Orange Sp/Adr

Good evening, ladies and gentlemen. Thank you for your patience, and welcome to Orange's full year 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 Edman, 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 Edman.

Good evening, and thank you for joining our 2025 results presentation. These 2025 results successfully conclude our three-year Lead the Future plan, which has been marked by consistent execution and focus on value creation. All our key objectives have been met or overachieved. We also finished the year with sustained strategic activity. In Spain, we signed a binding agreement with Lorca to acquire full ownership of Mass Orange by acquiring the remaining 50% stake in the joint venture for a price of 4.25 billion euros. With this operation, Spain will become our second largest market in Europe, and we will be able, upon closing, to capture 100% of Mass Orange value creation. Premium Fiber, the co-owned FiberCo with Vodafone and GIC, began operations in Q4. With over 12 million premises and nearly 5 million connected customers, this is the biggest FiberCo in Europe in terms of customers. In France, we submitted in October, together with Bouygues Télécom 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. Due diligence works have been initiated in early January 2026. There is no certainty that this process will result in an agreement. Back to our 2025 results, we are really pleased to report a robust commercial performance in France, Europe and Africa-Middle East, fuelling strong results fully in line with our guidance. After two consecutive guidance upgrades this year, full-year EBITDA grew by 3.8% with a solid 0.9 point margin rate improvement. Organic cash flow reached 3.7 billion euros, representing more than 8% growth year-on-year, overachieving our Lead the Future guidance. Let's now review our strong full-year and Q4 results. On the top line, the group delivered 40.4 billion euros in revenues, representing a 0.9% increase driven by growth in retail and MEA. EBITDA performance is up plus 3.8% for the full year. France grew at an accelerated pace. Europe's growth remains solid, and Africa Middle East continues to perform strongly in the double-digit territory. Finally, orange business further improved its EBITDA trend. We maintain discipline on e-CAPEX with e-CAPEX to sales at around 15% in line with our target. Organic cash flow reached 3.7 billion euros, rising by more than 8% and well in line with our annual goal of at least 3.6 billion euros. Our free cash flow all-in stands at 2.8 billion euros. Our balance sheet remains robust with a net debt to EBITDA ratio of 1.8 times. We also fully achieved our 2025 greenhouse gas emissions target on all scopes. Lead the Future has built a strong, sustainable momentum across the company, uniquely positioning Orange on its markets. With a powerful brand, cutting-edge networks, and our global teams, we are now serving 340 million customers worldwide. We are stronger in our core business, more efficient in our operations, and financially healthier. We have been very active in in-market consolidation across Europe, notably through the successful creation of MassOrange, now the leading operator in Spain. We are about to get full ownership of this operation, delivering synergies at full speed. I continue to advocate Europe to review its regulatory framework as we believe a strong digital and telecom ecosystem is essential for enhancing competitiveness in the region. Over the past three years, we have strengthened our leadership in NPS across 16 countries and delivered solid retail performance with an outstanding double-digit growth in Africa Middle East and leadership of Orange Cyber Defense. All of this has been achieved by maintaining a solid balance sheet while owning our infrastructures, which is a key differentiator. FTTH deployment is almost done in Europe and we now have approximately 100 million FTTH connectable homes. Our primary focus over the period has been execution. We streamlined our portfolio with the exit of Orange Bank in Europe, the sale of OCS and Orange Studio in 2024, and the continued transformation of Orange Business. Additionally, we accelerated efficiency through a major workforce planning agreement in France, simplified group processes, and maintained a relentless focus on cost optimization and operational efficiency. Financially, free cash flow all-in has grown significantly by 74% over three years, translating into an additional €1.2 billion in cash. The dividend increased by 7% over the last three years, while total shareholder returns surged by 82% in three years. We are very proud of these achievements. We have now very solid foundations for our next strategic plan, which we will present to you tomorrow. Looking at our sustainable performance, we all made significant achievements over the last three years, and we exceeded our 2025 targets. Greenhouse gas emissions are down 49% on Scope 1 and 2 compared to 2015, and Scope 3 is down 16% compared to 2018. Those results reflect all the efforts and levers activated, as for instance, our partners to net zero carbon program for which we signed seven partnerships. We are committed to our mission to reduce the digital divide and have increased 4G population coverage in MEA to 80%. Regarding digital inclusion, more than 3 million people benefited from free digital training since 2022. Finally, as part of our trust development strategy, we continued to launch new offers for youth protection and B2C cybersecurity. And in December, we appointed a chief trust officer, Guillaume Poupard, to accelerate this strategy. I will now hand over to Laurent for the financial review on slide 8.

Thank you, Christelle, and good evening, everyone. Let's start on revenues, up 0.9% in 2025 at 40 billion euros, fueled by robust service growth of 2%, which offset the expected wholesale decline. From a segment perspective, revenue growth is driven by Africa and Middle East, outstanding double-digit growth, and Europe at plus 2%. In France, retail ex-PSTN is up 0.6% as expected and was offset by anticipated decline in wholesale. Orange business is still impacted by portfolio pruning and by the difficult IT market and French macro environment. On efficiency, we have delivered strong results and achieved our three-year net saving target of €600 million. This success has been driven by strong operational efficiency, leading to a solid improvement in the EBITDA margin of close to 1 point in 2025. Regarding our procurement initiative, we are well on track to meet our mid-term target of 700 million euros, and we exceed 300 million euros of value created thanks to AI in 2025. This sets the stage for the next phase of efficiency, which we will present tomorrow at our Capital Market Day. Moving to EBITDA, growth reached 3.8% for this year. Strong result, which is driven by outstanding double-digit performance from Africa and Middle East, a continued solid growth in Europe, and a positive EBITDA momentum in France. Finally, Orange Business continued its EBITDA improvement trend despite current macroeconomic headwinds. Turning to net income, 25 net income is driven by EBITDA step-up, offset by tax, and by three main exceptional items. The booking of a provision related to the senior part-time for 1.2 billion euros net of tax. The impairment of orange business activities for around 330 million euros driven by market evolution. and the start of depreciation of the copper dismantling asset, booked in 2025 for around 370 million euros. Related to copper in France, 2025 marks the beginning of the industrial phase of copper shutdown, in line with the decommission plan announced in 2022. As part of this process, we have recognized, as per IFRS standard, a provision of 1.7 billion euros in 2025, representing the best estimate of the dismantling cost. This provision will be reversed as real costs occur. In symmetry to this provision, a dismantling asset of 1.7 billion euros has been recorded and will be amortized on a roughly linear basis until 2030. In parallel, to ease the analysis of our underlying performance, we introduce new indicators, excluding specific elements, the adjusted net income and adjusted earnings per share. Altogether, the adjusted net income amounts to 3.1 billion euros in 2025, considering around 1.95 billion euros of adjustment, mainly driven by the three exceptional items of 2025 that I just described. Let's move to CAPEX. We maintain our disciplined policy with 15% e-CAPEX to sale ratio. We pursued our investment in Africa and Middle East to support our strong revenue and decrease CAPEX in all segments. Excluding Africa and Middle East, our group e-CAPEX decreased by more than 3% year over year. On organic cash flow, the organic cash flow is up €280 million, reaching €3.7 billion, well in line with our guidance of at least €3.6 billion. This strong growth is mainly driven by EBITDA increase. Free cash flow all-in reached €2.8 billion, with a slight decline year-on-year due to the expected phasing telco license payment between 2024 and 2025. Net debt is stable and stands at 1.8 times EBITDA in line with our guidance of around two times. We are very proud to have successfully issued two jumbo bonds at the end of 25 and early 26, amounting to 5 billion euros and 6 billion dollars, both of them massively oversubscribed. This achievement secures the upcoming refinancing of master orange debt and demonstrates the strength and attractiveness of our group on the debt market. Moving to the business review and starting with France, the competitive environment remains generally stable, with sustained competition on the low end. In this context, we are laser-focused on our efficient commercial strategy, grounded in segmentation, strong customer loyalty and value. This approach has driven robust commercial performance this year. This quarter, we maintained positive momentum with 134,000 mobile net add, 315K on fiber, and a record since the last quarter of 2022, and 25,000 on convergence. This performance is fueled by positive results on both Orange and Soch brands and effective churn management, with mobile churn reducing by more than two points year on year. Convergent ARPO at close to 79 euros continues to grow and is up 1.2% year-on-year in Q4, while mobile and fixed broadband ARPO decline year-on-year, reflecting the mixed effect and our strategy to attract customers on all segments and then upsell and cross-sell. Overall, we continue to demonstrate our leadership and innovation in France. We are once again recognized by RCEP as the best customer service and for the 15 consecutive time as the best mobile network. We also have launched the innovative direct-to-device satellite SMS offering and successfully tested next-generation GPON fiber technology. Moving to the financials, our efficient commercial strategy led to a 0.6% growth in retail XPSTN revenues in 2025 and 0.5% in Q4 as expected, outperforming all the players of the market in a challenging environment. As anticipated, revenues remain impacted by the structural decline in wholesale. In Q4, this decline was offset by slightly more co-financing received this quarter. 2025 also marks the beginning of the technical closure of copper, with more than 200,000 premises completion. The robust improvement in EBITDA trend in 2025 and operating cash flow growth is driven by rigorous cost management with a significant 4% OPEX reduction over the year. This translates into a 1.1 point EBITDA margin improvement and an increase of close to 3% of EBITDA minus CAPEX. Turning to Africa and Middle East, which continues to deliver a very strong performance, demonstrating once again our positive momentum. Revenues are up double digits for the 11th consecutive quarter, driven by our four key drivers. Thanks to revenue growth and strict cost control, we delivered double-digit EBITDA growth in 2025 for the sixth consecutive year, raising the bar of EBITDA margin to above 39%, up by 0.6 points. EBITDA minus CAPEX is up at 17% on a FX-comparable basis and 14% on a historical basis. leading to a strong cash generation in Euro, our top priority for MEA. Moving on to Europe, revenues are back to growth, increasing by more than 2% in 2025, sustained by services and IT and IS, thanks notably to large deals in Poland and Romania. Services remain strong, fueled by effective volume value strategy, an increase of customer base by around 700,000 customers in 2025. Over the quarter, net ads remain robust, with mobile net ads above 100,000. Convergence revenues are up by 6% over the quarters, with net ads at 32,000 and growing ARPO notably in Poland. EBITDA reached €2 billion, up 3.2% in 2025, and EBITDA minus e-CAPEX is up by more than 12%. Moving to orange business, revenues are still impacted by last year's portfolio pruning and by the French macroeconomic environment. While the French market remains difficult, international segment of the business is showing clear signs of improvement as reflected by a win ratio of close to 50%. Orange cyber defense continued to grow sustainably at 7% in 2025. From a value proposition perspective, our new secure connectivity offer is a significant success, with over 240 million euros in orders this year and nearly 60% customer growth in the second half of 2025. With this new modular platform, our clients now have the opportunity to use connectivity as a service, offering self-service dynamic pricing and AI-driven automation. Together with Orange Cyber Defense, we are driving growth and profitability with our combined offers, leveraging both telco and cyber strengths. We are stepping up as well on our new flagship product, such as our trusted AI platform, Live Intelligence. In that context, the EBITDA trend at minus 6% year on year is improving for the third consecutive year, while not fully at our initial 2025 target. Let's turn to Spain. On a standalone basis, Masorange fully achieved its 2025 ambition. In particular, the company delivered above the targeted €300 million in cumulative synergies at the end of the year. From a commercial standpoint, we achieved strong net add in the mobile segment and maintained stable volume in fixed broadband. Revenues are up by 0.7% in the fourth quarter, top line benefiting from strong growth in both B2B and our new business initiative of setting the challenging telco retail market. Adjusted EBITDA minus recurring net capex is up 10% in line with our 2025 outlook. Finally, proceeds from the Fibre Co-transaction resulted in a significant deleverage, with the net debt to adjusted EBITDA now at 3.6 times from 4.5 times at the end of 2024. Moving to a word on premium fiber, we are very pleased to have successfully completed this NETCO transaction closing at the end of the year, maximizing the value of the largest fiber network in Spain. Going forward, the impact of the rental fees to access fiber premium network will be broadly cash-neutral, thanks to the reduction in interest costs driven by the strong deleveraging. With this, I hand over back the floor to Chrisel for the conclusion.