Orange Sa · EURONEXT:ORA
Orange Sa — France Telecom — Q1 2007 Earnings Presentation
44 slides from Orange Sa's earnings presentation, Apr 26, 2007
Slide 1: Form 6-K cover filing
SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 April 26, 2007 Commission File No. 1-14712 FRANCE TELECOM (Translation of registrant’s name into English) 6, place d’Alleray, 755
Slide 2: France Telecom 1Q07 results
france telecom 1Q07 results Gervais Pellissier – Senior Executive VP, CFO April 26th, 2007
Slide 3: Cautionary statement
cautionary statement this presentation contains forward-looking statements and information on France Telecom's objectives, in particular for 2007. Although France Telecom believes that these statements are based on reasonable assumptions, these forward-looking statements are subject to numerous risk
Slide 4: Agenda
agenda part 1: key achievements and consolidated results part 2: 1Q07 countries performance part 3: outlook 3
Slide 5: Key financial results: on track with our 2007 guidance
1Q07 key financial results: on track with our 2007 guidance (in million of euros) 1Q06* 1Q07 06/07 key points actual sustained growth in mobile (+4.3%) Revenues 12,617 12,844 +1.8% very good performance of home France activities (+0.9%) GOM 4,566 4,657 +2.0% positive margin evolution mainly driven b
Slide 6: Key operational achievements
1Q07 key operational achievements national launch of Orange naked ADSL offer new fiber offer launched in 6 towns offensive commercial offers and promotions combined with new France loyalty programs both on mobile and internet since the end of February 07 strenghten Orange’s leadership on Quality of
Slide 7: Key performance indicators
1Q07 key performance indicators 1Q07 vs 1Q06 change 106 million customers under Orange brand worldwide (66% of total customer base) + 63% 100 million mobile customers worldwide + 15% 7.2 million mobile broadband customers worldwide +223% 10 million ADSL broadband customers worldwide +25% of which 4.
Slide 8: Revenue growth: good performance of Home France and Enterprise
1Q07 revenue growth: good performance of Home France and Enterprise with a sustainable growth in Personal Change 1Q07/1Q06 * 1Q06/ (in million of euros) 1Q06 * 1Q07 1Q05* EURm % Group revenues 12,617 12,844 + 227 1.8% 2.0% total Personal 6,643 6,931 + 288 4.3% 7.4% personal France 2,391 2,388 -3 -0.
Slide 9: GOM rate evolution: on track with near stabilization guidance
1Q07 GOM rate evolution: on track with “near stabilization” FY guidance yoy evolution of GOM rate in ppt (on a comparable basis) +1.1pt +1.0pt +0.1pt +0.1pt +0.0pt 1Q06/1Q05 2Q06/2Q05 3Q06/3Q05 4Q06/4Q05 1Q07/1Q06 -0.7pt -0.6pt cautious management of commercial investments -1.8pt on a country basis
Slide 10: Capex: FY07 guidance maintained at around 13%
capex: FY07 guidance maintained at around 13% capex evolution per quarter 16.3% (in million of euros) 13.0% 11.6% 2,165 11.0% 9.6% 1,660 1,520 1,387 1,232 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 capex in EURm capex as a % of revenues low capex to sales ratio due to seasonality effect and strong investments in
Slide 11: Countries performance
1Q07 countries performance 10
Slide 12: Highlights of French operations
1Q07 highlights of French operations main achievements stabilization of market share (incl. MVNO) market challenges: at 46.5% in a competitive environment development of abundance offers at home st improvement of contract mix: from 62.1% in 10 days number portability starting May 21 1Q06 to 63.9% in
Slide 13: Personal France: customer base growth compensated CTR impact
personal France 1Q07: customer base growth compensated CTR* impact on revenues 1Q07 revenue: EUR2,388m / -0.1% yoy on an actual and comparable basis (in million of euros) + 77 2,391 2,388 + 26 + 14 - 74 - 47 1Q06 on a Customer base CTR Impact* Voice ** Non-Voice Equipments & others 1Q07 comparable b
Slide 14: Personal France: ongoing mobile broadband development
personal France 1Q07: ongoing mobile broadband development ARPU (EUR) mobile broadband customers (000) 4,376 421 410 406 3,595 60 63 64 2,522 361 348 342 1,903 1,506 1Q06 4Q06 1Q07 1Q06 2Q06 3Q06 4Q06 1Q07 Voice Non Voice ARPU decreased by -1% vs 4Q06 and by -0.2% excluding CTR* impact non voice rev
Slide 15: Home France: broadband growth more than compensates PSTN decline
home France 1Q07: for the 3rd consecutive quarter, broadband internet revenue growth more than compensate PSTN decline consumer services 1Q07 revenues: EUR2,370m / +0.5% yoy actual / +0.8% yoy on a comparable basis (in million of euros) +39 2, 370 +18 +112 2 ,352 +56 -11 -8 -24 -61 -103 - 98m in PST
Slide 16: Home France KPIs: fixed lines base increasing thanks to ADSL
home France 1Q07 KPI’s: fixed lines base increasing thanks to ADSL growth total number of fixed lines (in million) increase of market access lines (+0.8% 27.57 27.53 27.51 27.74 27.80 yoy) 0.92 1.21 1.56 2.27 3.03 FT wholesale lines quarterly increase (+761k) : 26.65 26.32 25.95 25.47 24.77 - 442k F
Slide 17: Home France KPIs: ongoing multiplay development
home France 1Q07 KPI’s: ongoing multiplay development Livebox, VoIP and IPTV customers over our DSL base multiplay* as % of total ADSL ARPU 1Q07 62% 58% multiplay ARPU 53% contribution almost doubled in 1 year 48% 46% 43% 41% 54% 35% 31% 28% 25% 1Q06 ADSL only Multiplay 12% 25% 10% 8% 5% 6% 75% 1Q06
Slide 18: Highlights of Personal Row operations
1Q07 highlights of Personal Row operations main achievements strong subscriber base growth (+32.6% vs market challenges: 1Q06) delivering 37.9m customers at the end subscribers growth vs ARPU dilution 1Q07 and supporting sustained revenue regulatory issues in major countries (Belgium, growth (+14.5%
Slide 19: Highlights of Home Row operations
1Q07 highlights of Home Row operations main achievements high growth of internet base boosted by ADSL market challenges: offers (despite limited PC equipment) market consolidation towards convergence fixed-to-mobile substitution FTTH in Slovakia: decision to deploy a fiber optic network actions: - e
Slide 20: Highlights of UK operations
1Q07 highlights of UK operations main achievements strengthened contract customer base: market challenges: competitors “new deal” with indirect - 91% of new customers took 18 months distribution channel contract in 1Q07 actions: - contract churn rate down from 28.8% in 4Q06 to 27.6% in 1Q07 - come b
Slide 21: Personal UK: underlying revenue growth of +2.4%
personal UK 1Q07: underlying revenue growth of +2.4% yoy 1Q07 revenues: EUR1,489m / +3.1% yoy actual / +0.8% yoy on a comparable basis (in million of euros) + 34 1,478 + 26 +20 1,489 1,444 -12 -23 underlying revenue*: +2.4% 1Q06 actual Forex Impact 1Q06 on a Customer Base Voice Non-voice Equipment 1
Slide 22: Personal UK: sustained growth of 3G customer base
personal UK 1Q07: sustained growth of 3G customer base ARPU (£) mobile broadband customers*(000) 1,139 263 257 257 931 52 52 53 728 211 205 204 526 425 1Q06 4Q06 1Q07 1Q06 2Q06 3Q06 4Q06 1Q07 Voice Non Voice blended ARPU –2.3% yoy driven by tariffs decrease linked with competition pressure, but stab
Slide 23: Highlights of Spanish operations
1Q07 highlights of Spanish operations main achievements market challenges: 11.1m customers, +7.7% yoy excl Euskaltel regulation: per second billing and CTR* cut effect (ow +10.6% for contract base) data revenue growth successful focus on contract customers: – 198k contract net adds in 1Q07 excl. Eus
Slide 24: Personal Spain: +2.3% revenue growth despite CTR and Euskaltel
personal Spain 1Q07: +2.3% revenue growth despite CTR* and Euskaltel customer migration 1Q07 revenues: EUR821m / +2.3% yoy on an actual and comparable basis (in million of euros) + 45 +5 821 803 -11 -4 -16 1Q06 on a Customer Base CTR Impact* Voice** Non-voice Equipment & others 1Q07 comparable basis
Slide 25: Personal Spain: customer base increase despite Euskaltel effect
personal Spain 1Q07: customer base increase despite Euskaltel effect customer base evolution (000) 11,058 170k Euskaltel customers remaining on 10,534 170 Orange network at the end of 1Q07 vs 422 379k Euskaltel subscribers at the end of 4Q06 5,487 1Q07 net adds of - 56 k split between 5,231 – 209k d
Slide 26: Personal Spain: mobile broadband customers growth
personal Spain 1Q07: mobile broadband customers growth of +65% vs 4Q06 ARPU (EUR) mobile broadband customers**(000) 311 301 300 695 37 36 36 422 274 265 264 242 173 123 1Q06 4Q06 1Q07 1Q06 2Q06 3Q06 4Q06 1Q07 Voice Non Voice blended ARPU at EUR300, stabilized in 1Q07 vs 4Q06 -9.2% CTR* cut will impa
Slide 27: Highlights of Poland operations
1Q07 highlights of Poland operations main achievements 1Q07 revenue growth of 7.4% vs 5.5% market challenges for the market thanks to customer base intensifying competition (Play entrance) growth MVNO development value market share increased at 34.7% actions: vs 34,5% end of 2006 and 34.1% end of pu
Slide 28: Personal Poland: leadership maintained
1Q07 personal Poland: leadership maintained 1Q07 revenues: EUR479m / 5.9% yoy on actual / 7.4% yoy on a comparable basis (in million of euros) + 100 -27 479 446 -24 -13 -3 1Q06 on a Customer Base CTR Impact* Voice ** Non-voice Equipment & others 1Q07 comparable basis Impact revenues growth of 7.4% y
Slide 29: Personal Poland: strong annual growth of customer base
1Q07 personal Poland: strong annual growth of customer base quaterly blended ARPU (PLN) and customer base evolution (000) AUPU (mins) +22.7% yoy 95 96 97 96 12,781 90 12,521 10,419 7,719 7,794 6,216 4,803 4,987 54.7 55.7 57.0 4,203 51.7 47.5 1Q06 4Q06 1Q07 Postpaid Prepaid 1Q06 2Q06 3Q06 4Q06 1Q07 A
Slide 30: Home Poland: fixed voice revenues decline due to regulation
1Q07 home Poland: fixed voice revenues decline mainly due to regulation revenues: EUR707m / -10.2% yoy actual /- 8.9% yoy on a comparable basis 776 -12 +4 +3 707 -48 -5 -11 1Q06 on a Voice fixed line PSTN volume and DSL Internet Narrowband Internet Carrier services Others 1Q07 comparable basis acces
Slide 31: Highlights of Enterprise
1Q07 highlights of Enterprise main achievements slowdown of the decreasing trend in Business Network Legacy revenues market challenges: continued Advanced Business revenues growth: pace of VoIP uptake – IP VPN accesses up 25% yoy (266k accesses) continued competitive pressure on data – Business Ever
Slide 32: Enterprise: continued ICT services revenues growth
enterprise 1Q07: continued ICT services revenues growth above market growth, slower decline of traditional business 1Q07 revenues analysis (in euro millions) 1,919 +38 1,928 +30 1 890 +33 +29 -29 -130 1Q06 Actual Forex Impact Perimeter 1Q06 on a Business Advanced Extended Others 1Q07 Impact comparab
Slide 33: Outlook
outlook 32
Slide 34: Key objectives for the coming quarters
key objectives for the coming quarters drive French operations momentum thanks to leadership and innovation in mobile and broadband ramp up FTTH pre-deployment in France continue to rebalance the customer base mix towards contracts and pursue the development of “3P” bundles (ADSL/Fixed/Mobile) in Sp
Slide 35: Outlook: on track to meet our 2007 guidances
outlook: on track to meet our 2007 guidances near stabilization of the gross operating margin rate in 2007 capex rate in % of revenues maintained around 13% organic cash flow of EUR6.8Bn 34
Slide 36: Appendices
appendices 35
Slide 37: Glossary (1)
glossary (1) ARPU – Consumer Fixed Services (HCS segment): average annual revenue per line for the Consumer Fixed Services is calculated by dividing the average monthly revenues on the basis of the last twelve months by the weighted average number of customers over the same period. The weighted aver
Slide 38: Glossary (2)
glossary (2) French Retail ADSL Market Share (ARCEP definition): starting from 1Q06, quarterly French ADSL market share presentation will be based on ARCEP High-speed Internet Observatory methodology. Until the end of 2005, the figures published by France Telecom covered intermediate markets (such a
Slide 39: Glossary (3)
glossary (3) Non labour expenses: operating expenses excluding labour expenses. Operating expenses excluding labour expenses included in the calculation of GOM, include external purchases and other operating expenses (net of other operating income). Non labour expenses are net of capitalized costs.
Slide 40: Gross Operating Margin
1Q07: Gross Operating Margin excluding Pages Jaunes * comparable (in euro millions) actual 1Q06 Basis –1Q06 1Q07 revenues 12,616 12,617 12,844 non labour expenses 5,806 5,809 5,930 as a % of revenues 46.0% 46.0% 46.2% of which commercial expenses 1,810 1,824 -1,769- as a % of revenues 14.3% 14.5% 13
Slide 41: Revenue growth recovery in 1Q07
revenue growth recovery in 1Q07 quaterly evolution of yoy revenue growth (on a comparable basis) +2.0% +1.8% +1.2% +1.0% +0.5% 1Q06 2Q06 3Q06 4Q06 1Q07 40
Slide 42: Home UK: focus on multiplay
home UK 1Q07: focus on multiplay LLU customers as a % of ADSL base 35% ADSL revenues grew by 17.5% yoy 34% 24% 1,095k ADSL subcribers (+11% yoy) 20% 21% – of which 254k are on a 18 months 16% contract mobile-broadband bundle 11% 14% 9% – 227k LLU subscribers, ie 21% of ADSL 5% base – 412k Livebox in
Slide 43: Home Spain: continued migration from PSTN to ADSL and LLU
home Spain 1Q07: continued migration from PSTN to ADSL and LLU LLU customers as a % of ADSL base 8% growth in ADSL revenues vs 1Q06 is still 63% 63% 68% 68% 64% not compensating the PSTN decline 55% 57% 11%* ADSL share of conquest over 1Q07 ; market share maintained above 12%* 44% 41% – a customer b
Slide 44: Signature
SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. FRANCE TELECOM Date: April 26, 2007 By: /S/ PIERRE HILAIRE Name: Pierre Hilaire Title: Director of Finan