#H1_2018 Orange financial results Stéphane Richard Chairman and CEO Ramon Fernandez Deputy CEO, Finance, Performance and Europe 26 July 2018
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: disclosure or inappropriate modification of the personal data of Orange’s customers, risks relating to the development of its banking activities and of mobile financial services, Orange’s exposure to geopolitical, macroeconomic, regulatory and corruption risks, the risk of not being able to maintain control over customer relations when facing competition with the OTT players, the success of Orange’s strategy of diversification to find new sources of growth, network or software failures as a result of cyber-attacks, various frauds that may target the Company or its customers, its dependence on a limited number of critical suppliers, damage caused to its installations and infrastructures due to natural disasters or intentional damage, risks relating to its brand strategy, its ability to retain the necessary skills due to numerous employee retirements and changes in its businesses, possible adverse health effects from exposure to electromagnetic fields from telecommunications equipment, various human factors related to psycho-social risks and to personal safety, fiscal and regulatory constraints and changes, the results of litigation regarding in particular regulations and competition, the terms of access to capital markets, interest rate or exchange rate fluctuations, Orange’s credit ratings, changes in assumptions underlying the carrying value of certain assets and resulting in their impairment, and credit risks and/or counterparty risks on financial transactions. More detailed information on the potential risks that could affect our financial results is included in the Registration Document filed on April 4, 2018 with the French Autorité des Marchés Financiers (AMF) and in the annual report on Form 20-F filed on April 4, 2018 with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. Other than as required by law, Orange does not undertake any obligation to update them in light of new information or future developments. 2 2
Section one H1 2018 highlights
H1 2018 Revenue Adjusted EBITDA* € 20.3 bn € 6.0 bn Group achievements +1.7% +3.3% +1.2% +1.2% +2.2% +2.1% FY’17 FY’17 H1’18 FY’17 FY’17 H1’18 yoy : comparison with the same period of the previous year, on a (IAS18) (IFRS15) (IAS18) (IFRS15) comparable basis unless otherwise specified All Group level mentions include both telecom and banking activities. Conversely, all mentions excluding Orange bank are explicitly called “Telecom” * see slide 24 for EBITDA adjustments Adj. EBITDA Adj. EBITDA CAPEX OpCF telecom telecom margin 3.4 +2.9% +3.9% +0.6pt € billion yoy yoy yoy 4
Solid commercial VHBB customers 4G customers* in million in million momentum driven 5.5m 50m by VHBB and 4G +37% yoy +38% yoy 5.5 50 48 5.1 46 4.8 43 4.3 36 4.0 3.7 33 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 VHBB > 100 Mbps TV in million 9.2 Broadband Mobile contract 9.1 9.0 customer base customer base customer base 8.9 yoy growth 8.7 yoy growth yoy growth +6.3% +3.7% +8.2% Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 5 * excluding operations under equity method
Convergent B2C customer base in million Convergence, % of broadband B2C customer base France Spain Poland the bedrock of 6.10 3.14 3.13 1.14 3.09 3.09 3.08 6.04 1.09 our strategy 5.98 1.03 86% 5.85 60% 54% 0.95 83% 5.71 0.86 58% 43% € 3.5 bn Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Convergent services revenues in H1 Churn improvement with convergence in Q2* +12.4% yoy -3pts -6pts -4pts Quarterly convergent ARPO, in € /month in Q2 € 63.8 € 58.1 € 24.0 +3.2% yoy +0.8% yoy -2.5% yoy** Number of mobile lines per convergent offer ( Q2 yoy growth) 1.56 1.87 1.92 +3.1% yoy +1.7% yoy +2.8% yoy * Churn differential between convergent B2C customers and total fixed BB B2C customers 6 ** YoY evolution calculated in local currency
Sustained 4G coverage investment Population covered in %, yoy evolution in pts efforts to keep 99.7% 98% 97% 95% 91% 99.8% 98% our competitive +0.1pt +6pts +4pts +8pts +10pts advantage in Belgium France Spain Romania Slovakia Poland Moldova connectivity VHBB connectable homes* yoy 12.7 m Spain +19% Telecom yoy H1 2018 CAPEX 10.3 m +3.8% France +30% € 3.4bn + € 124m As % of rev. 2.9 m + 3.7% yoy Poland +49% 16.5% + € 119m yoy +0.3pt yoy * VHBB > 100 Mbps 7
Section two Financial results overview
Revenue kept Q2 revenue growth contribution (yoy in € m) growing Fixed only narrowband +60 -72 Fixed only broadband & others -13 +47 -38 +141 -13 +169 Convergence Mobile only IT & integration Fixed only Wholesale Equipement Q2’18 services services sales & others growth Q2 2018 H1 2018 Q2 yoy revenue growth Q2 services revenue growth excl. yoy yoy H1 2018 Equipement sales & ePresse/Audio +1.4% +1.7% Books revenue* +5,2% MEA + € 141m + € 338m +1.3% yoy +1,8% Spain € 20.3bn +1,3% Enterprise +50bps vs Q1 growth France +0,6% at +0.8% +0,3% Europe * Orange Bank Net Banking Income is not included in Group revenues but in “Other operating income”, that is below the IC&SS -5.9% revenue line and feeds directly into consolidated Adjusted EBITDA. 9
Adj. EBITDA H1 Adjusted EBITDA growth per segment Telecom, yoy, in m € growth driven -21 57 -30 6,043 -12 by revenue and 72 cost control 159 5,819 H1 2017 France Spain MEA Europe Enterprise Others H1 2018 cb Q2 2018 H1 2018 +159 € 3bn yoy yoy H1 2018 +3.4% +3.9% +39 Cost decrease Adj.EBITDA* Gross oss savi vings ngs target get + € 113m + € 225m (Telecom) already y achieve ved € 6.0bn As % of rev. As % of rev. +120 Revenues growth € 476m gross saving in H1 33.5% 29.8% +0.7pt yoy +0.6pt yoy € 325m OPEX H1 18 * See slide 24 for EBITDA adjustments. Adj.EBITDA growth drivers in France 10
Net income + € 155m improved 116 879 -167 267 thanks to -61 724 EBITDA growth 1 2 H1 17 Net Reported D&A, income tax Impairment of Financial result H1 18 Net income EBITDA cb paid & others goodwill & assets income consolidated consolidated Group Group yoy H1 2018 +21.4% Net income + € 155m € 0.9bn 1. Adjusted EBITDA improvement yoy and less EBITDA adjustments* than in H1 2017 2. Positive effect resulting from H1 2017 loss on BT shares 11 * Refer to slide 24
Net debt to Net debt* – telecom activities ( € bn) Net Debt/Adjusted EBITDA Telecom Adjusted EBITDA 25.3 24.6 23.8 ratio in line with the medium term 1.87x 1.96x guidance H1 2017 FY 2017 H1 2018 Maturity profile** as of 30 June 2018 - telecom activities Liquidity position (telecom activities) in € bn, bank loans & others € 13.1 bn 15.4 15.4 exchangeable bonds bonds o/w € 7bn in cash 4.9 4.9 3.6 3.6 14.3 2.2 2.2 2.0 2.0 1.8 1.8 0.6 4.4 2.5 1.5 1.3 1.5 H2 2018 2019 2020 2021 2022 >2023 * see details on slide 27; ** after hedging 12
Section three Business review
Q2 2018 France 5 th consecutive quarter of total revenues growth, driven by convergent services in € m Q2 18 yoy cb H1 18 yoy cb +0.6% +1.4% Convergent B2C ARPO Revenues 4,460 8,952 +1.6% +2.6% Retail services 2,723 5,483 Quarterly ARPO in € ePresse/Audio Book 65.1 64.8 Convergent services* 1,096 +11.4% 2,196 +13.1% 63.8 62.5 -2.7% -1.8% Mobile only services 584 1,183 61.8 +0.3 cts -4.7% -4.3% Fixed only services 1,043 2,105 +0.7% +1.3% Fixed only broadband 638 1,281 405 -12.2% 824 -11.8% Fixed only narrowband Wholesale 1,322 -1.3% 2,615 -2.1% +5.3% Equipment sales 293 -0.9% 611 +3.6% +3.0% Other revenues 121 242 +5.1% Adjusted EBITDA 3,266 36.5% 1.3pt Adjusted EBITDA margin CAPEX 1,669 +3.6% Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 18.6% 0.4pt CAPEX/revenues *B2C only Revenue evolution (in € m) Mobile only ARPO Broadband only ARPO -16 Quarterly ARPO in € Quarterly ARPO in € +4 ePresse/Audio Book ePresse/Audio Book -56 17.2 17.2 17.2 39.0 39.0 38.7 +112 16.9 +0.1ct 16.8 37.8 4,460 -16 37.7 +0.4cts 4,432 Retail services excl. PSTN +4.5% yoy Q2 17 cb Convergent Mobile Broadband PSTN Wholesale, Q2 18 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 only only Equipment 17 17 17 18 18 17 17 17 18 18 14 & Other
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