Orange S.A.
Q4 2014 Earnings Call Transcript

Published: 18 Feb 2015

[Stephane Richard:]

[Starts Abruptly] [Interpreted] …quite a few of our senior executives Ramon, notably who I will give him the floor after this brief introduction of mine. Also with me is Delphine Ernotte, who’s in charge of France; Thierry Bonhomme from OBS; and Marc Rennard from AMEA and Pierre Louette, our Secretary General and the members of our financial team. And in London we have Gervais Pellissier and Mari-Noelle Jego-Laveissiere. I’m going to start off with a brief overview of the 2014 highlights and key figures and then Ramon will go into greater detail about our numbers and our performance into fiscal 2014. To put things simply, we consider that 2014 was important and positive for Orange because in spite of a very tough and exacting background from a competitive standpoint because of course in Europe there has been bare-knuckle competition. And in terms of regulations, things were quite tough. A few decisions generate quite a few impact on our numbers and from operating and strategic standpoint things are tough as well, because we are experiencing constant change in our industry and Orange is at the heart of this change, which we can call the digital revolution. So what I’m saying is that in 2014 there were more challenges than one and in this turbulence the group’s performance was quite good, actually quite remarkable in some instances, but first of all let me speak about our share price performance. I know that you’re sensitive to that, 2012 was not good. 2013 saw a slight pick-up and 2014 was a year when we came back to the fundamentals and a more objective and clairvoyant grasp of this group’s assets in digital revolution. And of course, our performance was the best of the CAC 40 and in the European Industry. Now, let’s take a look at the key numbers for 2014. While, Orange has met all its objectives, sales amounted to €39.4 billion, down 2.5% from 2013, but the drop was 4.5% in 2013 from 2012. If you restate this for regulation, the 2014 drop was a mere 1.6%, whereas the drop was 2.6% in 2013 from 2012. And as you shall see later on the sales trend is good, because quarter on quarter the drop has slowed and sales were flat at the end of the year in the last quarter. Looking at EBITDA now, we met our goal with so that we would generate EBITDA between €12 billion and €12.5 billion, we achieved €12.2 billion right in between as it were. Now with this performance which is essential, it’s critical, because as you recall the main item of guidance I gave was stabilization of our margin and with this €12.2 billion EBITDA we have stable EBITDA margin, 30.9% of sales. It had dropped 1 point in 2013, and it’s flat in 2014. Therefore that objective is met too. This was achieved with main major efforts on the robustness of our balance sheet. I’m on Page 6, ladies and gentlemen. In our guidance, we said that we wanted to get closer to a ratio of two. I’m talking about net debt over EBITDA. We achieved that, because at the end of 2014 the ratio was 2.09 so it’s significantly down from 2013. Ramon will give you information about the transactions that have led us to this accomplishment and this does give us greater comfort and elbow room to bolster significant new investments moving forward. And this number by the way neutralizes the acquisition that we will speak about later on, well, actually it doesn’t neutralize it. It takes it into consideration. So the robustness of the balance sheet with the operating performance and EBITDA that I mentioned, now enable us to confirm, as per the decision of the Board yesterday, to pay out €0.6 per share for fiscal 2014. And the suggestion were therefore about the proposal therefore we made to AGM next May, we already paid €0.2 in December 2014, that’s the interim dividend, we will pay the balance I’d say €0.4 in June. 2014 was an important year regarding our international operations with two transformational moves, two substantial and strategic moves. The first is Jazztel in Spain, an acquisition which when completed will allow us to have a convergent fixed mobile operator on a market where we have been successful but where we are facing two competitors, Vodafone and Telefonica. Vodafone bought out Ono, the cable operator. And therefore, Jazztel is going to be instrumental to bank on our success in Spain so we have to move forward in convergence and we have to initiate a fiber investment program. And with the Jazztel acquisition we’re going to accomplish that and that should be closed by the end of H1. Along with Deutsche Telecom we entered an agreement to dispose of Everything Everywhere, our joint venture to British Telecom. There’s convergence there too. We’re not the operator, but this does show what’s going on in Britain. Quite a few people thought that Britain would be sheltered from convergence, as it were, but that’s not the case, because the main fixed operator is going to become a major converging operator on the British market. And we are, of course, enjoying these circumstances to make the most of this asset. And the four or five years that we spent managing and growing Everything Everywhere with our German partners we’re extremely positive for the organization for Everything Everywhere for the cooperation between our two companies. Some people spoke about dissent between the Germans and the French, but that is totally false. On the contrary, Everything Everywhere is a fine example of cooperation between operators in Europe. So there is something less substantial that I like to mention too. There - we disposed of Orange Uganda, showing that we are pragmatic and when we are having difficulties or even when we are facing failure or when there is no growth on the horizon for us we decide to step out, that’s what we did in Uganda, so we stepped out of Uganda. Now, all these results - all these financial results were possible on the strength of four key levers or priorities. First of all, well, the management is focused on four key topics. First, strong commercial focus and we shall see that in that regard 2014 is a conjuncture, because in 2014, we did achieve commercial performance on all our markets. We maintained investments in networks notably very high broadband, fixed and mobile very high broadband. So in quite a few countries, pride of place, France of course, we broadened the gap with our competitors and we have strengthened our leadership when it comes to network quality. We continue to significantly reduce our cost and optimize our cost structure we’ll come back to that, well beyond the objectives that we have set ourselves. All this was possible of course with the strong employee engagement, because we and I in particular always strive to achieve employee subscription. We explain the strategy. We pursue. We explain all the topics that could be of any concern to them and we speak about the outlook to them in very clear terms and that is how we can achieve strong employee engagement in this organization. Now allow me to come back to a few items of our commercial performance. As I mentioned, commercial performance was excellent and I shall give you a few examples. First of all, in France, Orange has asserted, fortified its leadership position well ahead of its competitors. 2014 was the year when Orange achieved its best net mobile sales since 2008 with nearly 600,000 new mobile customers. And the churn was the lowest since 2010. So if you combine both those factors commercial effectiveness and efficiency and the ability to reduce churn significantly while you clearly understand the results we accomplished. 2014 was a year where very high broadband really picked up. We have a few numbers to illustrate that right here. In mobile operations we closed the year with 3.7 million 4G customers well above the objective that we have set ourselves. We have 1 million additional customers who came in the last quarter 2014. All this was possible through the investment efforts we made with the 4G coverage rate of 74% at the end of 2014. In particular, we have an edge given the number of significant sights we have - or well ahead of our competitors, of course, we’re going to sustain and maybe even fortify that this year. But this mobile very high speed broadband performance could also be seen in fixed operations because fiber really picked up commercially in 2014 563,000 customers at the end of the year, 280,000 new clients at - in the last quarter and in that quarter we saw more fiber than ADSL for the first time ever. So you see the curves are crossing each other and the outlook augurs very well in this area. We have 3.6 million households who have fiber in France, connected to fiber in France, our aim is 5 million at the end of 2015 and to be about 1 million fiber customers, the transformation rate is also on the rise because of few years’ time. We rose from 10% to 15% transformation. It is a number of actual households, given those that are connectable and our aim is 25%. In France, I think that it’s fair to say that we are the only player on the market who can claim to cover the whole market. And all the market segments with a competitive proposition. This starts with the value propositions with SIM-only propositions, Sosh, which was very successful in France, with the 4G Sosh proposition, up to the high end products. Converging propositions, which are, of course, very instrumental. Across Europe now, well the same strategy was rolled out. There was acceleration of 4G coverage in Spain, in Poland and in Belgium. You see nearly 90% of 4G coverage in Belgium. And in all these countries this 4G effort has helped us gain ground and to somewhat turn the tide as was the case in Belgium for instance. And to build a competitive edge which we’re happy to have. Now in Spain you see 2.3 million 4G customers, no less. This is true with fiber as well. Worth mentioning is Spain once again in the number of fiber customers were multiplied by factor 2. There is Slovakia as well, but I could also mention Poland. Poland, that is also been rolling out fiber with a vengeance. In Africa and Middle East, we brought in very good results, nearly 12% growth in our mobile subscriber base over a period of 12 months. Mobile banking, Orange Money is increasingly successful to 0.6 million active customers and that number is growing all the time. And in enterprise there were encouraging signs. Enterprise operations have been under pressure for the past few years, more so than other segments in the group - enterprise has been under influence of the economic situation notably in Europe with encouraging signs cropped up in 2014. In terms of new segments, new businesses, the cloud, security, you see that there our sales grows considerably to 27% growth in security for instance, but more conventionally we have had the ability to pick up major contracts in key countries, pride of place to France. So it’s fair to say that OBS is turning things around and this bodes well moving forward. So 2014 was a year where we sustained substantial investments amounting to 14.3% of sales, it was 13.7, that was the ratio CapEx to sales in 2013. €5.6 billion invested in 2014, the bulk of that clearly went into acceleration of our high speed broadband efforts which is at the root of Orange’s success, in countries where Orange has operations. So we have this ability to offer fixed and mobile high speed broadband to our customers well ahead of our competitors. So 4G, fiber, and that investment root has been very rewarding. And in more countries than one we are now number one in terms of network quality. This is particularly true in France. For the fourth year in a row ARCEP ranked us first in terms of network quality, now the gap has broadened with our second competitor, also Africa, Middle East. There we deployed 3G in 15 out of 19 countries and we launched 4G in four of these countries in 2015. As you shall see, other major countries in the region will also embrace 4G. Now a few words about costs, just to say that, for the past two or three years, we’ve cast quite a few efforts on turning revenue declines around. We want to offset that by reducing costs and that’s what we’ve been doing. Those efforts were particularly significant in 2014 especially when it comes to indirect costs which are the most difficult to harness, because we have payroll costs, of course, and other costs that can’t really be kept in check the way we like to. So our aim was €250 million, we rose that to €300 million. And actually we managed to save €503 million in indirect costs, so in a period of three years we will have reduced our cost base by €1.7 billion. And that is of capital - paramount importance, because we’re going to back on that moving forward. The effort is now behind us and now the group is back on track with a better cost base in many countries including France and that makes us even more competitive. So costs have shrunk in direct costs, particularly, and specific stress was placed on France. France made major efforts on this front and as you can see in France cost savings, operating cost savings offset 82% of the revenue decline. So the EBITDA margin rose in 2014, it rose 0.6 points on the strength of the tenaciousness of the teams to cut cost. Now management’s focus on the cost structure is going to continue. This is a multi-year effort. In particular we’re going to formalize this in our 2020 plan. All this was possible through strong employee engagement. This group has been changing for 24 years. It’s been undergoing or leading technological change. So it’s been transforming and for the past five years we’ve been embracing or leading these changes. We’ve been modernizing and constantly adjusting, and we’re doing this with our employees on board. In 2010 we signed what we call a contract social, social contract, and we launched a number of programs that offer individual progress to our employees. In particular we provide digital training to our employees. Last year we delivered 75,000 digital passports. The passport is a digital training module offered to all our employees, so 75,000 last year. We have 73,000 group employees who use Plaza, our internal social network. So digital is really with us on a day-to-day basis at Orange and it does spell progress for our employees. This was recognized by a number of employer awards. We’re quite proud because they do cover all the regions where we have operations, in Europe and Africa, and even farther out. Okay, that’s what I had to say to you. Ramon is going to now integrate here and I shall come back to tell you everything you need to know about 2015. I give the floor to Deputy CEO, Chief Financial and Strategy Officer, Ramon Fernandez.

[Ramon Fernandez:]

Thank you, Stephane. Good morning. So there will be some repetition but it will be in English, so you can check if the figures are the same. We’re looking at Slide 15, which shows that we had indeed a very encouraging revenue trend in 2014, each quarter posting a continuously improving year-on-year evolution. So total revenue for the year was €39.4 billion, down 2.5%, with Q4 eroding only 0.6%. This is to be compared, for instance, with minus 3.8% in the first quarter of 2014. And, as Stephane said, excluding regulation, the fourth quarter revenues stabilized. Looking at the main elements driving our revenues, mobile services revenues decreased by 3.3% in the fourth quarter. It was 6.6% in the first nine months of the year. And this improved trend is mainly led by France, Spain, Belgium, with Africa and the Middle East accelerating their growth momentum. We also performed well in mobile equipment sales, up 16% in the fourth quarter, and the performance here is also mainly driven by France and Spain, especially supported by the commercial success of iPhone 6 which was launched in September. Fixed services revenues also improved compared to the previous quarter and to previous quarters, again close to stability in Q4 at minus 0.3% year-on-year compared to minus 0.7% for the full year. The fourth quarter trend was driven by the performance in broadband services. We have here plus 2.7%, with strong growth in Spain, more than 16%, and also a slight revenue increase in France, plus 0.5%. Other fixed services are increasing by 6.4% with the progression of unbundling and private- public partnership for fiber deployment. Lastly, still on this slide, you can see that we have a relative improvement in the enterprise revenue performance resulting from a further growth of IT and integration services. All-in-all, this improved trend in revenues contributed to the stabilization of our EBITDA margin and that’s what I will discuss more on the next slide. So here we see the better trend in the restated EBITDA, which has also been supported by cost reduction. In Q4 the EBITDA margin is stable year-on-year and this is for the fourth quarter in a row. All in all, the full-year €317 million EBITDA erosion for the full year is significantly less than the minus €1 billion of 2014, it is a decrease divided by three. The graphic at the top right provides more details on the early EBITDA evolution compared to 2014. First, revenues were down €1 billion, this is compared to around minus €1 billion in 2014. Second indirect costs decreased by €503 million, this is minus 2.8% and this is thanks, first, to a decrease of close to €300 million of indirect cost savings, €294 million to be precise, excluding labor costs. And here all categories of costs are decreasing, excluding operational taxes. And second, we have a decrease of 2.2%, which is €209 million, in labor costs. This is mainly driven by a 3% - 3.8% decrease of full-time employees as well as the rate increase of the French CICE, this is the employee tax offset for €30 million. This very good performance in indirect cost savings gave us the room to support our very strong commercial performances during the year. But we also have here direct costs going down by more than €200 million. So, overall, total cost reduction in 2014 made it possible offset close to 70% of the revenue decrease. Turning to our net income, you can see here that in 2014 the net income amounted to €1.2 billion. This is a decrease of €908 million compared to 2013. And this decrease is mainly due to the impact of specific items which are not linked to our operational performance. Most of these elements reflect our voluntary policy to prepare the future for the company. And, as you can see on the details provided on the top right of this slide, these effects are mostly the result of three elements. First, provision linked to the senior part-time program. This TPS program is a success for the group. Second, some provisions related to our restructuring projects in real estate in France. And third, the booking of some extraordinary expenses, notably related to the settlement of litigations. The net income group share stands at €925 million. Turning to the next slide, at the end of 2014 we have reduced our net debt by €4.6 billion, at €26.1 billion, against €30.7 billion at the end of December 2014. This evolution is driven by deleveraging of around €1.8 billion and is also accelerated by the favorable impact of the hybrid bond issuance. As a reminder, hybrid bonds are considered as equity under IFRS rules. I also remind you that the €3 billion hybrid bonds issued in October in the context of the tender offer on Jazztel have no impact on our 2014 net debt as we have put the proceeds under escrow to back the bank guarantee issued under Spanish market rules. As of December 2014, our net debt to EBITDA ratio is 2.09% compared to 2.37% at the end of 2014. Among the main factors impacting the evolution of net debt we can highlight a few elements. First, an operating cash flow generated €6.6 billion. Second, in 2014 we paid €1.8 billion of dividend. This was €0.50 a share in June to balance the 2014 dividend and there was also a €0.20 share in December as an interim dividend for 2014. Our net debt has been reduced by €1 billion with the disposal of some assets as part of our ongoing portfolio optimization, notably Orange Dominicana. And the last point on this chart, regarding liquidity you can see that the group maintained a strong liquidity position of €13.2 billion at the end of December, including €6.9 billion in net cash. Once again, this amount does not include the €2.9 billion escrow deposit in the context of the acquisition of Jazztel. I would now like to say a few words about the performance of our different segments, turning first to France. You can see that in France the EBITDA margin improved by 0.6 point in 2014 at 46.2%. This improvement of 0.6 point in 2014 comes after a decrease of 0.9 in 2014 and 2.2 in 2012, and this improvement is due to the slowing down of revenue decrease but also, as Stephane said, to sustain cost reductions. In 2014, cost reduction allowed to offset 82% of revenue decrease and even close to 100% in the second half. Thanks to the continuous improvements in the company processes and also the decrease of real estate costs and general expenses. These efforts favored investment and commercial costs, and this helps, once again, to boost our commercial performance that increase our premium sales, both on fixed and mobile in the fourth quarter. Concerning revenues, the improving trend seen in the first nine months of 2014 has continued in the fourth quarter with a decrease limited to minus 1.8%. This is to be compared, for instance, to the minus 7%, we had seen in the fourth quarter of 2014. Still, in France, if we look at what happened on the mobile services we can see here a decrease in revenues of 5.4%, a trend which is improving. And this improvement is reflecting a better customer mix which is driven by the larger share of premium offers. Now representing 61% of the contract consumer base. And within premium sales we also see a growing part of high-end packages. Second, we witness a growing appetite for 4G where we are clearly leading the race. We had 3.7 million customers at the end of the year. This was 1 million customers more in the fourth quarter and this is to be compared with the 1 million customers we had at the end of 2014. So you can see that the pace, the rhythm is improving quite rapidly and we even now have more than 4 million 4G customers. In February we had more than 4 million customers. We also have a healthier trend of our mobile ARPU, since 89% of our contract base is now on a post-April 2013 offer. And so as a result of the decrease on the mobile ARPU is minus 7.2% in 2014, it was 11.5% in 2013. And finally, the increased penetration of convergent offers is leading to a continuous decrease of our churn rate, which is the lowest since 2010. So globally we had a very solid commercial performance in the fourth quarter, confirming and amplifying the trend of third quarter with a total of more than 600,000 new contract customers in 2014 excluding M2M. If we look at the fixed services we can see that here we have a decrease by 0.9%, which is to be compared to minus 3.4% in the fourth quarter of 2013. Broadband revenues were slightly up by 0.5% thanks to a 2.4% year-on-year increase in customer base and this helps to offset the price effect of the growing penetration of convergent offers which now represent 45% of the broadband base. 2014 was also the year in which fiber took off reaching 563,000 customers, with a new record quarter at 82,000 net adds, and this contributed to an estimated broadband share of conquest of around 35% for the quarter. Wholesale revenues increase was mostly due to unbundling accesses expansion and also to fiber infrastructure rollout. Last point on fixed, excluding the impact of the 2014 subscription price increase, the €91 million decrease in PSTN revenues was the lower since 2007. Turning now to Spain, we see that, as announced in the first half of 2014, Orange Spain top line trend continues to improve with minus 1.2% in the fourth quarter. This is to be compared, for instance, to the minus 8.6% in Q2. And the improvement here was visible in both mobile and fixed. Mobile services revenues eroded 8% in Q4 after nearly minus 12% in Q3. Handset sales revenues had a very good quarterly performance, nearly plus 12%, and fixed services also revenues improved by more than 13% in Q4. In terms of commercial performance we had solid growth in the fourth quarter with a strong take-off of fiber. Here also Orange Spain is doing well, the FTTH customer base multiplied by two in Q4. And Orange Spain is also leading the 4G market with more than 2.3 million customers in the fourth quarter. In Poland, we had a fourth quarter of sequentially improving revenues trend, leveraging convergence as our key market differentiator. I will not go into all the details, you can look at the slide. But just one work on Poland, you see that over the full-year, and in the context of revenues which are still eroding, it’s minus 4.5% year-on-year. Orange Poland has managed to stabilize its restated EBITDA margin at 31.6%, thanks to significant cost savings, which were extracted across the whole business. In the rest of the world, first looking at Africa and the Middle East, we had another quarter of significant revenue growth at close to plus 8%. And this is driven by a plus 11.9% performance in the mobile customer base. Mobile data revenues grew significantly, it’s more than 40%, plus 44%. 7 out of 13 countries had double-digit revenue growth. And I may also remind that you that starting from Q1 2015, we will provide you with more details on Africa and the Middle East with a dedicated segment. Considering the whole European portfolio, you can see here on the right, that we are witnessing improving year-on-year revenue trend for the fourth quarter in a row and this is supported by continuously improving trends in residential, postpaid net-adds. Turning to the Enterprise segment, we see revenue trend continuing to improve slightly in Q4. And the slide on enterprise is going to be on the screen quite soon I guess. Here it is. Here we have revenues going down by 2.3% for the full year. We have to compare this to minus 5.3% in 2014 and this is driven by the good performance of IT services since the end of 2014, as well as a lower price pressure. So voice continues to decrease, but at a reduced pace, data services grew in volumes with lower price pressure and, once again, we have a very positive trend in IT services with a revenue growth of close to 5% for the full-year compared to minus 3.6% in the full-year 2014. And this increase is concerning all activities and the trend is supported by new services like security, for instance, we have in the fourth quarter plus 37% with the contribution of Orange CyberDefense, cloud is also increasing rapidly. So all in all on the Enterprise segment, we have an EBITDA margin, which is slightly eroding at 15.7%, despite significant cost reduction it is close to €100 million OpEx savings, €94 million to be precise, and this enables to offset more than 60% of the revenue decline. One last word on this slide on EE before turning back to Stephane for our 2015 guidance; here in the UK, we had many occasions to discuss what was going on. I will only highlight the fact that over 2014, a strong delivery of network and retail optimization synergies, have helped EE to deliver an EBITDA margin of 25.1% This is up 0.8 points year-on-year, despite operating revenues going down by 1.4%. Going back to Stephane now.

[Stephane Richard:]

[Interpreted] Very well, I’ll go back into the language of Moliere, but I’m sure we’ll be alternating between Moliere and Shakespeare later on. Talking about 2015, just to tell you what the figures are which we are basing ourselves on for Orange vis-à-vis the markets, just a quick word about the general environment. We’re not expecting any particular good news coming through in 2015, there is a lot of competition on our market. There is no reason why this should become any weaker and at best the impact of some regulatory decisions in 2015 may be slightly weaker, which could lead to some positive trends, as we’ve already seen, on revenue figures. Having said that, revenues or some of our revenues will be going down. We have the national roaming figures for France, which will probably going down. So, as we look forward to this year, we’re very clearheaded about what’s ahead of us, but we’re in a good position and. As you’ve seen, we’ve been able to strengthen considerably the customer base in 2014, and that gives a good reason for being optimistic for this coming year. And we certainly want to keep up this good level of commercial performance, of course, being driven by fixed and mobile broadband, which will continue to develop everywhere. Now with this tied up with major cost containment efforts, we are looking forward for 2015 to an EBITDA level, which will be between €11.9 billion and €12.1 billion. If you take the middle point between these two, €12 billion, then you will see that this figure is very close to what we’ve achieved in 2014. At the same time in absolute value of EBITDA, and this is what we are giving as guidance for 2015, we’ll be working on at least stabilizing the EBITDA as a part of our sales figure. So we’re laying down the same target of producing EBITDA stabilized over 2015. Our balance sheet is a very positive part of our portfolio as it were and if we want to keep net debt over EBITDA around 2, and this is the medium- term objective, we’re coming closer to this. So the figure for the end of the year 2014 was coming closer to the figure of two. We are being very selective in terms of mergers and acquisitions with two top priorities, exclusive priorities, one in Europe, where I think there will be a certain number of opportunities arising and then Africa and the Middle East, which means that yesterday we proposed to the Board that we would be keeping the dividend for 2015 at €0.60, this was voted by the board. And we’ll be able to pay an interim payment of €0.20 at the end of the year, as we did last year. So these are the guidance figures for the group for 2015. Let me just finish by saying that we do have an important day ahead of us on March 17. We have an Investor Day organized then, and in the course of that, I’ll be presenting to you, the team will presenting to you the strategic plan for the group looking forward to 2020. We have a very clear priority in this plan. We want to base ourselves on our customer experience to ensure that we are the best-in-class. This starts with connectivity, of course, but it goes on to concern a whole series of services, the way in which the customers use our services. So we’re really talking about from the very first moment when the customer gets in touch with us, right through to a whole series of services, which mean that the customer has an excellent experience with us. And we will really be concentrating, focusing on quality. But we’ll have the pleasure of unveiling all this to you on March 17. And we have very concrete objectives, which we’ll be rolling out to you then. So we can all look forward to that. I have Jean- Marc Vignolles, Jean-Marc Dutolle [ph], so we have people in London, Spain, and other countries as well, Poland, ready for your questions, ladies and gentlemen.

[Unidentified Analyst:]

[Interpreted] A more political question. Vittorio Colao and Michel Combes didn’t say much about the first decisions coming down from the European Commission. What’s your feedback on that and could you say a few words about the political side? What’s your reaction to your interpretation of the Macron law, which is coming in and the new powers given to the ARCEP? And then a question for Delphine about fiber. The ARPU, up until now the trends have been pretty positive. We’ve been seeing €3 incrementally for a month. Do you think this is still going to be an encouraging enough level when SFR is kicking in with more discipline on their prices?

[Stephane Richard:]

[Interpreted] Yes, Delphine will be able to answer that question specifically. If we talk about the new EU Commission for a moment, what we’ve been doing over the past month, working in tandem with some of my European colleagues, Tim Matius [ph] and Cesar Alierta and [indiscernible] from Telefonica, we got in touch. We’ve put our heads together. There is the Vice President of OnSIP and the new Commissioner in-charge of digital Mr. Oettinger, he is a chairman gentlemen. In terms of methodology I think we’ve moved forward, because I remember what happened a few years ago and it really is the first time that the major players on the European market have been coordinating, working on the content, working on processes, and going out to meet the European leaders and talking about their vision of the future. We want this vision to be very much concentrated on the future, of course, and to be very constructive. Now we’re not here to whinge, because that seems to have been one of the tones adopted by the industry. We have been very positive, listening to the project and saying a few words of warning about some of the ideas, particularly the idea of the level playing field. When I see the amazing statements of Mr. Obama on what that means, well, we’ve talked about all that and we’ve talked about net neutrality as well. And we’ve talked about the way the telecom package, as it stands, could be looked at by the European Commission in order to come up with a text, which wouldn’t penalize quite so much the European industry compared with the way it stands at the moment, I’m thinking particularly of the net neutrality issue. I’m relatively optimistic to see that European leaders, the President of OnSIP and Commissioner Oettinger, they are very lucid about all this. They do know the subject, which is good for us. I’m reasonably optimistic about the way in which the European Commission will be dealing with the important issue of regulation. I’m thinking about privacy issues, level playing field, tax optimization. And then there is everything the Commissioner is doing in terms of competition, competition law and so on, and all the issues of consolidation and the industry in Europe, Commissioner Vestager has been working on that. Now, we are not going to dream, but I think that there are real needs for consolidation in this industry in some countries, and I think this is a message, which has been clearly given to the Commission, they’ve understood that. In the next few months, there will be quite a few issues coming up, which will enable us to see whether the Commission has actually taken all these issues on board properly. So I’m relatively optimistic, and we’ve got people to deal with who are very attentive and open minded and very much aware of the fact that Europe is lagging behind. I could have talked about what Francois Hollande and Angela Merkel said in Davos. They talked about digital, of course, and they said that Europe was not ahead of the game, that’s the least one can say. So they were picking up on what Mr. Obama said yesterday. And we are certainly not going to be left behind and leave other players to simply wipe their feet on us and walk ahead. The Macron law, there was an amendment introduced into this law on the question of roaming, controlling roaming. Pierre might want to say a few words about that. Pierre?

[Pierre Louette:]

[Interpreted] Yes, a lot of things in the Macron law, lots of different questions covered in it. Let’s talk about the good news for us in terms of rolling out a very high broadband. This is what’s important for us, in fact, and, in fact, this almost didn’t work. But there is an obligation, which will be kicking in July 1, 2016, all new installations will have to be equipped with fiber. Now the building industry didn’t want to do that, because it was going to be an extra cost, but this has been included, so in the future buildings will be delivered with fiber already installed, which is good news. Second important point is there are guidelines for tariffs. We’re beginning to see situations where rip promoters are coming up with very, very low prices, which would negatively impact on what we are trying to do. So we’re trying to keep a watchful eye on that and trying to work with local authorities, which, as you know, many of them are heavily in debt. And the final point which Stephane talked about, concerns roaming, nothing terribly new here. We are simply describing what already exists. ARCEP has always had full power to have access to the operators’ contracts; they just need to ask for it. So all that’s happening is going to be full transparency on this issue, but that’s always been there anyhow. So there is nothing particularly new on the question of roaming. Before Delphine goes on to the question for her, let me just say that the contract we’re talking about with Free, the roaming one, ARCEP has always had that contract. We passed it onto them as soon as we signed it. So that’s not going to give them any new information. ARCEP has always had all the information to hand. On fiber and the ARPU of fiber, yes, it’s going up, driven by several things. Let me remind you that fiber rates are higher on Open and on Sosh and also on professional and enterprise. So there is a price effect and there is a mix effect there. We have different types of customers, there is a customer mix and then the content as well, with higher speeds, these kind of customers that use more on broadband. So there is a real trend there, which is speeding up. Let me remind you that the open base represents 45% of our broadband basis and this is going up. It’s going to go up by 8% or it has gone up by 8% in a year. This will continue, the content effect will improve as well. So we think that the gap between fiber and ADSL will continue to deepen. And then the performance of Numericable gives a good indication of the kind of performance that you can get on the market, particularly a very high-speed broadband on the fixed market in France. Yes, over to London, I think. No, another question here from this room, first of all, in French or in English. If there is no questions here, maybe we’ll switch over to London. Gervais, Mari-Noelle. Gervais, questions.

[Stephane Schlatter:]

Thank you very much. Good morning, everyone. Stephane Schlatter, Societe Generale. I have three questions please. The new Chairman of the ARCEP, Mr. Soriano, said on January 28 in Paris the ARCEP will participate in the implementation of the Champsaur report to accelerate the move from high speed to a very high speed. He said copper prices could be a tool to push for this transition. So do you believe Orange could be allowed to increase significantly the unbundling fee in coming months? Second question, could you please let us know if a successful disposal of EE could result in a consolidation of the €2 billion capital increase announced last September together with the acquisition of Jazztel? And finally, about France, could you please let us know if SFR has suspended or not the co-financing of a vertical infrastructures in very dense area? And if not, do you expect this to be done any time soon? Thank you.

[Stephane Richard:]

All right. On your first and last question regarding the Rapport Champsaur, who chairs a Commission that has been asked to study the substitution of fiber to copper, we are expecting this report in the very near future, in the very near days. I just want to recall you that it is not Orange, of course, that sets the unbundling fees, it’s the ARCEP itself. And, in fact, what you are talking about is the capacity for us to have a sort of deal or dialogue between Orange and the ARCEP in order to create the conditions of unbundling price that could be more predictable over a multi-year period. Currently it is fixed every year, in the beginning of every year. And, in fact, what is at stake is maybe sort of an agreement that we could try to look for between ARCEP and Orange in order to have a more predictable path in terms of unbundling fees. And, of course, at a level, a financial level, that would be a motivation for us to invest in fiber. If I look at what happened in the past two or three years, what we have seen is a turnaround. We used to have unbundling fees constantly decreasing in the past and now, two years ago, this price has been stabilized. It has been slightly increased last year, stabilized in the beginning of this year. And I think that the new Chairman of ARCEP is very open-minded regarding the issue And he is convinced that for Orange and for the country and for the very high broadband rollout in the country, it might be very interesting and useful to have a more clear and predictable frame for the incumbent, for us, in terms of unbundling conditions, which is very key to consolidate our investment plan into fiber. So I’m relatively optimistic regarding the way unbundling fees could evolve in the future. Pierre, do you want to add something maybe on that issue?

[Pierre Louette:]

Yes, well, I think Stephane described basically the kind of deal that we can have with the ARCEP. We are just back now above the price of the local loop unbundling that was prevalent in 2009, so we’ve gone above that. It used to go down, down, down. It’s above, it now 9.05. Yes we are looking at a situation in which everybody feels that keeping the prices of the copper going down would be bad for the incentivization of people to invest in fiber. So this is actually also what helps copper. If it’s too low people will not go to fiber. So that’s exactly the kind of reasoning that the ARCEP does. And is the reason why, yes, we can look to everybody in a situation in which there would be a sort of major deal struck, saying copper will not be very cheap, and you will have a reasonable choice to invest in fiber. That’s I think the first thing that we can stress about ARCEP and the deal. What was the other part of your question, Stephane?

[Stephane Richard:]

Regarding the disposal of EE, maybe, Ramon, you can bring that?

[Ramon Fernandez:]

Yes, I think, so the question was what about the capital increase, which had been planned to finance the acquisition of Jazztel, so maybe two, three quick points. The first one, just to say that our utmost priority is going to close both deals, first the Jazztel deal by the end of the semester. We are still in the process of discussing with the competition authorities. And second also to close the EE sale to British Telecom. And you know, that the expected date is, at the latest, in March 2016. So first priority, we need to finalize this. Second, we always said in terms of financing Jazztel acquisition that we would do our best efforts to minimize the impact on our current shareholders. And we had said that at a maximum, we were envisaging a €2 billion capital increase. This figure had gone down to a maximum of €1.9 billion, following the issuance of the hybrid bonds this autumn. And the final amount to be paid for Jazztel was also depending on the rate of success of voluntary tender offer. So this, the real cost, the final cost is not known. Of course, if we can, we will not go ahead with the capital increase to finance Jazztel. We are going to get a bit more than €6.6 billion from the sale of EE. So calendars should be able to match in order to avoid going to the markets for the acquisition of Jazztel.

[Stephane Richard:]

Thank you, and Pierre again for SFR?

[Pierre Louette:]

So the other part of the question was relative to the attitude that SFR is going to have in the dense areas. I think that was the precisely the question. So the cable part of France covers 8.5 million homes, if you want, on a total of 22 million homes possibly. So in this area what is the attitude of SFR going to be? Basically, everyone expects them not to be super-incentivized to develop fiber, because they have a base of mobile homes - of cable, I’m sorry, homes. And then as far as today, we cannot have any real information to share on that. It’s pretty fresh. We - of course, we don’t expect them to be rolling out fiber. In terms of co-funding of what SFR had committed to do, they declare that they are going to co-fund and take the commitments of SFR and continue them, it’s not very clear. I don’t think we can really say as of today that anything special is happening or not happening. What is probable is that they will want to invest, at least, they declare that they want to invest in other areas. Again, this is not clear. It’s not happening as of today. So we are going to have to be waiting. As you know, they’ve just published their offer in terms of bitstream access to cable. Everything is really being put in place now so the fighting on the ground has not started yet.

[Stephane Richard:]

[Interpreted] I’ll speak French. One might have a few doubts about the real determination of the new players, SFR, Numericable, to increase their investments in cable in areas, where there is already cable and where this cable could supply very high broadband, one does wonder if they really wanted to invest at the same time in fiber optic networks. So this would be an overlap for about 1 million households, and so that is a problem. For the moment what they are saying sounds very reassuring. But I think there is as big cloud of uncertainty hanging over this - these regions. How does it tie up, their commitments and what they’re actually going to do?

[Stephane Beyazian:]

Thank you. Stephane Beyazian, Raymond James. Could we have an indication on the CapEx that you’re planning for 2015 and the moving parts behind it? And regarding the Iliad roaming agreement, what do you budget in terms - for 2015 in terms of reduction in the amount that you expect to receive from Iliad. I understand there are variables obviously behind that. But what do you budget? And have you already started to see in the fourth quarter a change? Have you started to see a reduction in the revenues that you get from Iliad? Thank you.

[Stephane Richard:]

Right. Regarding CapEx, Ramon?

[Ramon Fernandez:]

So on CapEx we have seen that in 2014 - I understand the question is 2015, but in 2014 we have an increase in our CapEx effort compared to 2013. This trend is more or less going to be seen also in 2015, where we will continue to focus our efforts on investment because we are seeing in the 2014 results that this effort is delivering results. So in 2015, we will concentrate our efforts on, exclusively in fact, very high broadband fix in Europe. And second, 4G in Africa and Middle East. So these are the two areas where we will increase our effort in 2015.

[Stephane Richard:]

Regarding your second question, as you know, we never provide figures regarding the roaming contract that we have with Iliad, which is covered by a total confidentiality. So I will not provide you with any precise figure regarding the 2015 budget. But what I can tell you is that we expect roaming revenue decreasing this year, in 2015, slightly decreasing, but decreasing. And of course we expect this decrease to accelerate then in 2016 and 2017 the end of the contract is end of 2017. [Interpreted] Maybe we’ll take a question from the room.

[Unidentified Analyst:]

[Interpreted] Yes, hello. In terms of cost cutting, what are your plans for this year? That’s the first question. And the second one concerns mobile in France. So we see that ARPU is not going down so much in Q4 as in the rest of the year. What are you - how do you see 2015?

[Stephane Richard:]

[Interpreted] Delphine will talk about ARPU for 2015, in terms of cost cutting. On that point we haven’t given any specific target, as we did last year. We said then that we’d be cutting back on the indirect cost by €250 million and we revised this objective upwards in the course of the summer. And in fact we’ve finished twice as much. So we’ve doubled this figure, over €500 million cost reduction. So this year we’re not actually giving any specific target, but you can bank on the fact that we’ll be maintaining our drive for cost efficiency. The basis, the baseline isn’t always comparable but you’ll see what the end result is at the end of the day. But obviously in 2015 Orange will continue to work very hard to be more efficient and effective and to have lower indirect costs. We’ve seen that all aspects of the company, right across the board, we’ve been working on them. We’ll need to, of course, guard our, keep our margin for maneuver, room for maneuver if we want to move forward on certain points. We’ll be certainly ensuring that and giving ourselves enough freedom to take up a position if we want to work on anything specifically. In terms of piloting, don’t forget that these indirect costs are multi-annual costs, which are very largely grouped together in our Chrysalid program, which is now three years old. And this program has largely delivered on its promises. In fact, it’s gone beyond that. So we’re talking about medium-to-long term actions which will be pursued right through 2015, with new chapters being brought in. We have a large section now devoted to real estate. And the indirect cost, we’ll keep working on that. Direct costs, it’s more difficult to plan for that, of course. We of course want to be able to seize opportunities which arise on the market. But what is important is the guidance we give in terms of EBITDA to the market, and that’s a key figure. We’ve really demonstrated that we can adapt our costs to sales revenue as they come in. And it’s essential for us to keep to our guidance on EBITDA. We’ve given a very narrow guidance bracket on EBITDA, and this is the key figure well, ARPU mobile. Delphine, over to you.

[Delphine Ernotte Cunci:]

[Interpreted]. Yes mobile ARPU, let me just give a quick comment about where ARPU went in 2014. We saw that this figure, well, that the slowdown was or the reduction was slowing down at minus 7.2%. We’re doing better on several points. Our marketing policy is working with the low-end and the high-end segmentation. That’s been good. And good results on the mix, more Open, more Origami offers. These offers have worked very well so the marketing has done very well. And we’ve also been reaping the fruits of our investment policy. We have a very good network, high-quality network and people are beginning to see that. People are talking about that on the mass market. The difference between our network and that of our competitors is absolutely clear. So unless you can imagine something revolutionary happening on the market, I don’t see why we shouldn’t continue our strategy and continue to outpace our competitors in terms of marketing strategy and also in terms of the very high quality of our mobile network. So we can say that maybe the ARPU will continue to go down slightly, but you’ll see at the same time a better mix, better marketing. And it might be less expensive because the churn rate is low, we’ll continue to drive that downwards. So fewer direct costs and I think we’ll really be able to meet our commercial challenges and objectives.

[Gervais Pellissier:]

We have plenty of over here in London.

[Antoine Pradayrol:]

Good morning. Antoine Pradayrol with Exane BNP Paribas. So two questions on M&A, please. I mean the first one on consolidation in France. Could you just remind us what the role - what role you would be ready to play if there was something happening in France, the role of Orange? And second, you said in your closing remarks that you could see many opportunities still in Europe in terms of M&A. So can you tell us whether you will also consider footprint extension or footprint expansion deals in Europe, whether you see possibilities to go beyond the countries where you are already present in Europe? Thank you.

[Stephane Richard:]

Right. Regarding the consolidation game in France, which is like I don’t know if it’s a nice or a bad story, but there are a lot of words or rumors about this and nothing very concrete. What I can say regarding Orange is that Orange will not play a leading role in any kind of consolidation, mainly for competition reasons. We have tried to build a global maybe solution in a discussion that we had in 2014 with Bouygues Telecom, Bouygues and with Iliad. We didn’t succeed in this attempt. And now what we are doing is of course looking closely to what’s happening, and in my view, of course, if something happens it will be between two of the three other players in the market. And probably in such circumstance Orange will have to play at least a sort of back - backing role because no one except only in one case, which is the Bouygues to Iliad combination, which in my view is very unlikely to happen. In any case, in any other combination, possible combination, Orange will have to participate, to participate in maybe buying some assets or participating in a way or another to the consolidation. We are ready to do it. We are ready to contemplate any project or opportunity that might occur. There is nothing in the agenda, and that is exactly the way Orange can play a role in the French consolidation, not a leading role, certainly not the frontrunner, but still available, open-minded to take a part and maybe also make it possible. Because at the end of the day, of course, any kind of consolidation will have to be approved by the competition authority, either at the French level or at the European level. And that will imply that there is a sort of balance between the players, and that’s it. I don’t see and I don’t speculate on a short-term operation or a short-term consolidation even though I still think that the economics of the industry in France. The prospects of the spectrum auction that we will have at the end of this year, should put everyone still attentive to what can happen in France, i.e., in my view the game is not over even though there is nothing in the short-term to expect. In the rest of Europe, what we see in Europe is an ongoing move towards convergence between fixed and mobile. We have had in the past two years quite a lot now of deals. And maybe in some markets mobile or in mobile market consolidation that could happen, I’m thinking of Spain, for instance, maybe of Italy, maybe of Poland. So in my view, once again in Europe, the consolidation process is not terminated and I think that we will see in the coming months new operations, either in fixed-to-mobile convergence or in mobile consolidation in Europe. What are the priorities of Orange? The first priority is to be strong in convergence in all the countries where we operate. It is the case in France, it is the case in Spain, it is the case in Poland. It is still not totally the case in Romania, in Belgium and, to some extent in Moldova and Slovakia. So clearly in those countries we pay a lot of attention on the way for us to become strongly convergent. It doesn’t mean of course necessarily M&A. And if I take the example of Belgium, what we have decided in Belgium is clearly to play the regulated access to cable, and that is what we are preparing. But it could also, if there are once again some opportunities, it could be also through M&A. So our first priority is to be convergent, fixed and mobile, in all the countries, European countries, where we are. In terms of expansion in Europe, I don’t see today any credible, likeable opportunity ahead of us and we have no project of that kind in the short term.

[Dimitri Kallianiotis:]

Hi. It’s Dimitri from Redburn. I had three questions, please. The first one regarding the CapEx plan in France and fiber. I mean fiber is doing extremely well. I guess one of the issues that you may have or may face is that Iliad and Bouygues are not investing much in fiber as we’ve seen in past years. SFR, as you said, may reduce its investment in fiber. So you may end up having a very, very high market share in fiber, even higher than what you have now. And do you think that could be an issue if you continue to be as successful as you are or could you reach a deal with the ARCEP and say, listen, we are the only one investing and therefore you should let us have a very high market share because we are competing against cable and not just on sort of just looking at fiber in isolation? My second question is regarding real estate costs. I see there is a lot of restructuring. I think there was some capitalized - positive capitalized real estate cost for Q4. We had about over €300 million of real estate restructuring in 2014. I just want to get your view in 2015 if we should expect any big potential positive from real estate since your number of employees continues to reduce. And my last question, and I’m sure you will come back to that in March during your investor day, but regarding Africa, you had very high ambitions I remember when you announced your conquest plan. I just wanted to know how those ambitions have changed, if you still see a lot of opportunities. There were some rumors about you being interested in buying the Bharti assets in Africa. Any comments there would be appreciated. Thank you.

[Stephane Richard:]

Okay. So the first question, fiber in France and the way we can manage our market share and conquest market share in fiber, Delphine?

[Delphine Ernotte Cunci:]

So it’s true to say that we are very effective on fiber market share, but we should consider the overall very high-speed market, which is cable plus fiber. And today, fiber is only 36% of the cable area so we have time before someone tells us we are dominant and very successful on the overall very high-speed broadband market.

[Stephane Richard:]

Okay. On the real estate component, Pierre?

[Pierre Louette:]

Thank you. So on real estate we’ve been able to start restructuring our buildings. We have about 7 million square meters of buildings occupied by people and it’s diminishing now because we have relatively few people and we’re trying to put them together in certain cases. There are still some buildings in which there are unoccupied spaces so we want to restructure this. We also want to continue selling buildings with the exception of technical spaces within those buildings. So we’ve been able to work on a legal system that helps us selling the space and keeping the property and the usage of the technical spaces. So this is the whole program that has been conceived. It’s expressed in the provision for restructuration that has been addressed this year and we will continue addressing this situation in the coming year also. Meanwhile we have a building that will be put - that will be delivered to us again, which is Alleray. Some of our teams are going back to Alleray. You remember Alleray, some of you probably visited that space. It’s been completely revamped, refurbished, modernized. And several teams will leave Losserand and other buildings and go to Alleray. So this is a continuous system and it’s delivering pretty heavily now.

[Stephane Richard:]

Thank you. Regarding Africa, Africa is for us a land of growth, and as you know it’s in Africa that’s in the next 20 years we will have the highest economic and demographic growth in the world. So I think that it’s very critical for Orange to be strong in Africa. It makes - once again, compared to other big telcos in the world, I see our African operations and African presence as really a very positive and a rich advantage in the global competition. We have constantly tried in the past four, five years; it was part of Conquest 2015 plan to expand in Africa. We have entered in four new countries. We are in some of those countries, like Morocco, in a process to become now a majority shareholder in our operations and we will stay open-minded in Africa if there are some opportunities. Of course, I don’t want to comment any market rumors and especially not the rumors regarding Bharti. What I can say is that, we are happy to be in Africa. We would be happy to be even stronger in Africa, if there are some attractive opportunities, meaning at a correct value and compatible with our guidance in terms of balance sheet. And we are especially happy to be in French-speaking countries of Africa, where, in fact, today there is the highest growth, and there is a global environment, including political environment, which is probably more favorable for us. Maybe Marc, because Marc is with us, you can give just a few additions.

[Marc Rennard:]

Yes, good morning. We reached all our commitment targets in terms of revenues and EBITDA last year. We grew by 7%. Our priority remains operational and organic growth as Stephane said - mentioned, we have already announced that we are interested to take a majority shareholder in Morocco and Tunisia. Regarding the other point, for sure there will be consolidation in the future. Let’s have in mind that we have 200 operators in Africa, 200 operators in Africa, for globally the same number of customers that China Mobile have, 800 million customers for China Mobile, 800 million customers in Africa with 200 operators. So one way or another there will be consolidation, in-market consolidation, we are opportunistic. And, as Stephane said, we don’t comment all the rumors in this market.

[Stephane Richard:]

Maybe a last word on Africa to remind that we are currently working on a vehicle like a holding company, that’s - that will host all our operations in Africa. This work will be completed by the end of first-half of 2015. We think that such a vehicle will give much more visibility to our African operations, maybe will give a better access to economics of this part of the world and also value of what we have in Africa to the markets and to our investors. It will be also for us a tool in any kind of further development or expansion. And so this will be for us a step, important step regarding what we are doing in Africa. Maybe one more question in London.

[Guy Peddy:]

Thank you. Yes, it’s Guy Peddy from Macquarie. Just two quick questions. Firstly, could you explain the thought process behind keeping the dividends flat for 2015 or the target of flat dividend? And leading onto that, what environment are you looking to change to actually return to a dividend growth policy in the mid-term? Thank you.

[Stephane Richard:]

Well, regarding the cash generation of the company, the EBITDA generation of the company and the global environments of our industry, we think that the level of €0.60 dividend is a sustainable level at least for 2015, and is considered by the management and by myself as like a minimum level in the mid-term. In my view, regarding all the financial parameters of the decision, the top line, the EBITDA, the CapEx, it would not be sensible to increase the dividend today, I mean, in 2015. And confirming the level of the dividend at €0.60 shows how the management is also committed to ensure an attractive payout to our shareholders. Now of course, in the mid-term, depending on the results and the success of our strategy in terms of top line, EBITDA growth and the general environments of our industry, we will be ready to grow the dividend. I think it is something that we can contemplate in the mid-term, not in 2015, but in the mi- term. And I would say that all the plans that we have all the strategies that we implement, all the efforts also that we make in better managing our cost basis clearly focus the EBITDA generation, so at the end of the day our capacity to better payout our shareholders. So let’s consider the 2015 commitment to keep the dividend at its level of €0.60 regarding the general environment of the industry as in my view a friendly and attractive commitment from the company towards its shareholders. And in the mid-term, I’m once again reasonably optimistic about our capacity to restart an EBITDA growth process and, of course, it would result in growing the dividend.

[Andrew Lee:]

Good morning. Thank you. It’s Andrew Lee from Goldman Sachs. Just a couple of questions on competitive intensity in France. First, I wondered if you could comment on whether you’ve seen any change in competitive intensity post Numericable getting the keys to SFR in November. I know that it looks like they’ve removed the €10 fiber off of that. And then secondly, Delphine mentioned or you all mentioned the traction you are getting from your network investments in mobile and fixed. Do you think that can enable you to sustain your prices or even grow your prices through 2015, or maybe doing it, putting this question relative to the rest of your competitors maintain or grow your price premium versus your competition? Thank you.

[Stephane Richard:]

Delphine?

[Unidentified Company Representative:]

[Interpreted] Tell us whether the competitive intensity has changed since the emergence of your Numericable and SFR?

[Delphine Ernotte Cunci:]

[Interpreted] There is still competition on SFR side. But it’s very complicated from my point of view to understand what they intend to do. For instance, they made some very high promotions on January. We wasn’t completely compliant with their strategy on the fixed market. So it’s difficult to tell now. I think that the merge is not complete, so we need to wait until they are completely hands-on, Numericable is hands-on on SFR teams to see what their pricing policy is both on fixed and the mobile market. But what is clear for last year and this year too is SFR is not a really big competitor for us today. They’re not very successful in terms of net adds, you will ask them, but it’s like we have - we like one competitor on the market, SFR. So it’s good for us. We have very good commercial performance in January, for instance.

[Unidentified Company Representative:]

[Foreign language]

[Delphine Ernotte Cunci:]

[Interpreted] The second question is, do we think that we are going to sustain our premium prices, both on mobile and Internet, and how is the market going to be. So we really believe that we have in France, at least, two competitors who are really focused on the fixed margin, which are Free and Numericable-SFR. And both SFR and Numericable has to make a huge EBITDA in order to be successful. So we really feel that those two competitors need to sustain higher prices on the fixed line. So we believe that the fixed prices, at least, not the prices, but the ARPU is really going to increase this year and maybe the years to come.

[Stephane Richard:]

Okay. Maybe a last question in London.

[Emmet Kelly:]

Yes. Good morning. It’s Emmet Kelly from Morgan Stanley. Just two questions please. The first question relates to EBITDA. If I look at the difference between your reported EBITDA and your restated EBITDA, it’s roughly €1.1 billion. Could you just say how much of these restatements are actual cash costs? And also if you look forward to 2015, how do you expect labor restructuring cost to evolve in France? Obviously the number was quite a bit bigger in 2014 than in 2013. And the just on the second question, you haven’t given any guidance for mobile ARPU or mobile service revenues in France in 2015, which is fine. But if I just look at the individual drivers going into 2015, if you just say a few words on what we’ve seen in 2014 and how you expect that to evolve. It seems like we’ve had some discounting going in on the mobile side from people moving to Open, so that’s obviously been discounted through the mobile side, also the move to SIM-only. Do you expect the impact from those two elements to perhaps decline as we go into 2015? Thank you.

[Stephane Richard:]

Okay. On the first question, EBITDA restatement, Ramon?

[Ramon Fernandez:]

Yes. So indeed you have seen in the presentation, you have a number of slides who are explaining the difference between restated EBITDA and reported EBITDA. And I explained the three main elements explaining the difference. And litigations, part of - you have the figures more than €400 million provisions related to litigations in 2014, part of these litigations have been paid already so the cash impact is in 2014. For instance, we reported last year that there was a €300 million paid to Bouygues. So part of this has been paid now another element was restructuring provisions for real estate. Here you will have no cash impact. And the third element was related to the senior part-time element, which also doesn’t have here a full cash element. So going from one to the other in terms of organic cash flow, we have €3.5 billion organic cash flow in 2014. And we aim to be - we are not giving any precise objective here, but I think you can draw conclusions from what I’ve said.

[Stephane Richard:]

Regarding the mobile ARPU in France in 2015, as this has been mentioned before, we expect still decreasing ARPU in France, but at a very lower level than what we have known in 2014 and 2013. So it will still decrease but much, much less than in the previous years. What are the drivers for and that can explain this evolution? The first is that, as you know, now we have re-priced almost 100% of our customer bases after the big price cuts of the recent years. So there is nearly nothing more to expect in terms of re-pricing effect. The second point is that it seems to - we think that we are touching a balance in terms of segmentation of the market between SIM-only and subsidized market. As you have seen in 2014, we have gained still some market share in the high end of the market, especially subsidized offers. And for instance, the launch of the iPhone 6 has been also a very positive contributor to the subsidized market. So we think that probably the main part of the SIM-only development in the French market is over and that this year and in the future we will see a sort of balance in the segmentation of the market between SIM-only and subsidized market. And we still believe that there is a very significant market for subsidized offers. And maybe last, we have today nearly I think 6 million customers for our convergent offers, Open. So it makes quite a difference between - with the situation two or three years ago where we started those offers, so meaning that we have substantial part of our customer bases that are under convergent offers. And so the impact, also the dilutive impact of those convergent offers on the ARPU will be much less in 2015. All those factors explain that we will have still a decrease in the ARPU but much, much lower than last year. So if there is no more question, I would like to thank you for your attention, for your participation and for your interest into Orange. Have a nice day. Thank you. Merci a tout le monde.