#Q1_2015 Orange financial results Ramon Fernandez Deputy CEO, Chief Financial and Strategy Officer 28th April 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 relations when facing competition with OTT players, Orange’s ability to withstand intense competition in mature markets and business activities, its ability to capture growth opportunities in emerging 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 resulting in particular from cyber-attacks, technical failures of or damage caused to networks, loss or theft of data and fraud, health concerns surrounding telecommunications equipment and devices, 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 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 changes in assumptions underlying the carrying amount value of certain assets and resulting in their impairment. 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 7, 2015 and in the annual report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 14, 2015. 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. 2 Q1 2015 results, 28th April 2015
1 Q1 2015 highlights
revenue EBITDA* € 9.7bn € 2.9bn -0.9% yoy -1.9% yoy -0.3% ex reg yoy 30.1% of revenues Capex mobile net adds € 1.2bn +2.9m Q1 2015 qoq 12.3% of of which +0.7m achievements revenues contract yoy : comparison with the same period of the previous year, on a comparable basis qoq : comparison with the previous quarter, on a comparable basis * in this presentation, EBITDA stands for restated EBITDA unless otherwise specified, see slide 25 for EBITDA restatements 4 Q1 2015 results, 28th April 2015
Sustained commercial performance across the Group 4G 4G customers FTTH FTTH customers in millions in thousand +0.8m 4.5m France +75k France 638k in Q1 15 in Q1 15 +0.6m 2.9m Spain in Q1 15 x2 Spain 113k +0.3m 0.9m in Q1 15 Poland in Q1 15 +0.1m 0.6m Belgium in Q1 15 +0.1m 0.5m Romania in Q1 15 +0.1m Slovakia 0.3m in Q1 15 Africa & Middle East Enterprise 101m cloud services +26% +3.1m Q1 15 yoy revenue growth mobile customers in Q1 15 13.3m +0.7m security services +30% Orange Money customers in Q1 15 Q1 15 yoy revenue growth 5 Q1 2015 results, 28th April 2015
Confirmed improved revenue trend in Europe & sustained growth in Africa and the Middle-East by activity 1.0% 1.0% Q1 2015 Q1 2014 -0.9% -0.9% -3.8% Q1’15 revenue -1.8% € 2.0bn enterprise & others yoy cb yoy cb -3.2% € 9.7bn -0.3% -3.0% -2.0% € 1.8bn fixed legacy & other fixed -2.3% -2.4% ex. reg. ex. reg. -3.9% -4.2% 2.1% 2.0% 1.9% € 1.4bn fixed BB 1.7% 0.9% IC&SS € 0.4bn mobile equipment sales € 462m Enterprise € 1,546m 28.1% 15.9% 16.0% 17.1% 9.8% France revenue Africa & Middle-East € 4,722m € 4.2bn mobile services by segment € 1,124m Other European countries € 396m -2.8% -4.9% -3.1% Bel+Lux -6.9% -7.3% € 302m Poland Spain Q1 Q2 Q3 Q4 Q1 Q1 2015 € 699m € 928m 2014 2015 6 Q1 2015 results, 28th April 2015
EBITDA decrease halved in absolute value with maintained efforts on cost savings Q1 2015 Q1 2014 EBITDA -1.9% -3.8% evolution 2,916 -90 Q1’15 EBITDA yoy cb yoy cb (in € m) +71 € 2.9bn 2,971 -37 - € 55m - € 120m 30.1% of rev . yoy cb yoy cb Q1’14 cb revenues direct indirect Q1’15 costs costs Group average FTE* down -4.1%** yoy focus on Q1’14 +114 +71 indirect cost Q1’15 Sustained efforts savings excluding Africa and the on indirect cost +13 3 (yoy change in € m) +13 0 Middle-East savings excl. AME 88.9k 55.9k Africa and the Increase in AME to -59 -4.2% -19 Middle-East -4.0% support growth Q1 2014 cb Q1 2015 France international * Full Time Equivalent ** comparable basis; -6.6% historical basis, mainly due to Kenya and the Dominican Republic 7 Q1 2015 results, 28th April 2015
Increased CAPEX on FTTH to support future growth Q1 2015 Q1 2014 homes FTTH connectable +3.0% +1.6% Q1’15 CAPEX +0.3m yoy cb yoy cb 3.9m France in Q1 15 € 1.2bn +0.1m 0.9m Spain in Q1 15 12.3% of rev . +28k 0.1m Poland in Q1 15 4G coverage in % of pop. +2pts -32 € 1,190m 76% France in Q1 15 +9 +57 +3pts 73% Spain in Q1 15 € 1,156m +11pts 72% Poland in Q1 15 +4pts 92% Belgium in Q1 15 +3pts 65% Romania in Q1 15 Q1 FTTH 4G Other Q1 2015 2014cb VDSL capex 8 Q1 2015 results, 28th April 2015
2 business review
Q1 2015 France financials Better revenue trend with fixed and mobile ARPU decrease slowing down change Q1 14 Q1 15 better mobile revenues trend confirmed in Q4 cb actual yoy cb in € m customer base mix continued to improve supported by 4G/4G+ network coverage – revenues 4,810 4,722 -1,8% improved customer loyalty with the lowest contract churn rate since 2010 (14.2%) – excl. regulation -1,6% European roaming tariffs cut negatively impacted revenues and EBITDA – mobile services 1,948 1,854 -4.8% mobile equipment revenues growth – 119 mobile equipment 149 +24.9% fixed services benefiting from VHBB dynamism fixed services 2,608 2,578 -1.1% growing BB customer base (+2.8% yoy) supported by FTTH (+75% yoy) – other revenues 136 141 +4.1% convergent offers success continued, negatively impacting BB ARPU (-1.4% yoy) – wholesale increase due to volume effect of unbundled lines and fiber growth – -1.3m PSTN lines lost (-12.5% yoy) vs. 1.5m in 1Q14 yoy – Quarterly revenues evolution (% yoy) Broadband ARPU evolution (annual rolling, % yoy) Fixed BB revenues +1.1% yoy (+ € 11m) -1.4% -1.4% Fixed wholesale revenues -1.8% -1.8% -2.0% -2.1% +5.1% yoy (+ € 48m) -2.5% -3.1% Mobile ARPU evolution (annual rolling, % yoy) ÷ 2 -4.2% Mobile services revenues decrease -5.0% divided by 2 in Q1’15 -6.4% (- € 94m vs. - €209m in Q1’14) -7.2% -8.9% -9.2% -7.0% -10.4% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 10 Q1 2015 results, 28th April 2015 Q1 2015 results, 28th April 2015
Q1 2015 France mobile KPIs Strong mobile contract momentum with improving loyalty yoy +16 pts contract net adds excl. M2M (in ‘000s) contract churn rate 91% of customers repriced on post April 2013 tariff plan +3 pts 19.4% 19.0% 18.5% 17.6% 16.3% 15.5% 15.2% 14.8% 14.2% 61% of consumer voice contract are on premium* offers +7 pts 42% of consumer voice contract are on Open offers +298 +12 pts +256 39% of consumer voice contract are on SIM-only offers +240 +219 4G 4.5 4.5 +166 +164 customers 3.7 in millions 2.7 2.0 +85 1.4 +59 1.0 0.3 0.1 Q213 Q313 Q413 Q114 Q214 Q314 Q414 Q115 -83 7,262 75.5% 17 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 4G activated coverage in towns covered sites % of pop. with 4G+ * Origami & Open 11 Q1 2015 results, 28th April 2015 Q1 2015 results, 28th April 2015
Q1 2015 France fixed KPIs FTTH accelerating BB customer base growth 10.421m FTTH net adds (in ‘000s) ADSL* net adds (in ‘000s) BB conquest share +2.8% yoy broadband customers 31.0% ~ 25%** 15.5% 27.5% 27.1% 21.9% 10.8% 19.5% 33.1% FTTH 638k customers +74.8% yoy +7 pts yoy +95 47% of BB customers have a 4P offer +85 85 +67 +71 +7 pts yoy +62 37% of BB customers are on premium*** offers +35 49% +31 +3 4 +8 2 +65 +41 +41 of FTTH net adds are +45 new customers +75 +3 0 +3 3 +50 +47 3.932m +3 6 +20 +17 +13 +1.2m yoy +11 +8 -8 -16 -15 FTTH homes connectable 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 12 * and others (satellite…) ** Orange estimates *** Play and Jet Q1 2015 results, 28th April 2015
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