how this impacts your shareholder returns policy to be outlined at the capital market stay in February? And then the second question for me is just going back to the operational performance in France. I think last quarter you gave a bit more color on your expectations, how French service revenues XPSCN should develop. Obviously, it slowed down 20 bits versus last quarter. How should we think about this going into year end? Is there the chance that this is going to turn negative, or do you still have the ambition of maintaining flat to slightly positive retail revenues XPSCN in Q4? Thank you.

Thank you, Josh. I'll start by your second question, and then Laurent can comment on your first one. Operational performance, and for Q4, we expect the same trend as Q3, which means a flat to small positive growth, excluding PSTN for retail services. So really same trend as Q3. And on the group leverage, Laurent can comment, but I think we've said before, it's very important for us. I mean, we know shareholder return is important, and we have a leverage that allows us to be flexible. And, of course, remaining investment grade is important, but we think we have a solid balance sheet and we have the opportunity to carry several transactions.

Yes, good morning, George. So indeed, as you know, we have a very strong balance sheet. Of course, the potential acquisition of SFR will have some impact on the leverage, but it will create as well a lot of value, as we said, which means that this leverage will basically be smoothened on a relative short period of time. Overall, we are confident that we can run both the mass orange potential acquisition and our fair share of SFR purchase without, I would say, impacting the shareholder return, which remains for us a top priority.

Thanks. Maybe just one other follow-up, if I may. If we were to see the big price for SFR change or increase over the coming months, is the agreement for the asset split between Iliad, Brigham, yourselves, and the percentages given set in stone? Or would there be the potential for certain operators to change the amount which they're buying and the assets which they are acquiring as part of the deal? How much flexibility is there on the 27% split you have today?

Thanks, Josh. I mean, you can be assured that the three of us have a very constructive dialogue, and that's what we want to have with the seller. Now, obviously, I don't want to give you information that would jeopardize our ability to have the best negotiation in a transaction that's obviously very complex. As we said, we are value-driven in our approach. Each company, let's not forget that we have a very strict antitrust process and that this bid has been prepared. Of course, with all the scrutiny and to be compliant with competition rules. So all of us, we have our own models of valuation, but we also have such an experience and we know, of course, very well the French market. So that's something we would be able to discuss, the few of us, with the seller. value-driven approach, which doesn't mean we're thinking of a mechanical negotiation for such a transaction with such impact on every three players.

Many thanks.

Thank you. Our next question today comes from Roshan Ranjit from Deutsche Bank. Roshan, you can unmute yourself and ask your questions.

Great morning, everyone. I've got two questions, please. First question, and just I guess in the context of any potential antitrust violence that we do get, can you remind us what percentage of your B2B revenues and total revenues you derive from France, please? And the second question, on the operational side, now this was the second quarter where you have upgraded your EBITDA guidance. yet we haven't seen anything change on the organic cash flow level. Appreciate it is a greater than metric, but are there any other moving parts at the organic cash flow level? I know last year you absorbed a higher cash tax, yet still saw an upgrade, but any details you could give there would be very helpful. Thank you.

Thanks, Roshan. As you know, we do not publish the split of our B2B in France, but clearly we have taken into account in our negotiation with Iliad Free and Bouygues Télécom the fact that when we have high market share, I mean, you can count on our competitors to try to get assets that would help them grow and increase market share. So that's why the B2B part of Altice France would go to Bouygues Telecom and, to some extent, Iliad Free, not to us. But we don't publish the split on B2B in France. On organic cash flow guidance, Laurent?

Yes. Hi, Rochelle. So our guidance on cash remains valid above 3.6. So it's above 3.6 billion euros of OCF. So that remains valid. I just take the opportunities to state that within our 3.8% of EBITDA growth in France, we have 0.9 points coming from the bank, which are not part of our OCF, as you know.

Thank you. Our next question comes from Mathieu Robillard from Barclays. Mathieu, please listen carefully. In order for us to hear you, on your mobile phone, you need to press star six. Please press star six to unmute yourself and ask your question.

Hopefully you can hear me.

Yes, we can.

Thank you. Thank you for the presentation. So I had two questions. The first one was around OBS. So you mentioned that the environment was tough and you've slightly or you will maybe change the guidance or at least what you deliver. And the question was a bit broader. I mean, clearly it is natural to see you lose a bit of market share on communication. I also understand that on IT it's a competitive market. But at the same time, We see a lot of growth for some services like cybersecurity, data centers, cloud, and obviously talks of increased need for sovereignty in Europe should be a positive for you. So maybe you could lay out a little bit where you see growth coming from at some point in the next future. And also, if you could give a bit of clarity in terms of your data center exposure, Maybe if you could give us a sense of what is the capacity you have in France and in Europe and how you expect that to grow. And then the second question I was going to ask again about the potential SFR transaction and just a point of clarification because in the press release, you indicate that not all of the assets of Altice SFR are concerned by the BID. I also note that in the French press, there was some reference that the offer that you were making for the assets represented the EBITDA multiple of around 6.6, which kind of suggests, if I'm getting my math right, that the value of the EBITDA that you are bidding for is around 2.6 billion euros, so quite lower than what the trajectory of Altice EBITDA suggest for the full year based on the H1. So I don't know if you can give a bit of detail as to what you're buying. I understand, obviously, there's no French overseas. There's some service businesses or VALTs that are not included. But if you could give a sense of what is the bid that, as a whole, you would be buying, that would be very helpful. Thank you.

Thank you, Mathieu. On Orange Business, clearly there's of course the structural transition from legacy connectivity to next generation connectivity, and that's changing the nature of the services we provide, moving from a traditional telco to a more integration type of services. And we are investing in our evolution platform, so in really having a platforming approach for those services. Of course, cybersecurity is clearly, and by the way, next generation connectivity is not a market that's declining, but of course, compared to the value of legacy, there's a value difference, but clearly the next generation connectivity is not a decreasing market. Cybersecurity, clearly it's, we've been investing for years and we continue to do so. On cloud and data center, on cloud to start with, we are transitioning from some, so part of our solution has been in the pruning of the portfolio and so we have some transition effect. but that's clearly an area where we are investing on sovereign cloud, private sovereign cloud, public sovereign cloud with Bleu, together with Capgemini. When it comes to data center capacity, we don't provide details, but of course we have capacity in all the countries where we operate, and we are investigating plans to accelerate in that field. Of course, We are not a pure player in data centers, so we are still thinking what should be our strategy, so not ready to provide you more details on this. On SFR, clearly, the list of assets is what has been published, so it's very clear. It's everything in Altice France, but the overseas business, XP Fiber, Intel SIA, UltraEdge, and ATS, their field services unit. So that's everything else. When it comes to EBITDA, bear in mind that for us the valuation is both, of course, multiple of EBITDA, which so far was based on the data we have, which is end of 24, as well as our own assessment of synergies. And every of the three bidders has done its own assess synergy plan. So we've done our math. and clearly the value comes from the synergies as well. So it's not an easy, straightforward EBITDA calculation.

Thank you very much.

Thank you. Our next question today comes from Nick Lyle, Berenberg Bank. Nick, same goes for you. Please press star 6 on your mobile phone so that we can hear you.

Hi there. Can you hear me? Yes. All right, great. If you could ask a couple on consolidation as well, please. On the argument, Christelle, you mentioned the pro-consolidation argument it seems you're going to use is to protect competition. So could you just explain to us why you think cutting out a disruptive operator protects competition here? Are you arguing that Altice France wasn't sustainable? Maybe you could help us with that. And then secondly, it's going to be up to the three of you to put together remedies. So on the structural side, do you think there are any acceptable remedy takers left or do you believe the remedies, are you thinking this is going to be behavioural now post the CMA decision, for example? So could you help us a little bit with what sort of remedies might we have to think about? Thank you.

Thank you, Nicolas. I won't say anything that would prevent our ability to run a smooth and open dialogue without the trust authorities, but clearly what we see and think of mobile consolidation, and we know that from our Mass Orange experience, where 18 months after closing, we are driving synergies that allow us to continue to compete on the low end as well as to compete on our A brand on the premium market. And we are driving synergies, and the market and the price point for consumers has not changed. On the contrary. And so in France, I think what we know is that we know exactly the amount of synergies that can be driven by bringing more mobile customers or broadband customers on our infrastructure. And that's driving efficiency that in return allow us to continue to compete and to offer attractive price point for consumers while continuing to invest. You have to cut investments if you want to just continue to play in a super competitive market. And remember that we would then end up with three players in the market, two of them being stronger. Of course, our objective is to be a leader in France. But our two other competitors, post-consolidation, if that goes through, would have more ability to invest and would have more ability to compete head-to-head with us. So that's why we do believe that competition authorities should really look at it similar to what the CMA has done in the UK.

Okay, thank you.

Thank you. Our next question comes from Stefan Bayezian from Odo. Stefan, please unmute yourself and ask your questions.

Sorry about that. Good morning. Two questions, yes, if I can. The first one is, can you think just a little bit on the cost savings? And I'm partially thinking of the early retirement plan where you are in this regard and perhaps also the network spread down. I think you were planning to launch a tender for the corporate and have different contractors. And so I was just wondering where you stand on that as you continue to make progress in your cost-cutting plan. And the second question coming back to the offer, I was just trying to clarify one thing. So if you're contributing 27% to the bid, would it be fair to say that your share of the ABDA of SFR is probably a little bit lower than that because you may be taking a bit more spectrum than some other buyers in the consortium. Would that be fair? Thank you.

Thank you, Stefan. I'll start with your second question. I won't provide you more details. So unfortunately, we don't want to speculate on what could be. And remember, this is only a non-binding offer at this stage, and we haven't agreed with the sellers. So I think it's really premature to provide you more details on that. But the split of assets... is exactly the one that has been shared in the press release. On cost savings, the early retirement plan is now open. It's been open for several months, and the employees who are deciding on a voluntary basis to accept it, many have volunteered already, so it's really executing as per plan. And I don't know if Laurent, you want to comment on the various cost savings procurement and the copper RFP as well.

Good morning, Stéphane. So we continue to move full steam on the cost optimization and you refer to procurement. So we are working on our 18 billion euro cost base to drive savings on this part. The copper contract is one of the major contracts on which we are working with Jérôme and the team in France, which is not yet decided. That will come for the next month. It is a jumbo contract indeed for the next four or five years. So we'll be, of course, eager to get the best value out of this contract to drive this strategic project for Orange France.

Very good. Thank you.

Our next question comes from Otavio Adorizio from Bernstein. Otavio, please unmute yourself and ask your questions.

Good morning. Could you hear me?

Yep.

Perfect. I have a few questions, but let's first start from Spain. You basically recently monetized or announced the monetization of the fiber car, the JV between Masoran and Segoda. Now, Zegona, the main asset they brought were the clients, and therefore the monetization of the assets rely on the long-term commitment of Zegona clients to that network. Now, Zegona has the habit of playing many different fields, and it looks to be likely that potential could be a target for Telefonica. So I was wondering, how is Telefonica? difficult will be for Zegona to move to migrate its clients, how there are any penalty fees in that particular deal, and can Zegona actually disentangle from that JV? Second point is on the credit ratings. You effectively reiterate that it does really matter the two deals you're currently negotiating in Spain and in France, you still remain investment grade. And that's true because basically you have a quite large room. But it's likely that potentially the cheaper B plus could be done great by one notch. Are you prepared for that or you reckon that you have other levers to avoid that particular downgrade by one notch by the agencies? And the third point is on the pricing. Pricing is domestic. You made a lot of comments on the fact that there is a lot of competition on the low segments, the value segments. But I noticed that this quarter has been a bit different. It's not only been mobile, where you still got an ARPO that's going down around 4%, but for the first time, I don't remember having a quarter, you actually have a negative trend on the fixed ARPO. So if you can comment on that one, do we expect the repricing on fixed to continue and to have a negative trend in the next few quarters? Thank you.

Thank you, Octavio. On Spain, with the implication of Zegona and premium fiber company, be assured that, of course, we have long-term commitment from both, of course, Mass Orange on one side and Zegona on the other side. And you know that if we have a third-party investor like GIC in such a transaction, that's really something that has been carefully taken care of. Laurent, the investment grade.

Yep. So, hi, Ottavio. So on the rating, of course, early days, because we have, as Christelle explains, there is no deal in France, no deal in Spain. So all of that is pure speculation, of course. But globally, we have a strong BBB plus rating. We feel that we have capacity to stick to this rating despite all of this potential transaction. But then, of course, it will all depend on the timing and the sequence of it. But globally, we are very confident that midterm will remain on this BBB plus rating that we enjoy today.

And on price competition in France, you're right that our ARPO for broadband is slightly declining compared to one year ago, but it's also slightly increasing compared to Q2. So that's what we can say. But I don't know if maybe, Jérôme, you want to give more details on the pricing environment and what we've seen.

Thank you, Christelle. As you said, the environment remains quite stable on broadband, while it's more competitive on mobile low-end in particular. What is very important for us is the convergent ARPO. As you reminded, convergence is our growth engine, and our convergent ARPO is increasing by 1.8% at 78.6 euros. So on broadband, we don't see so much intensity on the competition, but it's true that some... mid-range offers on the market and some promotions have been impacting the year-over-year ARPO, but still progressing on a quarter-over-quarter basis, as you said. Thank you.

Thanks. Next up is David Wright from Bank of America. David, please unmute yourself and ask your questions. Go ahead.

Hopefully you guys can hear me. Thank you so much. Two questions, please. I think on both the recall and your comments earlier, you suggested the regulation could be separate processes, possibly even, I'm talking about, of course, the SFR deal. possibly even separate jurisdictions. But I assume these are not mutually exclusive. If any one of those regulation approaches were to find difficulties or unreasonable remedies, I assume the entire deal would be off. Or could there be any possibility that for instance, four a week to separately buy the B2B business of SFR. I'm assuming any problem with any regulation of the whole deal is challenged. If you could confirm that. And I am a little confused just on the French broadband pricing. I think you said, so you said that the ARPU is obviously down a little more now. What is happening? Are you losing higher value customers and adding lower value customers? And are the higher value customers migrating into convergence? And I'm just trying to understand that mix effect. Those two questions. Thank you very much.

Thank you, David. On regulation, clearly it's one proposal with three bidders, and our proposal cannot be split apart. Otherwise, it's not the same. So now the regulation and the antitrust authorities would review case by case because they would review the impact for every of the three companies separately, but of course, It's in a global approach to the market of what the Altice sale would impact. So clearly, even though it could be reviewed, I mean, it would be a different price on one per company. In the end, it's the assessment of one transaction and the impact for each company in the market. too early to say whether one authority would claim the leadership on the other one. What we know is that in any case for any transaction, when we were reviewing with Brussels the Spanish transaction, of course the Spanish authorities were reviewing carefully and remained involved by Brussels. So in any case, we know that both teams would review carefully this transaction. On the French broadband pricing, clearly, as you know, we are gaining customers on broadband. And so we have indeed some of the new customers. Some of the new customers, that's why we call it the mix impact. have an entry price that's lower than the average ARPU that we had in our base. And that's why you see a small impact on the base. But again, you see the ARPU compared to Q2 and it's slightly increasing. And we've had that impact in the past. So it's not really significant. We don't see a spin down of customers moving from high offers or premium offers to lower offer. Of course, we have some migration from pure broadband to convergent customers. And you see overall, every segment of our customers is positive in net ads. So all in all, we are adding more customers in our base and the mix, that's what we call the mix effect, some of these new customers are coming with a lower price than the base, so that's the impact on the average ARPO.

Yes, super clear. Thank you, guys.

Thank you. Our next question comes from Carl Murdoch-Smith from Citi. Carl, please unmute yourself and ask your questions. Carl, go ahead and unmute yourself. Okay, we're going to come back to you, Carl. For the time being, we are going to take our next question, which comes from Andres Kabajek from UBS. Andres, please unmute yourself and ask your question.

Hi everyone, good morning. Thanks for allowing me to take questions. I've got one follow-up and then a separate question on Spain. So the first follow-up is basically on the shareholder returns policy, which obviously you said is a very important feature for the company. Over the past three years, we've had a feature within this, which was that every year the dividend was supposed to grow. So I was curious, now that we only have a floor, you have more clarity into, I guess, the timing of potential deals and the potential amounts involved and therefore the impacts on your balance sheet. I was also curious to therefore see whether the kind of growth element of the shareholder returns policy is something that you will be thinking about as very important for the next three-year period. That's one question. And then the second question on Spain is, Coming from a slightly different angle, you have been in discussions with Vodafone also around potential RAN sharing, which obviously would have a benefit to your CapEx and also potentially to Totem, I believe. So I was just curious whether there is any update on those specific negotiations. Thank you.

So on the shareholder return policy, I won't provide you more details. And, of course, we know that's one item that we would cover as part of our 25 results in February and our capital market day at the same time. But yes, you're right, we have a floor at 75 cents as reminded in our guidance. On Spain, we already have a round sharing on some areas of Spain between Mass Orange and Vodafone Spain. So nothing new on that front. to comment on. And of course, when it comes to tower companies and totem, actually we have been negotiating, but that was part of our synergy plan. When we combine Orange and MassMobile, we have been renegotiating and working on the network synergies between the two companies. And also as part of that, all tower companies in Spain have been contributing. But, of course, Totem was already supplying Orange, and the network of Orange has been maintained. So not much to comment on top of that. But, no, nothing new on the network synergies, I would say, beyond what we had already planned as part of the Mass Orange transaction.

So no progress on like the full RAM sharing project that's been kind of in the media in Spain.

I guess you're talking about some speculation around the creation of a specific vehicle where we would combine assets. Indeed, nothing to comment. We remain as we are, which is we are sharing, and we are using the Vodafone Spain network, and they are using the Mass Orange network in some areas. But nothing has changed.

Thank you very much.

Great. So Carl, we're going to try one more time. So we're going to give you the floor. Please try to unmute yourself. If it doesn't work, I will send you the conference phone number and you can try that way. Okay, so we just gave you the floor. Please unmute yourself and ask your question. All right, stay tuned for an email with the phone number. Our next question comes from Emmett Kelly from Morgan Stanley. Emmett, please unmute yourself and ask your questions.

Okay, good morning, Christelle. Good morning, Laurel. I've got two questions, please. The first question, please, is on consolidation, and it's on the potential impact on Towers. Can you say if there would be any impact on Totem Towers in France from a successful completion of the transaction? And secondly, just looking at the press release last week, you said that the non-binding offer is subject to several factors and one of these is due diligence. So as you get access to the SFR data room, what are you really looking for? Are you looking at the churn of the subscribers, the quality of the subscribers, the free cash flow profile of the business? Are you looking for areas of overlap where you can target costs, reductions? And what are your red lines there? Thank you very much.

thanks amit on on the impact of any potential consolidation on the on the french market and specifically on totem of course given our view is that we would create more synergies we would actually load our network with with more customers so no impact foreseen Of course, I would say every day our teams are planning for network evolution. And as you know, part of the transaction is to solidify the ability for telecom operators in France to continue to invest. So I think this transaction, on the contrary, would probably provide more mobility in the long run for all players in the market to invest, which I see as positive for Totem. On the due diligence, I mean, nothing specific. This is really pretty standard what we look at for due diligence. And, of course, it goes from the financials, but also, I mean, everything that you can think of, but really standard. So no specific, no red lines. I mean, it's really pretty standard.

Thank you.

Thank you. Our next question comes from Fernando Cordero from Santander. Fernando, please unmute yourself and ask your questions.

Okay. Thank you very much. Two questions from my side. The first one in Spain and particularly also in the potential consolidation scenarios, and I would like to understand at which extent you would be interested or you believe that Mass Orange would be, let's say, stronger if it would be regaining the full control on the mobile network. Today, it is having a branching agreement with Vodafone Spain, and I would like at which extent or in which scenarios you would be interested in having full control of this branching agreement. And the second question, also starting from Spain, but ending in France, given that the operations in Spain are now putting a lot of focus on, let's say, services on top of connectivity, starting with devices, but also other services like energy alarms and so on, at which extent do you foresee this strategy to be potentially implemented as well in France? Thank you.

Thank you, Fernando. So in Spain, on the network side and potential further market consolidation, we don't see, I mean, we cannot comment. As you see, we've created the premium fiber because we see the value of combining assets and making sure we bring more customers on an existing infrastructure. So we have this similar rational, very value-driven approach. When it comes to mobile network, we don't, I mean, as we said, nothing has changed. We leverage the Vodafone Spain network. They leverage our network. We are more looking for more synergies than trying to de-synergize amongst players, given the competitive intensity in the market. When it comes to diversification, a lot of the initiatives that Mass Orange has launched are actually already in place in France. We have been home security is a market we have launched a few years ago, insurance as well, content as well. So devices, I mean equipment, equipment sales actually part of the growth in Mass Orange. is somehow applying the same rules that Orange Pain, or the same recipe that Orange Pain was having from a marketing standpoint to the full Mass Orange scope. So I think, of course, we keep on learning from things that Mass Orange is launching and testing in Spain, and that's useful to compare and to benchmark ourselves also in France. But this is something we have done already as well in France for quite some time.

And, Fernando, we can add that around 8% of our retail services, XPSTN, are coming from all of these adjacents, and that there is a clear path in terms of positive evolution on this. And, indeed, we are cross-fertilizing with our master range colleagues on these subjects. Okay. Very clear. Thank you.

Great. Thank you so much. Our next question comes from Eric Ravary from CIC. Eric, please unmute yourself and ask your questions.

Hello. Yes, good morning. Thank you for taking my questions. So two questions. First one on OBS. In the press release, you don't reiterate your target to stabilize the EBITDA in 2026, so I wanted to check that. if you're removing the guidance for next year. And second question is on wholesale revenues in France. The decline is accelerating over the two last quarters at minus 9%. For the next quarters, should we expect the wholesale to come to a double-digit decline due to the acceleration of copper decommissioning? Thank you.

Thank you. On the orange business soft guidance, what we see clearly is that the overall market environment, be it the IT market or the French, I would say, macro environment, is highly uncertain so in that environment our message is that it's difficult the guidance we have is difficult but we are not setting a different guidance at this stage and of course our strategic plan for orange business and our cybersecurity activity would be a core pillar of our next capital market day in February. But we continue to drive with the same intensity, our efficiency program, our transformation, our repositioning on the new portfolio. So it's really more the overall market environment that's making the execution of the plan uncertain and difficult. But it's not because we are slowing down on everything we've launched already. And the wholesale trajectory for Q4, Laurent, it's probably the same.

So indeed, what we said, Eric, is that the second half wholesale evolution will be in line with the H1, same trend. And all of that is definitely in line with our global guidance. You know, you remind of one billion euro revenue decline of wholesale between 22 to 25, so fully consistent with our expected trajectory.

Thank you. As a reminder, if you'd like to ask a question, please raise your hand in Teams, or if you're connected on your mobile phone, to raise your hand. It is star 5. Now we will move on to our last question from Russell Waller. from New Street Research. Russell, please unmute yourself and ask your question.

Thank you. Excuse me. Yes, good morning, everyone. Yeah, I just have some questions on the offer to SFR, please. So first of all, could you just explain why your offer excludes those assets that you listed? So XP Fiber, intelsia etc why were they excluded and would you consider changing your offer to bid for the equity so it includes those assets for example if that's what the seller wanted Second question, just, you know, obviously the offer was made in public. Can you just confirm about standard practice? So, for example, when you made the offer to MassMobile, were there negotiations in private first and then the offer was made in public? Or did you just make the offer in public as you did for SFR? And then finally, could you just talk about whether or not there might be clawbacks or clauses included in the deal based on, say, the performance of the underlying asset at SFR? You know, some people have concerns that there's underinvestment or CapEx is low, for example, and so you might buy an asset that maybe doesn't quite meet the expectations. So how would you protect yourself from that aspect? Thank you.

Thank you. On the overall transaction, and of course, I mean, the fact that we have a proposal coming from three players is not standard practice in submitting an NBO, and especially with two players listed and given the amount we're talking about. And the fact that we had officially submitted an offer, we thought – and that was also, I mean, a legal interpretation. And that's something we've disclosed and we've discussed with the market authorities. And so that's not something we decided on our own. But that's really what has driven the press release on the proposal, even though, indeed – It's an NBO, and at this stage, it's not a confirmation that we've reached an agreement with the seller. So that's very clear. So very early to comment on other things like, I mean, clawback clause or everything, because that would mean we have a final and signed agreement. So, of course... that's something we would be happy to comment on we hope on the day when we have when we have a deal agreed between parties that's not the case today on the assets and some of the assets that have been excluded xp fiber as you know is owned 50 percent by altis only or 49 or 51 i don't remember so other other players are involved and it's an asset that has been for sale for some time. Some of the other assets are really independent assets and very different from our telco business when it comes to call centers for supporting Altice. So we don't think these are assets that naturally make sense for us to acquire. And we don't think, by the way, that Altice would have difficulty to launch a sale process. But again... What we said is we believe our proposal is a good proposal. We want to be constructive in dialogue, so I don't want to anticipate any conclusion that would be reached, and I don't want to put words in the mouth of Altice. That's for them to assess what they want to do.

Thank you.

Thank you. That was our last question, so I will now hand it back over to Christelle Edmond for any concluding remarks.

Thank you all for joining our Q3 results. We are pleased with our solid results. We are forming the strength of our strategy and efficiency focus. Based on these results, we are upgrading our EBITDA guidance from above 3% to at least 3.5%. Thank you all, and I wish you a pleasant day, and I really look forward to seeing you at our next Capital Markets Day on February the 19th.