FY 2014 results Stphane Richard, Chairman and CEO Ramon Fernandez, - PowerPoint PPT Presentation

FY 2014 results Stéphane Richard, Chairman and CEO Ramon Fernandez, Deputy CEO, Chief Financial and Strategy Officer February 17 th , 2015 FY 2014 results – February 17th, 2015

disclaimer This presentation contains forward-looking statements about Orange. Although we believe these statements are based on reasonable assumptions, they are subject to numerous risks and uncertainties, including matters not yet known to us or not currently considered material by us, and there can be no assurance that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ from the results anticipated in the forward-looking statements include, among others: the success of Orange’s strategy, particularly with respect to customer relation when facing competition with OTT players, Orange’s ability to withstand intense competition in mature markets, its ability to capture growth opportunities in new markets and the risks specific to those markets, the poor economic conditions prevailing in particular in France and in Europe and in certain other markets in which Orange operates, the effectiveness of Orange’s action plans for human resources, and the success of Orange’s other strategic, operational and financial initiatives, risks related to information and communications technology systems generally, in particular technical failures of networks, fiscal and regulatory constraints and changes, and the results of litigation regarding regulations, competition and other matters, the success of Orange's French and international investments, joint ventures and strategic partnerships in situations in which it may or may not have control of the enterprise, and in countries presenting additional risk, Orange's credit ratings, its ability to access capital markets and the state of capital markets in general, exchange rate or interest rate fluctuations, and asset impairments. More detailed information on the potential risks that could affect our financial results will be found in the Registration Document filed with the French Autorité des Marchés Financiers (AMF) on April 29, 2014 and in the annual report on Form 20-F to be filed with the U.S. Securities and Exchange Commission on April 30, 2014. Forward-looking statements speak only as of the date they are made. Other than as required by law (in particular pursuant to sections 223-1 and seq. of the General Regulations of the AMF), Orange does not undertake any obligation to update them in light of new information or future developments. FY 2014 results – February 17 th , 2015 2

1 FY 2014 highlights Stéphane Richard Chairman and CEO

revenue EBITDA* EBITDA margin € 39.4bn € 12.2bn 30.9% -2.5% yoy -2.5% yoy stable yoy -1.6% ex reg yoy indirect opex capex net debt / 2014 EBITDA** savings € 5.6bn 2.09x € 503m 14.3% of revenues achievements yoy : comparison with the same period of the previous year qoq : comparison with the previous quarter * in this presentation, EBITDA stands for restated EBITDA unless otherwise specified, see slide 35 for EBITDA restatements ** calculated by dividing (A) net financial debt, including 50% of the net financial debt of the EE JV in the U.K., by (B) restated EBITDA including 50% of the EBITDA of EE JV (adjusted in 2014 for £336m from the administration of Phones 4u) FY 2014 results – February 17 th , 2015 4

stabilized EBITDA margin 30.9% as % of revenues stable yoy € 12.2 bn 2014 EBITDA between € 12.0bn - € 12.5bn stable EBITDA margin FY 2014 results – February 17 th , 2015 5

balance sheet strength preserved 2.37x 2.17x 2.09x 09x 2014 2 x net debt / EBITDA* closer to 2012 2013 2014 * calculated by dividing (A) net financial debt, including 50% of the net financial debt of the EE JV in the U.K., by (B) restated EBITDA including 50% of the EBITDA of EE JV (adjusted in 2014 for £336m from the administration of Phones 4u) FY 2014 results – February 17 th , 2015 6

dividend policy adapted to cash generation € 0.20 interim paid on December 9 th , 2014 balance of € 0.40* to be paid in June 2014 € 0.60 dividend * subject to the Annual General Meeting of Shareholders approval; ex-date June 8th, record date June 9th, payment date June 10th FY 2014 results – February 17 th , 2015 7

portfolio review focused on existing footprint, while respecting leverage ratio guidance selective portfolio review Orange Uganda Jazztel and EE deals under regulatory review FY 2014 results – February 17 th , 2015 8

growing strong commercial investments in focus mobile and fixed VHBB ongoing costs strong employee reduction engagement 4 levers FY 2014 results – February 17 th , 2015 9

sustained commercial performance across the Group homes customers 4G coverage customers FTTH connectable in thousand in % of pop. in millions +1.0m 74% 3.7m France in Q4 14 +82k France 3.6m 563k +0.5m in Q4 14 70% 2.3m Spain in Q414 x2 0.6m 61% x2 Poland Spain 0.8m 53k in Q4 14 in Q4 14 +0.1m 0.5m 88% Belgium in Q4 14 Slovakia 0.3m 62k x2 0.4m 62% Romania in Q4 14 Africa & Middle East Enterprise 97.5m cloud services +4.4m +16% in Q4 14 2014 revenue growth mobile customers 12.6m +0.6m security services +27% in Q4 14 2014 revenue growth Orange Money customers FY 2014 results – February 17 th , 2015 10

increased CAPEX on 4G and FTTH to support future growth 2G/3G FTTH CAPEX by technology 4G AMEA VDSL (in € m) 286 315 311 2013 CAPEX +125 -235 +60 2014 408 375 436 +122 13.7% 14.3% 4G 2G/3G FTTH rationalization in AMEA VDSL & phasing out as % of revenues as % of revenues € 5,563m € 5,636m +1.3% 2013 cb 2014 FY 2014 results – February 17 th , 2015 11

accelerating the modernization of the company to mitigate revenue pressure OPEX larger share of indirect costs decrease revenue decline offset by opex savings (opex savings in % of revenue decline) (opex savings in € m) indirect costs 369 Group 69% 48% 8% -346 -462 direct costs -503 -93 93 -204 -583 France -707 707 82% 57% 23% -92 929 2012 2013 2014 2012 2013 2014 FY 2014 results – February 17 th , 2015 12

strong employee engagement facilitating the modernization of the company top employer awards received in 2014 high level of French employee satisfaction France Romania Spain Slovakia 92% 92% 92% Poland Moldavia 90% 88% UK (OBS) Armenia Belgium 84% 79% Senegal Ivory Coast Uganda Mali Egypt (OBS) Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 Jun-14 Dec-14 % of Orange employees who declared that their working environment was at least as good as in other companies India (OBS) FY 2014 results – February 17 th , 2015 13

2 2014 results overview Ramon Fernandez Deputy CEO, Chief Financial and Strategy Officer

better revenue trend in Europe & strong growth in Africa and the Middle-East Q4 2014 FY 2014 by segment -0.6% -2.5% IC&SS (in € m, yoy growth in %) 1,814 Enterprise 2014 revenue yoy cb yoy cb 6,299 € 39.4bn France Africa & Middle-East 19,304 -0.0% -1.6% 4,283 ex. reg. ex. reg. rest of Europe 2,900 Poland Spain 2,918 3,876 by activity yoy yoy Q4’14 FY’14 France Spain Poland € 7.9bn enterprise & others +0.9% -1.2% -1.2% -0.8% -1.8% -0.3% -0.7% € 12.9bn fixed services Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 € 1.5bn mobile equipment sales Africa & +16.0% +16.9% rest of Europe Middle-East Enterprise 7.6% € 17.1bn mobile services -3.3% -5.8% -6.7% -2.2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 FY 2014 results – February 17 th , 2015 15

better revenue trend and cost savings supporting EBITDA margin stabilization EBITDA down - € 317m vs. - € 1,021m in 2013 Q4 2014 FY 2014 EBITDA evolution 2014 EBITDA -0.7% -2.5% (in € m) yoy cb yoy cb € 12.2bn stable margin 30.9% of rev. Group average FTE* down -3.8% yoy quarterly opex savings 2013 (yoy in € m) 2014 123 indirect costs -99 -114 -119 91.9k -170 59.7k -30 -3.7% -146 direct costs -3.9% -152 -149 149 -47 47 -245 245 -266 266 France international Q1’14 Q2’14 Q3’14 Q4’14 * Full Time Equivalent FY 2014 results – February 17 th , 2015 16