Press & Investor Day 2015

Transcription

1 ORANGE Press & Investor Day March 2015, Grand Palais, Paris Transcription English Table of Contents Introduction and Overview... 2 Stéphane Richard... 2 Digital revolution... 2 Orange s strengths... 3 Launch of the ESSENTIELS2020 plan levers of action... 4 Offering enriched connectivity... 5 Reinventing the customer relationship... 8 Building a company model that is both digital and caring... 9 Supporting the transformation of business customers Diversifying by capitalizing on our assets New identity of our brand Financial Presentation Ramon Fernandez Investment Programme Sales Growth Cost Reduction Financial Position Essentiels Stéphane Richard Q&A Session Concluding Remarks Stéphane Richard... 33

2 Introduction and Overview Stéphane Richard Chairman and Chief Executive Officer Good morning everyone. Thank you for attending this very special day for Orange. Today, I am about to present our new strategic plan, which will guide our actions until It follows up our Conquests 2015 plan, launched in July Thanks to Conquests 2015, we have seen many success stories come to life despite a tough environment. But we did succeed, thanks to bold choices and a meticulous cost management. Building on these achievements, as illustrated by our outstanding commercial performance in 2014, we are now much better armed to write a new page of Orange s story. I am pleased to present our new strategic plan with the Executive Committee by my side. They have been fully committed in setting up this plan with me and I want to thank them all. This plan is the result of hard collective work. We have discussed it extensively for some time now, and we are ready and excited to implement it together. Digital revolution Let s now switch to French to discover it. Because it changes our behaviours, disrupts hierarchies, enriches our imagination, the digital revolution has completely changed our world, our relationship with the world, our openn ess to the world. Of course, it has also given rise to new expectations, such as the need for connectivity, which is now virtually vital. Our smartphone has become an indispensable part of our daily lives: on average, we consult it 150 times a day, and spend nearly 2.5 hours looking at it! And this is just an average. Some take that further. But this revolution has also given rise to new requirements. As we each live in our own way, depending on our profile, according to our tastes, our particularities, we expect offers and services to be as flexible and adapted to our needs as possible. Therefore, the challenge is not only to offer a high-performing network, "ready-to-connect" for everyone, but to offer services that take into account the reality of the digital life of each person. We must therefore respond to the new aspirations of our customers for a secure and seamless connectivity, greater customisation, while enjoying, of course, a good price/quality ratio. Good value for money. These expectations go hand in hand with the extension of the digital experience. The generalisation of video on the Internet and the growing appetite for content have led to a boom in mobile network traffic, with a 50% rise in traffic every year. It also involves the doubling of the number of screens in households, from 6 screens on average in 2014 we are going to have 13 screens in 2022, with increasingly less differentiated fixed/mobile uses. And finally, there is a new and significant trend: the emergence of connected objects, which are on the verge of becoming a huge part of our lives in an increasing number of areas. This a new era is about to begin: the "Internet of things". It is estimated that there will be more than 25 billion connected objects in the world in The networks are therefore more than ever an activity of the future! 2

3 This evolution involves a two-fold challenge: a technical challenge to cope with this explosion of uses, and an economic challenge for the monetisation of data. There are new expectations with more and more usages but our industrial environment is changing. There has been a continuous increase in competition. We are still in competition with the other telecom operations, including the cable operators who are now fully present on telecom services, strengthened by several mergers in Europe, as in France with the takeover of SFR by Numericable. This is in a context where the European markets are massively evolving towards the fixed-mobile convergence with swift technological cycles on mobile with the 4G and soon the 5G, and on fixed with fibre. Regulations are, of course, very present in our mind, but are starting to change. The public authorities and regulators are becoming aware of the need for investment and are slowly starting to revise their approaches, by giving more room to investment incentives. In France, this was reflected by a slight increase in the unbundling tariffs (after an uninterrupted drop ever since this was set up) and by wholesale prices on optical fibre incorporating a premium for the primary investor operator. Following this same rationale, the authorities in charge of competition now accept intra-country consolidation operations, such as in Germany, Ireland or Austria. They have understood that the aim of consolidation operat ions is not to raise prices, as competition remains very high, but to better amortise investments quite simply. Although they impose significant remedies, there is no longer a dogma on having a minimum of 4 network operators per country. However, apart from the competition between operators, we are also seeing the development of a new form of competition from over-the-top or OTT platforms. Of course, these actors are partners with which we create value for our customers. However, we must not be naïve. We must remain vigilant on the temptations and open strategies of the commoditisation of access. Here again, the European and national authorities are becoming increasingly aware of the need for equal regulatory, competitive and tax treatment between OTT and operators, even if this is not always easy to put in place. This is the challenge of the level playing field and we have been fighting for that in Brussels. Orange s strengths In this context, Orange has many strengths. First of all, the commitment of our employees and strong proximity with 6,500 shops across the group. Powerful networks, which are reliable and of increasingly high speed, with fibre, 4G and also our submarine cables. Thirdly, we have a strong capacity for innovation which is reflected in commercial success, as evidenced by our mobile finance offerings Orange Money in Africa and Orange Finanse in Poland or Homelive in France, our connected home offer. Finally, we have a leading brand, Orange, which is recognised internationally on the values of quality and confidence over the world. With these strengths, Orange can provide digitalisation, which penetrates all areas of life: family, home, well-being and health, entertainment, work. This is a unique opportunity for Orange, because it places connectivity and operators at the heart of uses. It is a unique opportunity, but there is one condition to be met: we must meet the aspirations of our customers. Our mission is strong, clear, and assumed: the role of Orange is to be "always in touch" to connect each person to what is essential in their life. This new approach is the cradle of our reflection. Instead of thinking on the basis of our technologies, our propositions, our 3

4 networks, we now wish to adopt the points of view of our customers to offer each person the best experience on a daily basis, for our individual customers as well as for our B2B customers. What we promise our customers is not only technologies; it is a "service rendered" from end to end, with the greatest simplicity of use possible. Launch of the ESSENTIELS2020 plan It is therefore entirely natural that at the time of choosing the name for this new strategic plan, I wanted a name that reflects something that focuses on the essential needs of our customers, and which also marks the focus of the entire business and of management. A name which also sets a goal, a clear horizon of 2020, as our actions, our investments, the dynamics we are now launching are intended to be sustained over the long-term. I am therefore very pleased to launch our Essentiels2020 plan. For this strategic plan, we have a central, exacting and strong ambition: to offer each of our customers an unmatched experience. What is an unmatched or incomparable customer experience? First, we must start to be excellent on what I call the "basics". This ability to communicate and to be connected at all times and in all places that are important to our customers. This is the primary expectation of our customers, and we owe it to them to be exemplary. The quality of service they perceive must be perfect at every moment of the day, whether at home or in their place of work, during their daily travel or in public transport. But we don't want to stop there. We want to go as far as creating enchantment to surprise our customers. This will take place, in particular, through a sophisticated and unprecedented customisation of services and offers. Each customer will be recognised in all his or her interactions with Orange and accompanied in his or her digital life. Every day, Orange will be there to meet his or her expectations and even to anticipate customer needs. Finally, thanks to innovation and by always being on the cutting edge, we will make our customers discover new digital uses to enrich their daily lives and make their li ves easier. The historic role of Orange has always been to popularise new technologies to the greatest number of people. In the era of the digital revolution, this role has become even more significant. We want to offer this unmatched Orange experience to all our customers, wherever they may be. Our international strategy is very clear; it has not changed. Our playing field is Europe, Africa and the Middle East, and throughout the world for our major corporate customers with OBS. In Europe, we continue our path towards convergence in all countries, particularly after the takeover of Jazztel in Spain and the transfer of EE in the United Kingdom. Africa and the Middle East remain a growth territory for us. The constitution of a holding company for our operations in this region will give us greater room for manoeuvre to develop our business. 5 levers of action For this Essentiel2020 plan, I have decided to place all of the Company's resources at the service of a single goal. The entire Orange Group teams and management will focus on this goal, which will guide each of our actions. That objective consists in offering all our customers an unmatched experience the Orange experience. 4

5 We are going to implement 5 levers to achieve this goal. First of all, the customer experience begins with the quality of the network, and for this we are going to offer our cus tomers an enriched connectivity. We are then going to reinvent the relationship we have with our customers. We are going to mobilise all our employees around a new company model that is both digital and caring. We are going to support the transformation of our business customers by offering not only connectivity, but a high standard of service, by constantly adapting ourselves to the evolution of its activities. Finally, we are going to diversify by offering new services to our customers, in an extremely targeted way, where we can create value by capitalising on our assets, and in 2 areas on which we are legitimate and expected by our customers: mobile banking and connected objects. To make all this possible, we must embark on a business dynamic: a digital business dynamic, of course, but also a more and more effective business dynamic that is also more responsible. We are going to use digital tools and the digitalisation of our internal and external processes, by integrating the tools of Big Data, the Cloud and the opening of our APIs. We are going to continue to work in an open innovation mode. Also we shall continue with our Chrysalid operational efficiency programme, for which we set the same level of ambition as for the previous period. Finally, we will simplify our organisation to have less layers in the hierarchy and more decentralisation. We will reach our goals respecting social performance and by being an ethical company, respectful of the ecosystem and the environment in which we operate. Providing an enriched connectivity Let us now move to the first lever of the Essentiels2020 plan: an enriched connectivity. The Orange experience will firstly be based on an enriched connectivity for all our customers in all our markets. Because what counts most for all our customers is quality, and the network performance as they perceive in their main places of life and their daily travel. This involves access to first-rate infrastructures. We are already the leader in the deployment of fixed and mobile broadband in most of our countries. We want to broaden that gap. That is why we will invest over 15 billion in our networks between 2015 and This investment effort will be carried out in a targeted way. First, with a clear priority to investments in high speed broadband, to respond to the explosion of traffic and the expectations of our customers. These investments are important; they create value for the next 5 to 10 years to come on mobile, and for the next 20 to 30 year to come on fixed line operations. We will then prioritise our investments where we know our customers have genuine needs, and where we can significantly improve their daily experience, by mobilising all the technologies available. To intelligently allocate our resources, we will deploy a CEM Customer Experience Management tool. This will give us a view on all our customers and their individual experience of the network. By the systematic escalation of information on the use of our customers, we will be able to better identify the areas in which the coverage is not satisfactory for our customers, and we shall be better able to detect any malfunctions in real time. This will enable us to focus our efforts to provide the best experience for our customers where they need it. For example, when we detect that you have poor mobile coverage at home, we will contact you either to inform you of the works we are planning to improve this coverage, or to offer you an alternative solution, via a femtocell. In the same 5

6 spirit, the My Network application will allow each customer, if they wish, to participate in the improvement of their own quality of service by reporting any difficulties they may encount er. These initiatives will enable us to prioritise the allocation of network Capex according to their impact on the customer experience and to track the evolution of uses. Our aim is to triple the average data flow of our customers on our fixed and mobile networks in all our countries by 2018 compared to In France, regarding fibre, we are going to catch up with and rapidly exceed the geographic footprint of cable and offer our high speed broadband services to the greatest number of people by tripling our fibre investment by We will increase from 3.6 million connectable households at the end of 2014 to 12 million in 2018 and 20 million in For us, the FTTH is clearly a tool for creating value, by the win back of market shares and fostering the loyalty of our customers, as well as by the improvement of the ARPU, as can be seen in our 2014 results. In France, regarding mobile, we will continue our investments in the 4G and we will build on the quality of our portfolio of frequencies, which is the best of all operators. This will allow us to maintain our leadership and to respond to the concerns of our customers on the quality of the mobile network, notably during travel and in the transports, but also inside buildings. That is the challenge of indoor coverage. To immediately respond to this expectation of indoor coverage on mobile, we are going to launch Voice on Wi-Fi, as of this year. The benefit will be immediate for our customers. Once customers are connected to Wi-Fi, at home, in the office, with friends or on holiday, they will be able to transmit and receive all their calls in a completely transparent way, as if they were connected to the mobile network. In major urban areas, by relying on our CEM tools, we are launching the My City Without Cuts project, which aims for the virtual disappearance of dropped calls. In Europe, we have a very clear objective: fixed-mobile convergence. We want to be present in the homes of our customers. To achieve this, we will be pragmatic and adjust the situation in each of our countries. In Spain, we are going to continue the development of our FTTH network and our TV offer, in particular by the acquisition of Jazztel, currently being examined by the European Commission: we will double the share of our convergent revenue, which will represent 40% of revenues by However, in Europe, not everything will be carried out by means of acquisitions. In Poland we will deploy our own fibre network. In Belgium, a country characterised by the strong presence of cable and where the regulator has decided to put in place a control of these networks, we are testing the use of cable. We have also announced the launch of a TV offer for 2015, breaking with the current offerings. In Romania, we are approaching the households in a different way. Boosted by our leadership position in mobile, we have opportunistically added a TV offer, thanks to the low price of contents. This approach will also allow us to better serve our business customers and to develop our value market shares on the B2B fixed and mobile market in Europe, to move closer to those of the B2C. More specifically on mobile, in Europe we are aiming for a 4G coverage in excess of 95% on our European footprint in In Africa and the Middle East, the Internet will be 6

7 channelled mainly through mobile, and our challenge is therefore to bring more customers to mobile data uses. Orange will continue to invest massively in the coverage of territories and in the increase in bandwidth. We are planning to launch the 3G in 2 additional countries, Cameroon and Guinea-Bissau. As for the 4G, it will be launched gradually in 4 countries in 2015 and in the majority of countries of this region by In addition to these infrastructures, we are launching customised offers with the Orange universe, in order to popularise the use of mobile data, such as the Klif telephone. This is a smartphone at $40 including a communication pack and 6 months of Internet access, which we just announced at the Mobile World Congress 2 weeks ago. To anticipate the future uses of our customers, we must transform the very philosophy of our networks to make them more agile and to optimise them. Ultimately, we will be able to make our networks dynamically programmable in real time in order to automatically adapt to the evolution of traffic and needs. This will first be done with the move to the all-ip, which will allow the fixed or mobile voice, data, Internet and television services to communicate everything by IP, i.e. in a single language, a universal language. All-IP" is first of all the possibility to introduce new convergent voice-data-image services, for the general public and for the Enterprise market, and to improve our quality of service. This technology will also allow us to gain in efficiency and in agility and to significantly reduce our network Opex at the end of the migration programme, thanks to the abolition of the use of RTC and associated equipment on our copper networks for the benefit of voice over IP. The virtualisation of our networks will enable us to make the hardware and software separable, that is, we will be able to remotely re-programme any physical equipment of the network to give it a new function, without having to physically intervene, or even to install new equipment, as is currently the case. The development of the Cloud and APIs will also continue in this evolution towards greater flexibility and openness. Moving forward, the development of the 5G will allow us to go even further. It will give us the radio infrastructure adapted to new uses of the mobile Internet and the Internet of things, and will also lead us towards a fully digital economy. These developments will give us the agility to respond to the needs of our customers in real time, while reducing our cost structure and our CO 2 emissions. We will build on this quality of the network to develop uses and meet the expectations of our customers by offering an experience of enriched and multi-screen content. That is what we offer with our new TV interface, Polaris, presented on Orange TV in France, and which allows you to find the same experience consistently on all its screens (TV, tablet, smartphone, computer), with the option to switch very simply from one screen to the other. Polaris is an incomparable experience to consume content when you want, on the screen that you want, designed specifically for an easy and intuitive access to content. With the launch of the TV stick in Romania, and soon in France, our customers will be able to have access to Orange TV and the associated content at home, simply by plugging this HDMI key into their television. In addition, we have a multi-distribution strategy for OCS and we are pursuing the enrichment of our package, both in terms of technological innovation and conte nts, with the recent signature of an exclusive agreement for Sony Picture Television contents. We cannot talk about TV without mentioning the box. Our box is one of the most performing on the market. In order to be in a leading position, I announce that our new box will be 7

8 launched out next year, and I will have the pleasure of presenting it to you at the end of next year, at the next edition of the Show Hello. Our content strategy is simple: reinforce our role of distributor by favouring a positioning of aggregator, capable of selecting, promoting, packaging and offering attractive content which corresponds to the expectations of our customers, in a simple and fluid way. Thanks to all these innovations, linked with the increase in the bandwidth of our cu stomers, our ambition is to increase the "Entertainment" revenue of the Group's fixed customers by 50% by the end of Reinventing the customer relationship The second fundamental aspect of our Essentiels2020 strategy is the customer relationship. To reinvent the customer relationship, we will approach all our activities on the basis of the experience and uses of our customers, by anticipating their expectations and by responding to them in a targeted and effective way. Because the strength of Orange is to address all users, to provide solutions for each market segment without neglecting any, from digital customers attentive of prices to customers who are most demanding on the service, including Enterprise customers, from the smallest professional to the multinational. We must first simplify the customer journey, limit the steps and intermediaries, with special attention to the key moments of the interaction, in particular the command. Physical and digital points of contact should participate in a single, adapted and agile customer relationship, made possible by the digitalisation of our processes and our services. Being perfect as far as the customer is concerned means developing a relationship of trust with our customers. Orange must be the operator that ensures the security of data and respects the privacy of its customers, and we are going to develop and make accessible to the greatest number of people flagship services such as Mobile Connect, a simple and universal solution, with a secure authentication system. Mobile Connect will affect more than 1 billion users by For the customer relationship, Big Data is the ultimate tool that will enable us to better understand our customers and propose offers to them which respond to their expectations and wishes. Imagine that when you enter an Orange shop or call your customer service, your Orange advisor says: "Hello Mr. Richard, the smartphone you ordered to replace the one your daughter broke is ready. I can offer you a protective cover if you want. It could be useful. By the way, I hope you are satisfied with the fibre installation we performed in your home last week. Did you know that you benefit from the OCS package in your offer? This is what the integration of specific smart data tools in our customer relationship process in shops or on our digital channels will allow: in all our points of contact, you will be automatically identified and recognised, and your contact will have access to the entire history of your relationship with Orange. The simplification of the customer journey also takes place through the complementarity of our physical and digital channels. This is something that Orange believes in. We will not replace a channel by another one. We think we need mutual enrichment and quali ty in our common journey. Of course, it is always immediately available and very simple to use. So digital is an essential component of the customer relationship, and is set to make major 8

9 progress. Our goal is that half of all our customers' interactions with Orange in France and in the rest of Europe pass through the digital channel by 2018, as compared to slightly over 30% today. It is a benefit for the customer, and also a very effective way to make savings. And to facilitate the lives of our customers, in France, from 2016 there will only be one Orange customer service number, regardless of your offer, your problem or your req uest for information. In Africa and in the Middle East, where prepaid is still the dominant use, the great majority of customer interactions such as the account status or recharging via Orange Money are already automated. Thanks to the growth in the fleet of smartphones we actively support, we can radically improve the ergonomics of these acts of daily life for our customers and propose new services, in particular by the progressive deployment of an enhanced version of the "Orange and Me" application. In a "mobile first" environment, the mobile becomes the preferential point of contact for sales and services, which leads us to optimise the coverage of our physical retail outlets, but above all to redesign their role. Our points of sale should become concept-stores, offering a warm and original experience, organised by universe: home, family, work, well-being, or entertainment. 20% of our shops will be under the Smart Store concept in France and in Europe by Our shops will also be fully integrated in a unified digital -physical journey, with the possibility via digital to locate shops, to make an appointment online, to check the availability of a product or even receive customised offers. Among these Smart Store shops, some will be even more spectacular: the megastores. True standard bearers of Orange in the territories, these megastores will have an adapted space to test the products and services, discover our innovations, benefit from customised advice in all the universes which are important for the customers. We will open 40 megastores in France by The first ones will open in Orange is a universal brand. It is addressed to everyone, with a proposal tailored to each one. However, we are well aware that some customers expect a special level of service, and are ready to pay for it. Two examples among others. They want a premium installation at home of their Internet access with guaranteed time slots, but also of their domestic network with verification of the Wi-Fi coverage in all rooms. They want to control the connection of all their equipment, and install home automation systems such as Homelive, and so on. Those customers also expect a personalised welcome and privileged access to customer advisers who are experts in digital, capable of handling their requests from start to finish, or of remotely taking control of their terminal to resolve a configuration problem. Advisers able to propose the immediate replacement of equipment if necessary, or to proactively notify any malfunction of equipment we have detected thanks to Big Data solutions, and of course provide the solution. These are just a few examples of services that illustrate the level of attention we want to offer our most demanding customers and which we are currently testing on the ground. For these customers, in 2016 we will start launching first services in Europe, in France in particular and in a first African country, Senegal. Building a company model that is both digital and caring In order to focus on our customers, listen to them, and be effective in meeting their expectations, Orange must also give the keys to this success to its employees. This is the third lever of Essentiels2020. We want to build an employer experience that is similar to the customer experience. To do so, we want to build a new company model, that is both digital 9

10 and caring. You should not oppose both bodes. Digital will be a progress only if we place the human at the heart of it, both for our customers and our employees. To illustrate this ambition, we have set the goal that 9 out of 10 of the Group's employees would recommend Orange as an employer, as a great company to work for. This ambition begins with a key issue: securing the skills the Group needs to succeed, with growing needs in new professions, such as data scientists, for example. To do this, we will first rely on high-quality and digitalised internal training. Therefore in 2018, 50% of the training of our employees will take place via a digital training platform. We will also develop new digital modes of operation and organisation, more agile and more collaborative, contributing to the quality of life at work. We will apply the same principles as for our customers: innovate by simplifying and digitalising. Our employees are the best ambassadors of Orange. To provide the best experience for our customers, they must have access to simple and effective tools, in particular for in-store advisers and sellers. Finally, there is a value within Orange which is dear to my heart and which we must constantly encourage. This value is commitment. We will strengthen our managerial culture of trust and responsibility to provide the means for our employees to go the extra mile, which makes all the difference for the customer. Another way to develop the commitment and the participation of employees is to promote employee ownership. Employees currently represent 5% of the Group's capital. Our ambition is to aim towards 10% of employee shareholding in the long term. I believe that it is thanks to the commitment of its employees that Orange will succeed in digitalisation. Supporting the transformation of business customers Our business customers are familiar with all these transformations, and our role is to accompany them. This is the challenge of the fourth lever of Essentiels2020. The "digital revolution" transforms the lives of businesses. It helps them innovate more. It pushes them to change their processes, their customer relationship, the modes of work and the tools of their employees. This transformation is the bearer of opportunities, efficiency and growth. It is beneficial as far as necessary. But it still remains a major upheaval for businesses, who need to be accompanied in these new digital modes. Of course, we must offer our business customers the right connectivity at the right time, wherever they are. We should give them the best of our fixed and mobile broadband networks by incorporating solutions to secure and guarantee recovery time. But our role, at Orange, is no longer only to be a simple provider of connectivity. We must be the trusted partner of the digital transformation of businesses, in all its components, in complete security, and with an exemplary customer experience. We have therefore set ourselves a simple goal: to increase the share of IT services by 10 points in the Orange Business Services income mix by To achieve this, we must listen to the needs of our business customers, and the specificities of each industry, their trades, their processes, their specific constraints in terms of security. We must have tailored solutions for every business, from SMEs to multinationals. 10

11 In this business activity, we have to focus on 4 main areas in addition to connectivity. Firstly, in direct line with our historical business as a provider of connectivity, we must provide digital solutions for the work tools of employees who become more mobile, more connected and work in a more collaborative way. The establishment of mobile workstations like tablets and smartphones, whether for salespersons, technicians, or managers is a growing need for businesses. Previously reserved for a few managers, these tools have become essential for the effectiveness of employees on the ground or in points of sale, with a new requirement: connection to the business applications of these employees. For example, Orange accompanied a major household appliance retailer for the entry of the digital in its stores, by equipping the sales staff with connected tables, with customised tools according to the needs of each employee. We want to become a leader in the integration of mobility in the workstation. The second objective is the improvement of business processes, in particular through applications and connected objects, which open up new possibilities for businesses. Our integration know-how will build on our platforms of communicating objects and our data analysis expertise. Our business customers will be able to benefit from connectivity solutions, in particular M2M or services and platforms linked to the Internet of things to collect, store and integrate data from these objects in their business applications. We are therefore becoming an operator of data, which we make completely anonymous before rendering it available and secure to third parties, all through an API system. This leads us to the third area: the provision of private and hybrid cloud services for the multinationals, and to be a leader in this field in France. The Cloud infrastructure is a key enabler to provide agility and flexibility to businesses. It is also an area in which companies need trusted partners to manage their most sensitive data in a secure manner, and with a very high level of reliability. Finally, the last business axis, a subject which is an issue of growing importance for businesses, security in the digital world is cyber-defence. No business would consider leaving a warehouse in which it stores valuable goods unprotected. The same applies for the digital world. What is more valuable to a business than its customer data, its website, its tools for taking orders or customer management, or even its strategic data? With the takeover of Atheos and the creation of Orange Cyberdefence, the Group is now well equipped to help other businesses to protect themselves from these new threats, and to become a global player in the security of multinationals and the leader of cyberdefence in France. Diversifying by capitalising on our assets The trust placed in Orange by our customers also pushes us to meet new expectations. This is the 5th and final lever of our Essentiels2020 plan: diversification diversify by capitalising on our assets. This is not about going off on an adventure to explore areas far from our bases. On the contrary, we have decided to focus on a very small number of areas in which we can capitalise on our assets, and in which our customers consider us to be legitimate. These new playing fields are part of our future growth relays. We have identified connected objects and mobile finance as the two major transformations in the daily lives of our customers on which we believe we can provide added value to our customers and create value. Because these services have many synergies with our main assets: our relationship 11

12 with our customers, our distribution power, both physical and digital, our networks, our international presence, our capacity for innovation, the strength of our brand and the values of trust and security it conveys to our customers That is why we have set ourselves an ambitious goal for these new activities: to exceed 1 billion in turnover in These new activities will also benefit from the enriched connectivity that we are going to propose. For example, the latency time of the fibre is particularly adapted to connected objects, which must react almost instantly t o commands. Connectivity is in a way the oxygen of these objects. The ecosystem of connected objects will generate new positioning and business opportunities. We want to be present across the entire value chain according to the types of objects, with the exception of the manufacture of these objects, in particular with the distribution of objects to enrich our access offers, capitalising on our network of shops to present these new objects and accompany our customers as a digital coach. The provision of value-added services around these objects, in particular in the area of health and well -being, or even in that of the connected home. The success of the beginning of the Homelive offer in France with more than 10,000 customers a few weeks after it was launched, encourages us to continue in this direction and to further enrich our services on our various markets in Europe as of This ecosystem will continue to expand thanks to a platform of data derived from these connected objects open to partners who will enrich our customer offers. The second axis of diversification is mobile finance. Our customers expect to be able to perform an increasing number of transactions on their mobile, in a simple and fluid manner. Orange Money, in Africa, and more recently Orange Finanse, in Poland, confirm our legitimacy in this activity. The financial services contain 3 separate universes. First, in Africa and the Middle East, we have a money transfer and payment offer in Orange Money. The service is very successful with 13 million users today. We are aiming for 30 million users in Second, in Europe we have 2 different universes. First, the payment universe, which we are part of with Orange Cash and contactless payment via the NFC technology. Second, the universe of the mobile bank, which offers significant growth opportunities and on which we will focus our efforts in Europe. Our ambition is to launch a wider offer of mobile financial services on our 3 biggest European markets by We have Poland, of course, where we have launched the offer with a promising success. And we are also going to launch this in France and Spain, before To support these new services, we will continue to rely on innovation, internally but also by pursuing our Open Innovation logic. By 2020, our ambition is to have accompanied 500 startups in the world, through one of the Group's open innovation programmes, in a very operational logic which focuses on the rapid creation of commercial partnerships, or even capitalistic in some cases. Via our Orange FAB start-up accelerator, we have already identified some promising projects. For example, we have acquired a stake in Fenix, a start-up accompanied from the outset and which designs and manufactures solar batteries to recharge mobiles in a reas where there is no electrical network. We also have Afrimarket. External investment is increasingly used as a strategic lever, in particular to anticipate disruptive innovations, to ensure the settling of a company into the ecosystem and to contribute to industrial development. In order to go even further and be more responsive, we have just created our corporate investment fund, Orange Digital Venture. Orange is thus 12

13 strengthening its links with the digital ecosystem in order to be closer to technolog ical breakthroughs and participate in the emergence of the digital services of tomorrow. New identity of our brand In a moment, I will hand over to Ramon Fernandez who will present the financial modalities of this strategic plan. But before that, I would like to present the new identity of the Orange brand that we are launching today. A new identity focused on customer benefits and which reinforces and accompanies the Essentiels2020 plan. The role of Orange, our mission, is to "always be in touch to connect what s essential in your life". We decided, a few months ago, to redesign our brand to make it even more responsive to our customers. The Orange brand is very strong. It is envied by our competitors and trusted by our customers. The idea therefore was not to change the brand. But we want to make sure that our visual identity evolves by incorporating flexibility and dynamism, showing that we are able to really respond to the customer and always offer more services. Let's look at this in a few images now. [Video presentation.] As you can see, all our activities are focused on customer usage, which is a definite change for us. We will have achieved our ambition when technology becomes invisible and its use transparent, as instinctive as our emotions, as rapid as our thought, as fluid as our movements. When we can surprise our customers by customised and unexpected attention. I am now going to give the floor to Ramon, who will provide the details of our investment rationale. He will speak about the financials of our strategy. You will see that value creation is at the heart of this strategy. Thank you for your attention. 13

14 Financial Presentation Ramon Fernandez Deputy Chief Executive Officer, Chief Financial and Strategy Officer Hello everyone. Stéphane has just presented our operational ambitions and our strategic priority. I am now going to speak about our financial model and our financial balances and key facts and figures. The transition we are going to experience in will involve an unprecedented technological transition. The idea is to build a new network model, with a new fixed local loop that uses fibre technology, which will replace the local copper loop. In our sector, we are accustomed to dealing with the succession and overlap of techn ological generations in mobile, as each one (2G, 3G, 4G and soon 5G) has a life span of around 10 years. As for each generation leap that calls for a substantial initial investment, with temporary pressure on cash-flow generation, we will know when the time is right to invest, and at the right quantities in the new generation. We shall therefore efficiently manage this transition. The singularity of the period is that Orange will lead a major transition on the fixed networks, and will invest in a new generation of fibre networks, with a lifespan of several decades. These changes are a fantastic opportunity for Orange to make a difference. Our ability to anticipate, execute and finance these changes is what makes us stand out from the competition. We will take advantage of that. With the best networks and a service portfolio that is broader and broader, with our presence on all the segments of the market, we are going to offer this incomparable customer experience that Stéphane just described to you, and therefore return to the path of growth. Investment Programme Our investments will be the engine of this differentiation. Within our investments, which will reach a peak of slightly more than 16% of the turnover in 2017, over 15 billion will be invested in our networks over the period , with priority given to high speed broadband. Let me begin with fixed very high broadband and fibre. Approximately one-third of the 15 billion of network investments, i.e. 4.5 billion, will be allocated to th e deployment of fibre. Let us take the example of France, where this change in the business model is particularly marked. But the same also holds true in Spain and Poland. In France, our goal is to make eligible for FTTH the 6 million households in the very dense areas by 2018, and 14 million households in the less dense areas by 2022, 6 million of which by 2018, with an acceleration of the coverage in cabled areas in the next 18 months. Our dynamism in FTTH has also enabled, for the first time in 2014, the total number of fibre customers in France to exceed that of >100 mb/s VHBB cable customers. In low density areas, the ramp up in broadband will involve a mix between fibre, copper with VDSL, and satellite solutions. In this network construction phase, our FTTH investments will be in high growth with network deployment Capex (excluding customer connections) reaching a peak in 2017 and then gradually decrease. At the same time, a growing share of our investments, i.e. more than 40% in 2018 and 60% in 2022, will be dedicated to customer connections. The Capex is 14

15 fully variable and will only be committed when our customers subscribe to our offers and will be partly billed to other operators in the event of switches to the competition, as provided by the regulations. Such an investment creates value because it allows us to respond quickly to the ever -growing needs of bandwidth and reveals new usages. Based on our strengths in network expertise, and the resources we have to finance this industrial transition, we are shifting the competition field from copper to fibre. This should lead our competitors to invest via co-financing, in order to best respond to demand. To have a good return on the capital invested, it should reverse the deflationary trends of recent years on prices. Above all, fibre is a driver for growth in the turnover. In retail, fibre and the services it provides are a tool for the conquest and loyalty of high-value customers. We associate it with content services through our renewed TV offer. It helps us keep a connection with the client. With our infrastructure we provide the customer with an attractive and fluid media environment. With our efforts of investments in buildings and the quality of our services, we are already seeing benefits in terms of conquest, ARPU and loyalty. We are now seeing a re-conquest of several percentage points in our market share in fibreequipped buildings in very dense areas. In the less dense areas, beyond the conquest of new customers, the migration from copper to fibre contributed to defending our market share. With respect to revenues, we are enjoying a growth in broadband ARPU thanks to a favourable mix of premium offers, a price difference compared to ADSL on most of our offers, and a higher consumption of content. Today, a fibre customer brings an ARPU that is, on average, 5 per month higher compared to an ADSL customer, and this gap will continue to increase to reach 7 by Finally, we note greater loyalty among fibre customers with a strong appetite for con vergent offers. Our objective is to have over 60% of our broadband base on convergent offers in 2018, with a positive crossover impact on our Mobile business. Fibre will also allow us, in the area of Wholesale, to sustain our network operator b usiness with the following scheme. During the network construction phase, when we ramp up investments, wholesale income will grow thanks to the revenue from co-financing the fibre as well as that of copper unbundling, for as long as the customer does not switch to fibre. In the long term, the income from the unbundling of copper will be replaced by a recurring fibre income, certainly lower but related to lower invested capital, as it is co-financed. This lower income should also be considered against the major gains on network operating costs per customer as compared to copper, down by around 75%. In addition, the possible implementation of the Champsaur Report could stimulate investment by all players and promote the transition from copper to fibre. That is why fibre will be a major asset for Orange in the creation of value. This chart illustrates the profitability of fibre, with a favourable gap between the internal profitability rate and the weighted average cost of capital. Each fibre customer won means more loyalty, more convergence and more uses, and therefore more ARPU. Moreover, this profitability is stronger at the outset of deployment, and deployment occurs in very dense areas first. Due to that higher density, individual connection costs are lowest. It is in these 15

16 very dense areas that the virtuous effect of re-conquest is the most keenly felt because our market share is lower than the national average. Finally, the regulatory framework in France provides a difference in rates of return above the cost of capital in favour of the first investor, in order to incentivise investment and push the industry to perform the migration towards fibre by an effect of emulation. Therefore, and even if this gap has a tendency to decrease over the very long term, the investments in fibre will contribute positively to the operational cash flow in a few years. When it comes to mobile very high speed broadband, we will continue our investments in the 4G, while preparing for the next generation, 5G. Over the period, 5 billion will be dedicated to mobile access networks, including 1.5 billion devoted to the 4G, with a gradual drop in Europe where major investments are nearing completion, and a rise in AMEA. Our mobile Capex will be targeted on the satisfaction of our customers with, for example, the goal of reaching 100% 4G coverage in 2018 in the French TGVs, and to cover all metros and all the major highways with 3G or 4G coverage. These 5 billion will be supplemented by purchases and renewals of frequencies, always with the aim of offering more bandwidth, more speed and more services to our customers. Overall, we believe that the forthcoming effort on frequencies will be less than the 2.8 billion paid over the period. In total, our investment efforts, slightly up as compared to the previous period, will allow us to offer connectivity of excellent quality. This will provide new services that broaden the scope of our income in a series of concentric circles. In this respect, we already have an integrated offer of content with our accesses: TV on fibre, games and music on mobile, and a fluid shared Cloud space on fixed and mobile. We will therefore be well equipped to resist the competition from traditional players and the OTT s. Sales Growth In order to once again achieve sustainable growth, our Essentiels2020 plan is based on this investment effort. We will optimise our resources with a gradually changing mix of activity that I will now present. From 2015 to 2018, the evolution of our sales will result from the combination of 4 different factors. First, the decline in legacy activities: - with the unavoidable drop in voice over RTC income. This will lead to the end of the marketing of these services, which we contemplate from the end of 2017 in France. At that point, Orange will only market new generation voice services in France, exclusively on IP. We will also initiate this process in 5 other countries. - There will also be a decrease in national roaming in France from 2015 and its virtually total stoppage in Finally, there will be a reduction in Enterprise connectivity income. The second factor is the maturity of our activities such as mobile voice or ADSL, for which the differentiation by the customer experience will allow us to bolster value. These activities also constitute the foundation on which we will develop our growth activity, capitalising on our customer base. 16

17 Third, the growth in very high speed broadband, which will be bolstered by a strong acceleration in investment, in particular in fixed and in 4G. Fourth, our new activities: mobile financial services and connected objects. These will be developed with the help of the clear synergies between our core business and these relays for growth. Our ambition is to take a leading position on these new services, r elying in particular on the direct contact we have with the 244 million customers who already trust us, and whose needs we are familiar with. In the field of mobile finance, the prospects for growth are significant. In Africa, mobile penetration is significantly higher than the banking penetration in most countries. Orange now has a customer base of nearly 100 million people to propose these new services to. We are already familiar with 4 of the value-creating levers of Orange Money: - It is a new source of revenues: In Ivory Coast, Orange Money generates 2 of additional ARPU per active user. - It is a tool to foster loyalty: again in Ivory Coast, Orange Money customers have a churn 3 times lower than the other customers. - It is a differentiating service for customer acquisition. - And, finally, the costs of recharging prepaid phone credits are 4 to 10 times lower when the customer recharges via Orange Money. In the Europe region, capitalising on the success enjoyed in the AMEA region, we are launching Orange Money in Romania this year. And on our 3 largest European markets, our ambition is to launch enriched mobile finance offers in partnership with players offering us banking or digital know-how, as we have already successfully implemented in Poland. At Group level, mobile finance will be a significant contributor to our growth in revenues, with a sales objective of 400 million in 2018, that is, 10 times more than in As Stéphane mentioned, Orange also wants to be a major player in the ecosystem of connected objects in Europe. I will not go over the details, but these new services are essential for our future, and will have even greater impact beyond the horizon of the plan. Their operating margin rate is lower than that of our traditional connectivity a ctivities, but these services contribute to sales and EBITDA, and require lower investments. Connected objects and M2M services will contribute to the growth of our revenues, with nearly 600 million at Group level over the plan period. On the whole, our ambition is to achieve sales of 1 billion with these new services by 2018, thereby contributing to a return to growth in our revenues. In 2018, our Group sales will be higher than in of All that I am saying is, of course, on a like for like scope. Cost Reduction Orange will also continue to curtail its costs. The Chrysalid programme has allowed us to achieve the 3 billion in gross savings one year ahead of time for the period Based on our experience, our ambition is to generate 3 billion in additional gross savings, the bulk of which will be on operating costs. 17

18 We will extend the existing programmes. I am thinking in particular of our mobile infrastructure sharing initiatives over 50% of all our sites were already shared at the end of 2014 or for fixed infrastructure, as in Spain with the fibre. We will also continue the pooling of platforms between our countries, to reduce customer intervention costs, and to renegotiate the costs of international network access, as was the case in North America. We are also taking new initiatives to increase our efficiency through two areas of priority. First, in connection with our ambition to offer an unmatched customer experience, we will take a new step in the digitalisation of our processes and customer interactions. For example, I can mention the increase in the number of online sales transactions, a significant increase in self-care which allows for a significant cut in call rates, or the digitalisation of sales processes in the B2B relationship. We will optimise the meshing of sales points with larger shops that better suit the customer experience. This is central ambition for Essentiels2020. Secondly, we will accelerate simplification in all areas, in particular in our offers, services and information systems. As an example, I can mention the rationalisation of the portfolio of offerings in all our European regions; the virtualisation of servers; the de-commissioning of older network technologies, enabled by the migration to the All-IPCC; the pooling of the OBS network with that of Orange Spain, which will reduce access and backbone costs ; the simplification of the back-office activities that we have initiated in Poland; and local initiatives aimed at reducing energy costs. All these initiatives of the Chrysalid programme generate further cost reductions. From an analytical standpoint, things will change as follows. First, direct costs will remain under control. Part of these costs will increase in connection with the rise in sales. Another portion will drop, notably because of the transformation projects I just mentioned. These costs will change in connection with the change in the mix, in particular the growth in distribution activities linked to sales of handsets and connected objects; the development of content in Europe, in particular with the increased penetration of convergent offers incorporating TV; the increase in our customer base in AMEA; and the evolution of OBS activities with the shift to IT and services. These effects will be offset in part by the reduction of commissions through the rationalisation of indirect distribution channels in Europe. Our indirect costs will continue to decline. Payroll over sales will drop by 1.6 points in 2018, at Group level and in France. Our employment policy will allow us to adjust our resources to business needs while respecting the social contract. This transformation in France will involve over 25,000 retirements by 2020, but of course we will hire from outside to bring in new expertise. In 2015 and 2016, we will recruit 1,900 people each year. Outside of France, we will combine our headcount efforts with salary moderation policies that will nevertheless take into account inflation, in particular in the AMEA region. Finally, to improve our effectiveness, we will develop digital tools specific to the HR function that will ensure a better orientation of skills. Excluding payroll, indirect costs will also decline. In France, the decline in absolute value will be 10 %. At the Group level, by 2018, there will be a further drop in advertising expenses, overheads, and real estate expenses, excluding AMEA. In a context of development of networks and of continuous improvement of quality, the network costs will be stable at Group level. 18

19 All of these effects will make it possible to improve the indirect costs-sales ratio by 2 points over the period and even by 2.4 points in France. Combined with the margin profile of our new activities, this will enable us to regain the growth of our EBITDA. Therefore, the 2018 EBITDA will be higher than that of 2014, following a trough in Let us now see how the various segments will change. In France, RTC voice will continue to drop and the income from the roaming contract with Iliad will gradually decrease to virtually disappear as of These decreases will be partially offset by several growth relays, which will, throughout the market range, help fuel the increase in the mobile installed base and broadband ARPU, with the ramp up of fibre capabilities, broadband and wholesale sales. Growth will also be bolstered by 4G and new services. And Orange France will continue its efforts to decrease indirect costs. Therefore, despite the decline in RTC voice and national roaming, sales should be flat from 2017 and then grow. The margin rate will be higher than that of 2014 each year, and in value terms, EBITDA will be stable in 2015 and then grow through cost control, if you exclude the impact of roaming. In Europe, our strategy to re-conquer households tailored to each market will enable a return to growth in sales and EBITDA. We will capture a larger share of the expenditure of households and businesses through our convergent offers, which we will enrich with new services. We will also contribute to the consolidation of infrastructure between operators. Our ambition is to have access to an infrastructure everywhere in Europe, with organic deployment such as in Poland, Spain and Slovakia, with access to third-party infrastructure through partnerships or regulations, such as in Belgium and, in certain cases, with targeted M&A operations. As you know, Orange actively participates in the intra-market consolidation with the acquisition of Jazztel in Spain, and the disposal of EE to British Telecom. In Europe, we are expecting a return to a growth in sales and EBITDA from The 2018 EBITDA will be higher than its 2014 level. In Africa and the Middle East a growth region the whole economy of the region is set to make progress, even if occasional difficulties can still arise. GDP growth is expected to reach over 5% per annum. The population will reach almost 1 billion people in Purchasing power and per capita income will also rise. These are essential elements for the success of our activities, with the deployment of 4G and Orange Money, which should see its revenues multiplied by 4 over the period. In terms of costs, we will continue with the adaptation of our industrial model by strengthening the pooling of resources, and by sharing infrastructure (on an active or passive basis). We will also pool network supervision and other activities such as the Orange Services Grouping, based in Abidjan in Ivory Coast. Finally, the creation of a holding company bringing together all of our operations in the area as of this year will allow us to be poised to grow in the region. AMEA will experience a growth in sales of approximately 20% from 2014 to EBITDA growth should be even greater than that. At OBS, we will see a gradual recovery and a change in the business model. OBS will take advantage of the increase in cyber-defence and Cloud, two supports essential to the IT and Service Integration branch, the weight of which in OBS sales will increase by 10 points by 19

20 2020. This business will certainly have a lower EBITDA margin than that of connectivity services, but also requires less investment. OBS sales will stabilise from 2016 and EBITDA from Financial Position I would like to end with a few words on our financial situation, which will remain robust in a situation where we still emphasise dynamic management of our portfolio while paying close attention to our balance sheet. We could consider some consolidation deals, notably in market transactions. We could also step out from some countries where that is rational, such as Uganda as recently occurred. The Group intends to continue to reduce its debt to deleverage prior to disposal of our acquisitions. The combination of the Jazztel and EE transactions is part of this deleveraging trend. This leads us to reaffirm our goal of net debt over EBITDA, which is 2 in the medium term, compatible with the payment of a dividend of at least 0.60 over the period, without excluding a possible increase in connection with the return to growth in EBITDA. I am now going to hand over to Stéphane, who will conclude on our commitments and provide his conclusion. 20