Orange US$ bonds issuance

Transcription

1 Orange US$ bonds issuance roadshow materials Orange S.A. has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling J.P. Morgan Securities LLC, toll free at ; Deutsche Bank Securities Inc, toll free at ; RBS Securities Inc, toll free at ; Merrill Lynch, Pierce, Fenner & Smith Incorporated, toll free at ; Mitsubishi UFJ Securities (USA), Inc, toll free at

2 agenda 1. Orange at a glance 2. commercial agility and delivering on cost efficiency 4. managing a sound balance sheet 5. appendix 2

3 Important Information Forward looking Statements This presentation contains forward-looking statements. This information is sometimes given in the future or conditional tenses, or referring to future time periods, or using words such as ongoing, delivering, expectations, confirmed, increasing, improvement, ramping up, leading, accelerating, preserve, guidance and continued. Although we believe these forward-looking 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 by us to be material, and there can be no guarantee that anticipated events will occur or that the objectives set out will actually be achieved. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include our ability to withstand intense competition within our sector and to adapt to the ongoing transformation of the telecommunications industry, in particular in France with the arrival on the market of a fourth mobile operator; fluctuations in general economic activity levels and in the level of activity in each of the markets in which we operate; the political situation in the countries where we invest; the emergence of new powerful players, such as content and service suppliers or search engines; our ability to obtain a return on our investments in our networks; fiscal and regulatory constraints and changes; conditions for accessing the capital markets, in particular risks related to financial market liquidity; exchange rate or interest rates fluctuations; asset impairments; and results of current or future litigation. More detailed information on the potential risks that could affect our financial results can be found in our Annual Report on Form 20-F filed with the U.S. Securities and Exchange Commission on April 12, See also below for more information regarding our registration statement on file. Orange does not undertake any obligation to update any forward-looking statements or other information contained in this presentation. Other Information This presentation is confidential and is being provided to you solely for your information and may not be reproduced, transmitted, sent or distributed to any other person or published, in whole or in part, by any medium or in any form for any purpose. Failure to comply with such limitations may result in a violation of applicable law or regulations. The opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice. For the purposes of this presentation, Orange has also relied on information obtained from sources believed to be reliable but Orange does not guarantee the accuracy or completeness of such information. The information in this presentation is subject to verification, completion and change. In giving this presentation, neither Orange nor its respective advisers and/or agents undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in any such information which may become apparent. Registration Statement on File Orange S.A. has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling J.P. Morgan Securities LLC, toll free at ; Deutsche Bank Securities Inc, toll free at ; RBS Securities Inc, toll free at ; Merrill Lynch, Pierce, Fenner & Smith Incorporated, toll free at ; Mitsubishi UFJ Securities (USA), Inc, toll 3 free at

4 agenda 1. Orange at a glance 2. commercial agility and delivering on cost efficiency 4. managing a sound balance sheet 5. appendix 4

5 Orange has a diversified portfolio of activities and a footprint with complementary dynamics FY billion restated EBITDA* 5.8 billion CAPEX* With revenues amounting to 43.5bn in 2012, Orange is today one of the top ten worldwide telecom operators 5 * Non-GAAP figure. See Glossary of Non-GAAP financial measures.

6 Orange has expanded globally and built a leading position over a balanced footprint the Group invests in Egyptian operator Mobinil 1999 Creation of France Telecom S.A. as a public sector operator on January 1, 1991 first opening-up of the company's capital. IPO of 25% of the company 1998 sale of additional stake by the French State and capital increase. State holding ~62% 2000 creation of Equant, in which France Telecom holds 54.2% acquisition of the mobile telephone operator Orange, a brand created in completion of the acquisition of 49% of Telekomunikacja Polska S.A the French government is no longer the majority shareholder of France Telecom 2013 capital increase to acquire 80% of Spanish mobile operator Amena. French State stake at 33% Orange UK and T-Mobile merge and become Everything Everywhere (later rebranded as EE) disposal of Orange Switzerland expansion in AMEA Region (Morocco, Congo, ) the whole Group becomes Orange 6

7 governance framework Stéphane Richard, Chairman and CEO Gervais Pellissier, CEO delegate and CFO shareholding structure as of Dec 31, 2013 Board of Directors 15 board members 3 board committees Independent members Employees representatives Representatives of French State and affiliates Representative of the employee shareholders Audit committee Governance & CSR committee Strategy committee 7 Executive committee 12 executive members 7 main governance committees

8 agenda 1. Orange at a glance 2. commercial agility and delivering on cost efficiency 4. managing a sound balance sheet 5. appendix 8

9 2.1 commercial agility: accelerating commercial momentum 9

10 acceleration of commercial momentum in our major geographies* contract net adds (excl. M2M) (in thousands) convergent broadband base (in millions) Q1 12 Q2 12 Q3 12 France Q4 12 Spain Q1 13 Poland Q2 13 total Q3 13 France best mobile contract net adds in France over the last 3 years (+414k and +298k excl. M2M) contract quarterly churn rate down -2.3pt yoy fiber take-off confirmed in France supporting a 27% share of broadband net adds Spain record mobile contract net adds since Q4 10 (+179k or +71% yoy) driven by new portfolio of offers best ever broadband net adds (+83k) driven by convergence Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 France Spain Poland Poland strong mobile net adds in Poland (+179k) both Nju and Open customer bases > 200k RoW +47k contract customers in Romania thanks to smartphone push +452k mobile customers in Q3 in Egypt UK +493k 4G customers in Q3, leading to ~1.2m end of September 1. confirmed success of convergent offers 2. efficiency of our commercial segmentation between SIMO and subsidies +7% increase in Group mobile contract base (excl. M2M) year-on-year 10 * Information presented as of end of September 2013.

11 strong 2013 commercial momentum in France with 4G take off confirmed more than 1 million 4G customers at the end of 2013 mobile contract net adds excl. M2M evolution of 4G supports* 4G coverage in % of pop Q1 Q2 Q3 432 Contract net adds 2013 (k) Contract net adds Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 sustained improvement of broadband conquest share PSTN lines loss decelerating, accelerating FTTH net adds 41.3% 41.0% 40.9% 40.8% % 15.8% Q4 12 Q1 13 broadband M/S 27.9% ~27% Q2 13 Q3 13 broadband net adds M/S Q Q3 13 FTTH PSTN only naked DSL & other PSTN&ADSL * source ANFR

12 2.2 ongoing cost reduction with increased contribution from indirect costs 12

13 Costs reduction and CAPEX** improvements across operational efficiency FY12 ~ 11bn Direct Costs** interconnection costs commercial costs* content costs & other smart dimensioning of commercial offers FY12 ~ 19bn Indirect Costs** general expenses network related costs real estate advertising & promotion operating taxes & levies labor other Senior Part Time 13 *excluding advertising & promotions ** Non-GAAP figure. See Glossary of Non-GAAP financial measures.

14 delivering on cost efficiency 2013 initial goal of 600m cost base decrease already achieved in Q3 Cost reduction target for 2013 increased to ~ 900m yoy change in Group Opex* in m indirect costs direct costs -617 Q1 13 H1 13 9m 13 Opex * total Opex* down 176m in Q3, compensating >40% of revenue erosion despite maintaining commercial investments o/w c. 120m in France with substantially lower savings from interconnection than in H1 indirect costs down - 68m in Q3, o/w labor costs down 42m driven by -5.1k average FTE s yoy in Q3 as a result, the share of decrease in revenues that is offset by opex reduction is consistently improving, thereby improving trend in EBITDA margin recovery 14 * Non-GAAP figure. See Glossary of Non-GAAP financial measures.

15 headcount evolution already leading to cost reduction cumulated change in Group* headcount since end of k -0.3k -1.0k +0.1k 0.0k -1.8k -0.9k -2.7k -2.7k -1.8k ongoing improvement in French employee satisfaction 79% 84% 88% 90% 92% -0.2k -4.7k Q1 13 H1 13 9m 13 Jun-10 Jun-11 Jun-12 Jun-13 Dec-13 France Poland Others 15 Group headcount decreased by -2.8% over 9 months Estimate** of a number of employees reaching retirement age of ~30,000 by 2020 This figure is a significant portion of our workforce of 165,779 employees as of Q * figures by geographies ** as of today and under current legal framework

16 2.3 investing in growth and value 16

17 networks strategy aiming at strengthening commercial performance while improving cost-efficiency investing in value where network differentiation matters increasing network agility where network differentiation is less critical France UK VHBB Mobile Mobile 2.6m FTTH homes connectable end of G population coverage c.50% end of 2013 Optimal portfolio of frequencies: to manage data consumption and coverage First to launch 4G in Europe end of million 4G customers 4G population coverage over 60% end 2013 Network RAN Sharing Targets Examples expected benefits of mobile sites sharing better coverage at lower cost savings on operating costs France Poland Spain Romania coverage of rural areas (2G & 3G) with SFR and Bouygues Telecom JV with T-Mobile network sharing deal with Vodafone network sharing deal with Vodafone Spain VHBB Mobile 800k FTTH homes connectable by end of Q % of population covered in 4G end of 2013 TowerCo Cameroon, Ivory Coast... and new opportunities under study sustained investment in VHBB (FTTH/VDSL and 4G) to consolidate network leadership while improving cost efficiency 17 * Group (excl. minority interests and EE)

18 2.4 solid balance sheet 18

19 Orange has the necessary levers to preserve a strong balance sheet 1 acceleration of 2 marketing 3 ongoing reduction 4 commercial segmentation & in direct and indirect momentum quadruple play costs decreasing pressure of regulation supporting EBITDA generation 5 careful and selective 6 majority of 7 8 balanced M&A policy, focus on spectrum needed for dividend existing footprint including 4G offers acquired by policy potential disposals end of 2013 hybrid bond issuance preserving strength of Group s balance sheet 19

20 agenda 1. Orange at a glance 2. commercial agility and delivering on cost efficiency 4. managing a sound balance sheet 5. appendix 20

21 continued deleveraging and extension of average maturity of Orange Group s net debt bn ,8 61,0 63,4 4,6 68,0 4,0 44,2 6,0 49,8 5,6 47,8 6,4 6,7 42,0 7,1 38,0 7,5 35,9 9,0 9,0 9,0 8,5 7,3 32,5 31,8 30,9 30,5 29,6 years ,6 2, H year-end net debt net debt average maturity 21

22 bond diversification and smooth repayment profile well spread bond debt maturities for Orange SA m EGP JPY HKD CHF CAD GBP USD EUR rebalancing of Orange Group debt outside euro zone debt by curr. (before swaps) - Dec debt by curr. (before swaps) - Dec % 1% 6% 11% 70% EUR USD GBP CHF others 16% 3% 8% 22% 51% EUR USD GBP CHF others 22 no dependence on bank debt conservative financing management supported by strong liquidity position of 15.6bn end of 2012 ( 7.2bn available credit facilities and 8.4bn available cash and cash equivalents)

23 Orange rating vs peers as of 28 January 2014 A3 Telenor VOD TeliaSonera Moody s rating Baa1 Baa2 KPN T. Austria TEF DT Orange Ba1 Baa3 T. Italia BB+ BBB- BBB BBB+ S&P rating A- 23

24 24 Appendix

25 appendix A: glossary VHBB FTTH VDSL Very High Broadband connection by optical fiber directly to the subscriber s home ensuring very high-speed transmissions compatible with triple play packages. Very high bit-rate DSL: network technology involving the creation of new network nodes, which are not the distribution frames for existing telephone lines, closer to end customers. These nodes, which are linked by optical fiber to the distribution frames, host the DSLAM and can receive VDSL modems. The final section going from these network nodes to subscribers is still made up of copper wires. PSTN DSL ADSL Public Switched Telephone Network: voice transport network consisting of handsets, subscriber lines, circuits and switches. It is also used to access some data services. Digital Subscriber Line: technologies enabling the use of copper cables connecting subscribers of Public Switched Telephone Networks so as to enable broadband transfers of digital packets. Asymmetrical Digital Subscriber Line: broadband data transmission technology on the traditional telephone network. It enables broadband data transmission (first and foremost Internet access) via paired copper cable (the most common type of telephone line found in buildings). SIMO SIM Only FTE Full Time Equivalent M2M Machine to Machine: exchange of information between machines that is established between the central control system (server) and any type of equipment, through one or several communication networks. 25

26 appendix B: Non-Gaap measures (1/2)* restated EBITDA CAPEX Direct Costs Indirect Costs Opex i) operating income before depreciation and amortization, before re-measurement resulting from business combinations, before reclassification of cumulative translation adjustment from liquidated entities, and before share of profits (losses) of associates, ii) less non-recurring items capital expenditures on tangible and intangible assets excluding telecommunication licenses and excluding investments financed through finance leases Includes: interconnection costs, commercial expenses and content costs Includes: labor expenses, other network and IT expenses, property & general expenses. Defined as revenues minus restated EBITDA. * For more information about Non-Gaap measures and the calculation of certain Gaap equivalents, please refer to our report on Form 6-K filed with the SEC on January 30, 2014, containing, among other information, our condensed consolidated interim financial statements and operating and financial review for the period ended June 30, 2013 and further information about recent developments in our business. 26

27 appendix B: Non-Gaap measures (2/2) FY2012 Q1'2103 Q2'2013 Q3'2013 in m Actuals var yoy Actuals var yoy Actuals var yoy Actuals var yoy Revenues 43,515-1,188 10, , , Interconnection costs -3, Commercial expenses -5, , , , Content costs Other -1, Direct Costs -10, , , , Labor costs -9, , , , Other ITN6 costs Other ITN costs -2, General expenses -1, Property expenses -1, Operational taxes and spectrum expenses -1, Advertising costs -1, Other Indirect Costs -18, , , , Restated EBITDA 13,785-1,095 3, , , yoy change in Group Opex yoy change in Group Opex (cumulated)

28 appendix C: important information Orange S.A. has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling J.P. Morgan Securities LLC, toll free at ; Deutsche Bank Securities Inc, toll free at ; RBS Securities Inc, toll free at ; Merrill Lynch, Pierce, Fenner & Smith Incorporated, toll free at ; Mitsubishi UFJ Securities (USA), Inc, toll free at