France Télécom Orange roadshow in Tel Aviv Gervais Pellissier CEO Delegate & CFO June 2012
Agenda 1 introduction to France-Telecom Orange, one of the global leaders in Telecoms 2 a clear strategic and industrial vision 3 « conquest 2015 » strategic plan: a path to shareholder value creation 4 latest results and main financials 2 2
France Telecom-Orange : key highlights A Global Leader in Telecoms One of the Most Solid Capital Structure in the Sector Attractive Yield Supported by Fundamentals Clear Strategic and Industrial Vision in Changing Environment, both in France and Globally Conquest 2015: a Roadmap Focused on Shareholder Value Creation 226m customers, 35 countries 2x net debt/EBITDA 40-45% OCF payout / OCF 2012 guidance: € 8bn driving new business models execution on track 3
1 introduction to France-Telecom Orange, one of the global leaders in Telecoms 4
France-Telecom Orange is one of the major telecom companies around the world Repor ported d sales es in € billion ons (act ctua uals) s) Subs bscr cribe bers rs m YoY 95,0 88 -0,4% 91,1 +2,7% 161 79,7 +10,1% 141 62,8 307 +6,6% 58,7 180 -0,3% 58,4 650 +11,2% 53,6 398 +10,9% 45,3 226 +8,0 ,0% 38,5 300 +8,4% 30,0 +34,3% 140 FY 2011 FY 2010 5
it serves 226 million customers in 35 countries … United ted Kingdo dom Poland land Belg lgium Luxembo bourg Slovak akia ia Moldo ldova France ce Romania ania Swit itzerla land Spain ain Armenia enia Portu tugal Irak ak Tunisia isia Moroc occo co Jorda dan Egypt pt Mali li Niger er Seneg egal al Dominic inican an Republi blic Guin inea ea Bissau sau Central al Africa ican Repu publi blic Guin inea ea Guadel adeloupe pe Ivory Coas ast Marti tiniq ique Ugan anda da Camer eroon Kenya Equato toria ial l Guinea inea Democrati atic c Repu publ blic ic Guyana ana of the Congo Madag dagascar scar Vanuatu atu Botsw swana ana Mauritiu itius Reunio ion Island and Countries where we provide services for residential customers Countries where we provide services for business customers our Group provides services for residential customers in 35 coun untries ies and for businesses in 220 countries ies and territories ies 6
… with 172k employees delivering 4 key business lines businesses ses mobile 3,750 50 multinat atio ionals ls 2.7 milli lion on professi sion onals ls and s small, medium 35 countrie ies and l large e businesses in F France 157 millio ion customers rs world ldwid ide 28 dedicated customer r service ice centres internet and fi fixed-line ne networks rks 400,000 ,000 km underwater er cables – almost 10 times the Earth’s circumf mfer eren ence 3G network rks s in 26 countries ies 9.2 milli lion on Liveboxe oxes 8.3 milli lion on internet t telephony customers rs 4.1 milli lion on internet t TV customers rs 7
the Group has a diversified portfolio of activities and a footprint with complementary dynamics € 15 15.1 .1 billion € 45 45.3 .3 billion on on € 5.8 5.8 billion restated EBITDA on revenue € 9.3 9.3 billion capital expenditure operating cash flow Over erview on 2011 11 fina nanci cials By geogr eograp aphy hy By busin siness ess 45,3 € bn 45,3 bn 45,3 3 € bn bn 4% 17% 15,1 € bn 15,1 bn 15% 1% ICSS 8% 19% Enterprise 20% Enterprise & Wholesale 8% RoW 51% 9% 9% Mobile 6% Poland Broadband & Fixed line Spain France 50% 57% 32% group revenue group EBITDA group revenue 8
managing strong market positions across the footprint # 1 # 1 # 2 # 1 # 1 # 1 # 1 # 3 # 3 # 3 # 2 # 2 # 2 # 1 # 2 # 2 # 1 # 2 # 2 # 1 #1 # 1 #1 # 2 # 5 # 3 # 1 #4 #4 Vanuatu atu # 1 # 1 # 2 sition # mobile e market ket posi Main listed Countries where we provide services for residential customers subsidiaries 9
proactively kept growing in an increasingly global context since French market opening to competition in 1998, France Telecom has domestic telecommunication operations called France Telecom after being grouped under 1988 the name “PTT” (Post, Telegraph, Phone) since 1971 1991 France Telecom separated from the Ministry of Telecommunications, became a public operator 31 Dec c 1996 new law : FT was incorporated as a French Société Anonyme, 100% state owned IPO of 25% of the company (250m of shares). The company is listed on the Paris 20 Oct 1997 (Euronext Paris) and the New York Stock Exchanges (NYSE). The share is part of the CAC 40 Index. almost all telecommunications services opened to competition in France since ce 1 st st Jan 1998 1998 launch with Orascom Telecom of Mobinil in Egypt Dec 1998 Sell of additional stake by the French State and capital increase. State holding ~62% July 2000 France Telecom issued 129 m shares to partly finance the acquisition of Orange PLC owned by Vodafone. French state stake at 56% Jun 2001 acquisition of Equant (Enterprise Business) completion of the acquisition of 49% of Telekomunikacja Polska S.A (started a few years before) 2002 Dec 2003 act on telecommunication public service obligations and on France Telecom which authorized the State to own less than 50% of FT’shares privatization of France Telecom. French state stake now at 43% Sep 2004 Major steps s in internat ational al developmen ent Major sale of stake by the French State 10
in 15 years, France Telecom has expanded globally and built leading positions over a balanced footprint Jun 2005 French State stake decrease to 35% 5% Sep 2005 France Telecom capital increase to acquire 80% of the capital of Spanish mobile operator Amena. French state stake at 33% percent “Orange” becomes the single brand of the Group for Internet, television and mobile services 2006 Jun 2007 French State stake decreased to 27% selected acquisitions policy mainly focused on emerging markets Since e 2007 Greenfield in Central African Republic, Guinea Bissau, Guinea and Niger: 2007, 51% stake of Telkom Kenya: 2007, Uganda: 2008, Greenfield in Armenia in 2009 and in Tunisia in 2010, 40% stake in Meditel (Morocco) in 2010, 44% stake with a partner in Korek (Iraq) and 100% in CCT (DRC) in 2011 Apr 2010 establishment with Deutsche Telekom of the joint venture Everything Everywhere in the United Kingdom Jul 2010 new strategic plan, “Conquests 2015” Dec 2011 disposal of Orange Switzerland Major step in internat ational al development 11
York* and benefiting from a robust and diversified shareholders base France Telecom is now a major telecom group, listed in Paris and New- Geograph aphical ical breakdo down wn of instit titution utional al invest estor ors Dec Dec-11 11 sharehold holder er base 67,7 ,7% free e float at RoW 7% (i nstitutional + individual shareholders) North America 26% ( US 24% – Canada 2%) 61.1% institutional Rest of Europe 29% UK 12% individual shareholders 6.6% employees 4.8% France 0.6% 27% treasury shares APE + FSI** 26.9% (French State) * Around 100 millions ADR share Number of shares ** o/w 13.4% owned by APE (Agence de Participations de l’Etat), 31st December 2011 : 2 648 885 383 13.5% owned by FSI (French sovereign fund) 12
tain racti leve ing the right inin stment mainta ration remuneratio lder shareholder ve tive ring attrac l of investment iverin delive shareholders balance sheet while maintaining investment and remunerating since 2002, France-Telecom Group has managed to restore a strong strength lance sheet bala ing thenin vel Debt divided by two Equity doubled Increased maturity 3 1 2 X2,5 ,5 € bn Years /2 /2 9,0 € bn X2 X2 68,0 30,0 4,0 32,3 14,0 2002 2002 2011 2011 2002 2002 2011 2011 2003 2003 2011 2011 DPS (in € ) 1,30 1,40 1,40 1,40 1,40 1,20 1,00 1,00 1,00 1,00 1,00 0,48 0,25 0,00 '98 '98 '99 '99 '00 '00 '01 '01 '02 '02 '03 '03 '04 '04 '05 '05 '06 '06 '07 '07 '08 '08 '09 '09 '10 '10 '11 '11 CAPEX (spectrum included) Despite revenue pressure, CAPEX maintai ained ed at the appropriat ate /revenue (%) level to continue delivering performance 14,4% 13,2% 11,4% Domestic market shares at the end of 2011 close to 40% on mobile and above 45% 2009 2009 2010 2010 2011 2011 13
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