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Edited Transcript of ORA.PA earnings conference call or presentation 27-Apr-17 6:30am GMT

Thomson Reuters StreetEvents

Q1 2017 Orange SA Earnings Call

Paris Cedex 15 May 1, 2017 (Thomson StreetEvents) -- Edited Transcript of Orange SA earnings conference call or presentation Thursday, April 27, 2017 at 6:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Fabienne Dulac

Orange S.A. - Senior EVP of France

* Gervais Gilles Pellissier

Orange S.A. - Senior Executive Vice-President

* Laurent Paillassot

Orange S.A. - CEO of Orange Espagne

* Pierre Louette

Orange S.A. - Deputy CEO and General Secretary of the Group - Orange Wholesale France & Group Purchases

* Ramon Fernandez

Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa

* Thierry Bonhomme

Orange S.A. - Deputy CEO of Orange Business Services

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Conference Call Participants

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* Andrew J. Lee

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Dimitri Y. Kallianiotis

Redburn (Europe) Limited, Research Division - Research Analyst

* Eric Beaudet

Natixis S.A., Research Division - Research Analyst

* Giovanni Montalti

UBS Investment Bank, Research Division - Executive Director and European Telecom Equity Analyst

* Jakob Bluestone

Crédit Suisse AG, Research Division - Research Analyst

* Jeremy A. Dellis

Jefferies LLC, Research Division - MD and Senior Telecommunications Analyst

* Louis Citroen

Arete Research Services LLP - Analyst

* Mandeep Singh

Redburn (Europe) Limited, Research Division - TMT Specialist Sales

* Russell Waller

New Street Research LLP - Founding Partner

* Simon Weeden

Citigroup Inc, Research Division - MD and Head of European Telecoms Research

* Stephane Beyazian

Raymond James Euro Equities - European Telecoms Analyst

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Presentation

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [1]

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Good morning, and welcome to the presentation of our Q1 results. I would like first to highlight 4 quick points in order to better understand our performance. First, starting from this quarter, we are adjusting the reporting for all fixed and mobile B2B customers in France. Revenues and OpEx for companies employing more than 50 employees are from now on reported in the Enterprise segment. Second, as indicated during our full year results conference call, 2016 comparable basis is mostly impacted by the Egyptian devaluation, which happened in Q4 2016. Third, with the integration of Orange Bank, all group level mentions will include both telecom and banking activities, unless otherwise specified. And fourth, as promised, we will from now on produce new figures and KPIs, which will help you to better quantify why convergence is so important, and we will also present all the ARPU on a quarterly basis to give you a more dynamic vision of our quarterly performance.

So let's start our financial review with Slide 4, which presents the main results. You can see here that the first quarter confirmed the improving trends of 2016. Group revenues grew by EUR 85 million, driven mainly by Spain, and thanks to a better performance in France and Poland. This positive revenue trend contributed to an EBITDA growth of EUR 50 million, up 2% year-on-year. Excluding Orange Bank, the EBITDA of our telecom activities grew by 2.2%. CapEx was up 2.1%, sustaining our ongoing investments in very high broadband networks. And concerning our commercial performance, we now serve a total of 265 million customers with a positive upturn of our mobile net adds in the Africa and Middle East region.

So the next slide is devoted to convergence. As I just said, we will from now on communicate a number of indicators on convergence, because in the European markets, which is fast transitioning to convergence with -- demanding high-quality networks both in mobile and fixed, together with the convenience of a single bill and a single point of service, our long-standing strategy based on household-centric convergence, network superiority and customer experience, this is proving increasingly relevant. And I think we are starting to see this. It's going to set us apart from competitors. It's going to become more and more important, more and more visible in the future, and it will also probably contribute to structure our markets. You can see here that convergence is a strong acquisition tool for both initial and follow-on services. We see a growing number of mobile lines per convergent contract, standing above 1.4 -- 1.5 line in all our major countries today. We are also convinced that there is an upselling opportunity in lines of business other than connectivity such as content, IoT, financial services and other future adjacent services. So convergence is good for the top line.

Convergence is also a powerful retentional tool, resulting in a much lower churn for both fixed and mobile components with an economic benefit to Orange, much worth the discount we have to provide compared to separate fixed and mobile contracts. For instance, when we compare convergent fixed broadband contracts to all fixed broadband contracts, we see a churn improvement of more than 2 points in France, 7 points in Spain and almost 4 points in Poland.

Also, combining the growth in B2C convergent offers subscribed with the corresponding average revenue per convergent offer, ARPU, so we would be giving figures about ARPU from now on, while we get a much better trend in total billed convergent revenues than the B2C business as a whole. For example, in Q1, convergent billed revenues grew 10% in France, 12% in Spain, 23% in Poland. And finally, we rolled out our new convergent family of offers called LOVE in Spain, Belgium and Poland, and we now provide convergent services across our full European footprint, with a total base of 9.5 million B2C convergent contracts, growing at 10.5% year-on-year.

Let's now turn to the financial results in Slide 6. In Q1, group revenue grew for the seventh quarter in a row with plus 0.8% plus EUR 85 million, improving on Q1 2016 where growth stood at plus 0.6%. This performance was mostly driven by Spain, with growth accelerating to 8.5% year-on-year. This is plus EUR 101 million. And Africa, Middle East area reported a moderate growth of 0.7%. This would have been 1.5% when corrected for the February 2016 (inaudible) year impact. This is a prepaid market. So when you have one day less, it counts, and this would have been on par with the Q4 2016 performance at 1.6%. Also, growth has been accelerating at the end of the quarter in Africa and Middle East.

In France, despite intense promotional activities by competitors, we almost reached revenue stabilization while still impacted by the decrease in national and European roaming, and the underlying trend in mobile services broadly remains unchanged. I will come back to this later. Poland posted a second consecutive quarter of growth, supported by the growing total of mobile and equipment revenue.

Turning to EBITDA. For telecom activities, Q1 was up by 2.2%, confirming the positive trend of the previous quarters, also helped by a favorable comparable base effect in Q1 2016. Excluding all one-offs, EBITDA would have been flat year-on-year, which is fully in line with our 2017 guidance of an EBITDA higher than in 2016 on a comparable basis. Once again, this quarter, we limited the impact of top line upturn on content and commercial costs, thanks to our efficiency program, Explore2020, and to labor cost reduction with full-time equivalent employees decreasing by 2.7%. We therefore maintained what we believe is the right balance between growth and profitability.

Let's now have a look at our investments. We continued our investment efforts to keep our competitive advantage in connectivity amounting to EUR 1.5 billion this quarter with a ratio to sales of 14.7%, keeping our focus on networks, especially 4G and very high fixed broadband. As a result of this sustained effort, we reached 10 million fiber connectable homes in Spain, up 35% with a target of a further 4 million homes by 2018. We reached 7.4 million connectable homes in France, up 35% year-on-year, and we accelerated our fiber deployment in Poland with 1.7 million connectable homes, representing a doubling over one year.

In Romania, the agreement with Deutsche Telekom to access their fiber footprint allowed us to multiply by 7 in one year our homes connectable in Central Europe. The group also strengthened its leadership position in mobile, particularly in 4G coverage. In Poland, we now cover 99% of population, up by 10 points year-on-year. While in France, we now cover 89% of the population. This is plus 8 points year-on-year.

Let's now turn to our business review starting with France, Slide 10. Despite a tough market and some expected adverse effects, Q1 2017 showed good financial figures with total revenues close to stabilization at minus EUR 4 million or minus 0.1%, thanks to the strong performance of broadband and wholesale activities. Mobile service revenues continued to be under pressure due to the national roaming agreement revenue decrease, but to a lesser extent than in 2016 and still with decrease of European roaming. However, the underlying mobile service revenue was in line with 2016 at minus 1%. We were able to preserve value consistent with our strategy, focusing on maintaining a price premium against our competitors and limiting promotions to the Sosh brand.

In the meantime, we are continuing to focus on convergence and fiber, which are our key assets. In Q1, convergent revenues, which account for 23% of total revenues, grew by 10% year-on-year, and broadband revenues continued to grow at 5.5%, thanks to both good commercial performance and a continuous ARPU increase. The broadband quarterly ARPU increased by 1.6%, supported by the May 2016 price increases and also a good customer mix. Going forward, we expect broadband revenues to continue to grow at this pace.

Fixed wholesale revenues have also been exceptionally high at more than 5% -- 5.1% as they benefited from a favorable momentum in almost all lines of business and especially on FTTH cofinancing revenues, bitstream access and the ULL with an increase by EUR 0.35 of the ULL tariff in 2017.

In terms of commercial performance, Slide 11, and keeping in mind that we have transferred the business customers for companies of more than 50 employees to the Enterprise segment. In Q1, we have strong net adds continued to be driven by very high broadband and convergence. At the end of the quarter, we had 5.6 million B2C convergent customers, representing 57% of the broadband customer base. Convergence, once again, is a strong retention and acquisition tool supporting our performance both in fixed and mobile. 76% of new convergent customers were new fixed and/or mobile customers, and I'm not going to repeat whatever I was saying on churn, but you have seen the figures.

In mobile, we recorded another strong commercial performance this quarter, with 73,000 net adds and a decrease of a quarterly churn rate despite a competitive environment, especially on the low end of the market. On fixed broadband, we had 73,000 net adds with once again a record first quarter with 127,000 FTTH net adds, of which 51% are new Orange customers. The FTTH adoption rate was at 21.5%, up 2 points year-on-year with fiber representing now 14.4% of our broadband customer base.

So all in all, performance in France was good in Q1. This is clearly the result of our strategy, which is focused on the quality of our network and convergence. In mobile, we continue to lead the market with 89% of 4G population coverage. And in fiber, we now have 7.4 connectable homes, in line with our target to be at 12 million by 2018.

Let's now turn to Spain where growth was once again very strong this quarter. In Spain, Slide 12, despite heavy discounting from competitors since December, overall revenue grew by 8.5%, surpassing the 7.9% growth achieved in Q4 2016, and more broadly, over the full year 2016, where Orange widely overperformed its 2 closest competitors. This comes as a result of our value strategy with less recourse to promotions than competitors. And of Orange dual brand strategy with Jazztel brand achieving leadership in mobile portability before MÁSMÓVIL in Q1.

Mobile revenue accelerated to more than 8%, driven by a 5.4% growth in the contract base and a 4.6% growth in mobile quarterly ARPU, supported by recent service upgrades, the latest on the Jazztel brand last October and February on the Orange brand. But we also revised our mobile-only tariffs beginning of April and announced a new service upgrade for the Jazztel brand starting May 1.

Fixed broadband revenue increased by 8.5% despite aggressive campaigns by competitors, partially matched by Orange. This growth performance was driven by plus 5.4% year-on-year growth in subscribers and also a 3% growth in the broadband quarterly ARPU, fueled by fiber and TV penetration.

Convergent revenues, our new metric grew by 12.1% to EUR 503 million, driven by a 6.5% growth in number of convergent offers subscribed and a 5.2% growth in convergent ARPU to EUR 50 per month.

Commercial performance in Spain, Page -- Slide 13. In mobile, was great. Our 4G user base increased by 42%, reaching 8.2 million customers, and we clearly led the 4G Spanish market in 2016. Fixed broadband commercial performance was also very good as we leveraged our extensive 10 million fiber connectable homes footprint and grew our fiber base to a total of 1.8 million. This is close to 8% increase over 12 months, now representing 43% of our fixed broadband base. And here also Orange led the market in fiber net adds over the course of 2016. TV subscribers multiplied by 1.5 over 12 months to 537,000 supported by our strong FTTH performance. With regards to convergence, Orange continued to be the most dynamic operator in Spain, having the highest penetration of B2C convergence in its fixed broadband base. This figure is now 82%.

In Poland, Q1 revenue growth was positively impacted by equipment sales and higher revenues in ICT. We successfully launched the Orange LOVE convergent offer. Our B2C convergent base reached 738,000, and we are pursuing our investments in order to maintain our leadership in mobile, but also, and this is very key, to improve our quality in the fixed network. Our strategy to invest in fiber and in wireless for fixed is bearing fruits, as over the past 12 months, we managed to transform our fixed base towards a better quality with the increase of share of very high broadband and wireless for fixed from 30% to 35%. In Q1, in Poland, we had 117,000 fiber customers out of a total footprint of 1.7 million homes passed, and we also had 260,000 fixed LTE customers.

As said in the previous quarter, Orange Poland's turnaround strategy is not only based on investments but also on efficiency, and the company, Orange Polska, will disclose an update of its strategic plan along with Q2 results this year.

In Belgium and Luxembourg, we launched successfully our convergent offer with -- in Belgian, 50,000 customers. Total service fixed and mobile revenue grew by 0.6% in Q1, with mobile service revenues going down by 0.4% and fixed service revenues progressing well with performance of over 14% year-on-year. Orange Belgium remains focused on value with its strategy to monetize mobile data. And as a result, the postpaid ARPU has increased to EUR 28.9 from EUR 28.6 a year ago, despite the adverse EU roaming impact.

Turning to the Central European country subsegment. While this is still growing with a good commercial momentum with postpaid customer base growing in Romania by 2.2%, also in Moldova plus 13%. Thanks to 4G with 3.5 million customers in the area. This is an increase of 350,000, 11% over Q1 2016. And we are also following our convergence strategy in all 3 countries. In Romania, we launched a national convergent offer, while in Moldova, the acquisition of Sun Communications boosted our very high broadband base. This is now 231,000 customers in all the Central European region, including fixed LTE. Also as part of our Essential 2020 strategy to grow new revenue streams, we successfully launched Orange Money in Romania in November, reaching now 41,000 customers.

Let's now turn to Slide 17 to Africa and Middle East. Revenue grew by 0.7% in Q1. This is still impacted by the deteriorated environment in Egypt and GRC, also the impact of customer identification in 2016. And if we neutralize the impact of the basic style or calendar effect with 1 day less in Q1 2017 than in the previous year, revenue would have grown by 1.5%, in line with the previous quarter and improving in the last month of the quarter.

Data based services and new business lines such as Orange Money and B2B are consistently contributing to the growth of our revenues in this region, compensating for the decline of voice. Mobile data revenue grew by 31% in Q1, thanks to the fast growth of smartphone penetration and supported by our strategy to build mobile very high broadband networks in the region with now 4G available in 11 countries. The reliability and strength of our 3G and 4G networks is also a strong competitive tool to capture new revenues in the B2B segment. In Q1, B2B revenues grew by 11%, confirming the 8% growth achieved in 2016. And finally, Orange Money, that is today our main diversification tool, showed revenue growth acceleration at 64% year-on-year compared to 53% for the full year 2016.

Turning to Enterprise, Slide 18. So once again, this new parameter now includes all mobile customers and revenues of companies employing more than 50 employees. Why are we doing this? Well, in order to have a better alignment between management focus and reporting, we've consolidated P&L view per segment and this will also help to fully mobilize on the development on mobile, which is a key driver of the digital transformation of our B2B customers, generating productivity gains for improved sales force and field operations performance. Despite a good commercial momentum in Q1, voice and data revenues were impacted by some base effects and the impact already explained in Q4 2016 of the loss of a couple of international contracts in the past. Mobile remained under slight pressure due to the decrease of European roaming, but mobile customer base grew by 14,000 in Q1. Growth continued to be fueled by IT and integration services, with security and cloud growing by 15% and 19%. And -- all in all, Q1 was a bit below our trend, and we expect H2 2017 to be better than H1.

This concludes our operational review. Just a few words on our 2017 guidance which is fully confirmed. Starting with our full year guidance of the group, adjusted EBITDA above 2016 on a comparable basis. We will also maintain our net debt to adjusted take-home EBITDA ratio around 2 in the medium term. Regarding the dividend for fiscal year 2017, as you know, we will propose in 2018 (inaudible), a dividend payment of EUR 0.65, and we plan to pay a EUR 0.25 interim dividend in December this year. We will pay the 2016 dividend balance of EUR 0.40 on June 14. Regarding our portfolio management policy, we maintained our selected approach, focused on our existing footprint and on value creation for Orange and its shareholders. And finally, as announced last week during the (inaudible) show, we are about to launch our Orange Bank offer in France on the 6th of July.

Thank you for your attention, and I'm now available with all my ex-com colleagues to answer your questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Crédit Suisse, Jakob Bluestone.

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Jakob Bluestone, Crédit Suisse AG, Research Division - Research Analyst [2]

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Two questions, please. Firstly, could you maybe just give us a little bit of an update on how you see the French mobile competitive environment evolving? And then secondly, could you maybe also give us an update on the content side? There's obviously been some press coverage about sort of distribution agreement with Canal+, I don't know to what extent you can comment, what you think that might bring to you?

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Fabienne Dulac, Orange S.A. - Senior EVP of France [3]

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It's Fabienne Dulac speaking. So the French mobile market is very competitive. As you can see, it's very turbulent market. Maybe one figure to share with you, in this first quarter, we have had to face 76 days of promotion on 90. So you can see the turbulent market. We expect a competitive market always and especially on the low hand part with more and more discount, price as we can see at the beginning of the year. You see another point of importance, it's the recent competitors' move with unlimited data. So the competition is increased, especially on the low hand market, but we are confident that the mobile market in this -- we are confident that Orange in this movement can be sustainable with Sosh, as we prove with the net add we recorded this first quarter and with Orange, because the quality stay very important choice decision in the trade made by the customers.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [4]

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Thank you, Fabienne. So I would just like to support what Fabienne says, which is when you look at the performance on Q1, in terms of net adds and the quality of our performance, in a market where convergence once again is going to be more and more key, this is quite outstanding. And I think the best demonstration for the quality of network, for quality of service is absolutely key and that we can be successful in this environment. In terms of content policy, I think we are sticking to our general strategy, which is to offer to our clients the contents they want to have in terms of distribution, in terms of aggregation. We have a number of offers in France. We are distributing widely through our 6.6 million TV clients. We have agreements with Canal+, with beIN, with Netflix. We have OCS, as you well know. We have 2.5 million clients and some very attractive deals within OCS, especially HBO. You have seen a few weeks ago that we have a new agreement with HBO, which is very exciting for our customers. We are leaders in VOD, et cetera. So in different countries, situations are different. In Spain, for instance, we are neutralizing our investments and content on sports rights with Telefónica. In Belgium, we are a launching TV offer through regulation in cable access. In Africa, we have another set of initiatives. And in terms of relationships with Canal+, Canal is clearly one of the very key partners we have when we develop these policies. Canal is a shareholder with us in OCS. We are partnering in a number of countries, of course, in France, with the offer family by Canal that was launched also in last autumn, but not only in France, in Poland we are also distributing Canal, which is in (inaudible). We are partnering in Africa, especially in Côte d'Ivoire, for instance. And in the context of this relationship, we are regularly discussing with Canal to see what else can be done in order to reinforce the impact of our policies, and this is going to be continued in order to secure for our customers the capacity to access to what they want to have. I think at this stage, this is what we can say. But obviously, we are very much focused on all these issues, and you also know that we spend significant resources on content. It's over EUR 600 million a year, and this is the policy we will continue to roll out without being convinced that vertical integration is the solution. There is a much more efficient way, we believe, in order to secure access to content for our customers.

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Operator [5]

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Well, we will take our next question from the line of Raymond James from Stephane Beyazian.

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Stephane Beyazian, Raymond James Euro Equities - European Telecoms Analyst [6]

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Three questions, if I may. The first one is on Orange Bank. I think the selling point of the product were quite clear during your presentation, but I wasn't too sure on the sort of monetization and the possible net banking compare per user. Are you able to give us some indications on the sort of fees that you're planning, or any sort of indication on ARPUs? Or should we just consider for now that this will be a subsidized product, I think, in the range of EUR 100 million EBITDA impact in 2017 and potentially some levels beyond 2017? And my second question, I know it's not such an important type of margin business, but there was some deterioration in international carrier services which is something we also observed at KPN yesterday. I was wondering whether you can make -- it's a very volatile business, but is there any -- something more structural happening in the market and whether you can comment on that? And my third question, sorry, is just a follow-up on the content discussion. So am I right to understand that making OCS, for which you just renewed the HBO deal, so clearly you're strengthening the OCS proposition. So making OCS an exclusive product to Orange and Canal+ customer is still not an option today even if SFR is launching its bundle?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [7]

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Okay. So maybe just starting with the last question on OCS. OCS is not exclusive to Orange. I mean, we're not going to change this, but obviously, OCS is very much close to Orange and all the customers of OCS, I think, have a clear understanding. So we will continue to use OCS as a very powerful tool for Orange, but it's not exclusive to Orange. And I think, more generally, this idea of exclusivity is not really driving, we believe, a content business. I don't think it is either for competition rules or economic reasons the best way to follow. On the EC, maybe (inaudible) will answer to your question, is it structural or more conjunctural? And maybe Marc Rennard will say a few words on the Orange Bank. Maybe I can start with Marc on Orange Bank just to say that it's -- as you say, the picture is getting clearer and clearer. We have given this to Europe around EUR 100 million of net negative contribution in terms of EBITDA in 2017. This obviously depends on the acquisition costs that will be going with the launch of the operations in July. And for some time, this would be the kind -- it's a similar CapEx process. Then following a number of years, 5, 6 years, we are reaching the equilibrium, and we start to be on a positive trend. So in terms of KPIs, more specific, we will be -- I think when we will have launched the operation, it will be time to go into more details, but it's not meant to be a subsidized telecom operation for a year. It's initially kind of startup model. You invest in building the base and then it will be contributing. So it will have both a benefit in terms of on a stand-alone basis as a bank, and second, of course, in terms of a benefit to the telecom operations, in terms of acquisition and retention so we will play on both sides with this bank project.

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Unidentified Company Representative, [8]

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As far as international carrier is concerned, I guess we have 2 different trends. The first one is on voice and the revenue of international voice is decreasing. However, the impact is completely different than the EBITDA. We have a strong impact on the revenue, but nearly no impact on the EBITDA. And on the other side, the data business is growing both in volume, in the volume of data which is traveling around is growing. And also with services, we are pushing services for security, for fraud, for interconnection and so on, which are high-value services. So we are trying to manage the decrease of the voice, (inaudible) while decreasing the revenue and pushing strongly the data part. That will grow anyway in the future. So this is 2 different trends.

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Stephane Beyazian, Raymond James Euro Equities - European Telecoms Analyst [9]

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Just a follow-up, if I can. Are you able to disclose the number of ACS, OCS or your customers and recent trends?

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Unidentified Company Representative, [10]

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2.5 million essentially through the operators and also through the OTT stand-alone distribution.

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Operator [11]

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We will take -- next question comes from the line of Natixis, Eric Beaudet.

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Eric Beaudet, Natixis S.A., Research Division - Research Analyst [12]

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Two quick questions, if I may. It's Eric Beaudet from Natixis. The first one concerns the Enterprise division. You mentioned you expect an improvement in the second half of the year. I was wondering where that would come from as the European roaming impact will -- should actually impact your revenues in the second half. So I was expecting a worst second half than the first half. So where do see that improvement coming from? And my second question is on Africa, Middle East. You have had now for a couple of quarters top line -- organic top line growth of barely 1% or 2% below your long-term 4%, 5% growth targeted. What would be the trigger for that African growth to pick up?

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Thierry Bonhomme, Orange S.A. - Deputy CEO of Orange Business Services [13]

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Okay, that's Thierry Bonhomme speaking from Orange Business Services. I will answer the first question on the -- where do we stand when it comes to our B2B revenues. The first point is that's our Q1 results are not a surprise. We anticipated those results according to what happened to our sum, and that was already mentioned a few months ago, two big contracts at the international level we were not renewed one year ago. Why are we optimistic for the future? Because we have a very strong, very strong commercial pipe both in France and at the international level. And the second point, it's already working very well. We were awarded, I will not mention the big contracts both in France, 2 big contracts for the next 5 years. When adding the revenues, the TCDs, the total value of these contracts, it's very close to EUR 1 billion. So it's a huge number, and as well at international level. So the business is there. Our go-to-market teams are successful and we are, second point, still very confident when it comes to the growth perspective for our IT and integration services. That's very well embodied by security services and cloud services as well.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [14]

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On Africa and Middle East, you're right to say that the growth has been lower than initially expected. In 2016, we had 2.6% growth. This quarter, it's 0.7%. But once again, it's a prepaid market. So when you have 1 day less on a comparable basis because of the basic style here in 2016, it has an impact. If you take a comparable figure, we would be roughly in Q1 at the same level of Q4, which was 1.5%. Within the quarter, the process has been improving. You have to be aware that the identification process of prepaid customers which has been hitting the market in 2016 was in the second half of the year. So when we are in the early quarters of 2017, we are comparing ourselves with a base which was much higher in 2016. We are now back on the net adds positive dynamic which is aligned with the usual acquisition we used to see in this region, and we will have behind us the hit we took with the devaluation of the Egyptian pound in late 2016. So there are a number of elements which, of course, will be behind us in the future. I think the key in this region is to manage this shift from essentially a market where we were monetizing voice to a market where data is going to be more and more important, and we are seeing this in line with the higher penetration of smartphones. If you took -- if you take the GSMA figures, you can see that the penetration of smartphones in Africa is growing from 25% in 2014 to 40% in 2016, so this is a shift which is happening now at a quite rapid pace, and we are going to build on this to grow our revenues in the future through, once again, mobile data revenue. We are growing by more than 30%. We are growing the B2B business, which was not a traditional business for us in Africa, but we are now putting a focus on this. There is a lot of demand, and we are able to provide new services in line with our 3G and 4G networks that we are building and operating now. And finally, Orange Money which is a fast-growing activity, we have now EUR 150 million revenues. This is growing by more than 50% year-on-year. So all these engines for growth are full-speed working. Of course, we are starting from a base which is smaller than the traditional voice business, but this is going to be the key to go back to higher growth figures. And clearly, the 2017 performance is going to be much higher than what you are seeing in the first quarter.

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Operator [15]

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Our next question comes from the line of UBS, Giovanni Montalti.

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Giovanni Montalti, UBS Investment Bank, Research Division - Executive Director and European Telecom Equity Analyst [16]

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One Spain. Vodafone has recently reached an agreement with Telefónica and for wholesale access to the Telefónica fiber network and seems to have given up on further extension of their own proprietary network. So I wanted to understand if there is any ground for you to consider the option to join a similar agreement with TAS and if this means that for sure you will not do any more joint rollout with Vodafone. And also if you can add any color on the dynamics of the roaming revenues from Iliad.

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Gervais Gilles Pellissier, Orange S.A. - Senior Executive Vice-President [17]

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So Gervais Pellissier. Just on Spain. So the agreement between Telefónica and Vodafone, by the way, is open to other parties as being an agreement signed by the incumbent. But on our side, we have already built what we wanted to build in terms of fiber on the areas which are concerned in the Telefónica/Vodaphone agreement today. And on the other hand, I just remind you that we have also coinvestment agreement with MasMovil, which help us also to cover. The second point is that when we look at the economics of the fiber in Spain, we are using some, let's say, wholesale agreements of that type but for a small part, because it's much more attractive in terms of return on investment to build its own fiber or to share it on a real coinvestment plan than to rent it from a third party. This is why we might use this but just to keep customers in areas which are not today a priority for us in terms of investment. Second point, I think this shows also, in our view, the difficulties of Vodafone to invest into its network for 2 reasons. One, the relatively high cost of modernizing the cable infrastructure and the fact that they cannot dedicate that much resource to a new investment in new areas. That's also, for us, a signal that things are not that easy for them. So this is why we look at this agreement, I would say, rather positively to a certain extent because it shows the different strengths of the different players on the market.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [18]

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On the -- this is Ramon. . .

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Giovanni Montalti, UBS Investment Bank, Research Division - Executive Director and European Telecom Equity Analyst [19]

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Can we follow-up. Do you mean that your, let's say, total target of coverage, the additional 4 million households premises, if I remember correctly is -- I mean we should assume that this is going to be maintained regardless of the fact you will not be sharing this with Vodafone anymore. Is that a correct way of looking at it?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [20]

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I will hand over to Laurent Paillassot, our CEO of Spain who is with us to give you these details, but we maintain our objective. Laurent?

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Laurent Paillassot, Orange S.A. - CEO of Orange Espagne [21]

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Yes. Hi to all of you. Yes, obviously, as Ramon said initially, more than that, we are accelerating our deployment of fiber. So the initial objective that we had for the 14 million was 2020. Certainly, we will be reaching it by end of 2018. So basically, yes, we do think that accelerating the deployment of fiber is going to be key as the economics are very strong on fiber. And the bitstream agreements that Telefónica and Vodafone have, we already have access to that and we don't use it because it doesn't fly. So yes, we are committed to growing EBITDA and FTTH is a strong element for that.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [22]

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Okay. So on your question on the Iliad roaming revenue, you know that in 2016, we had a significant impact of around EUR 170 million for the year. We expect this impact to be significantly less important in 2017 due to the accounting modalities of a contract we signed in the summer 2016. And then the impact on a quarterly basis will be less and less important over the quarters of 2017.

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Giovanni Montalti, UBS Investment Bank, Research Division - Executive Director and European Telecom Equity Analyst [23]

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Sorry. Does this mean that the lowering part in terms revenue decline is to be, let's say, explained mainly by the dynamics implied by the renewal of the contract and the accounting implications of these rather than the evolution of the volumes of traffic that you're actually managing on your metrics?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [24]

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It's a mix of all these elements.

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Operator [25]

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Our next question comes from the line of Redburn's Dmitri Kallianiotis.

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Dimitri Y. Kallianiotis, Redburn (Europe) Limited, Research Division - Research Analyst [26]

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It's Dmitri from Redburn. I have 2 questions. The first one is regarding France. And I just wanted to ask you in terms of your strategy at the moment, most of your net adds comes on the Sosh brand. And I wanted to ask you if you had thought you needed to sort of reprice or change a bit your offers on your main Orange brand to make it more attractive or if you are just happy to basically acquire most of your customers on the Sosh brand even if they come with a lower ARPU? And my second question is on Spain. I just wanted to come back on a point mentioned by Ramon during the presentation on the service upgrade on the Jazztel brand. I wanted to understand, to me, and I haven't looked at it in details, but it looks like a price cut. So I was just wondering why you are cutting prices bearing in mind your performance is very strong in Spain. So is it because you see more competition coming?

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Fabienne Dulac, Orange S.A. - Senior EVP of France [27]

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For the first question on France, so we record -- I would like to remind first, we record a strong commission performance in the tough market I have described just before. It's thanks to the attractiveness of our offers, and I will come on this point just after, and the capability we have to address all part of the market, the low-end market and the high-end market. The mix we have today is still well oriented between high-end offers, thanks to Open, as Ramon said just before, and thanks to the convergence. And in the same times, we succeed in the low end with Sosh. This first quarter, as I said, was very competitive. So Sosh has been the good tool for acquisition we need. I would like just to say, in this same time, the very good resistance of Orange offers. Because we maintain the dynamic on the high-end market, and it was not so easy in this first quarter, we are able to maintain and to have a good balance between high-end and low-end markets. In front of the move of this first quarter, we just talked about it just before, the move of who offers unlimited data for convergent customer, I would like to specify 2 points. The reality of the data consumption is not clear today because if you know, the consumption is around 2.4 giga (inaudible) and the offer is really restricted today, offers by competitors. So it's why we decide to have a -- and to launch a measured response. In the same time to maintain the attractivity of -- the attractiveness, sorry, of our offers and to maintain the price premium. And we are really confident in this way, because that is one important, I think, it's in this market where you can see the value is -- there is a transference of value between mobile to (inaudible) activity, driven by confidence, they are confident we'll be the winner at the end. And it's the strategy we have with Orange, and it's why we pursue to work low-end and high-end market because it will (inaudible) at the end of the story.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [28]

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Laurent, on the Spanish question?

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Laurent Paillassot, Orange S.A. - CEO of Orange Espagne [29]

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Yes, just I think, if I understand the question correctly, it was about Jazztel doing promotions. Just a piece of information, when you see Jazztel communicating on 50%, it is excluding commission -- connection fees, which benefited strongly, 28% when you include the connection fee. So while this is temporary what we are doing right now, as Ramon mentioned, we are doing a service upgrade. So everyone is a little bit attacking the customer base. So it's really temporary and we expect to give you the size very soon. So if you look really what happened in Q1, everyone, Mobistar and Vodafone, was in the range of 50% 6 months promotions, where in Orange Jazztel we were in the 20% 3 months. So basically, not only we've been growing Q1 with less promotions than competition, and not only that, we have been accelerating our growth, so -- and EBITDA, as you see, looks in the same trend. So no, I mean we are doing service upgrades and we are remaining focused on value and creating growth.

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Operator [30]

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Our next question comes from the line of Goldman Sachs' Andrew Lee.

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Andrew J. Lee, Goldman Sachs Group Inc., Research Division - Equity Analyst [31]

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It's Andrew Lee here from Goldman Sachs. I'm going to go for 3 questions, if that's okay. Firstly, just on the French growth outlook this year. So wholesale fixed growth is unlikely to be sustainable, at least further out than 12 months. Can improvements in consumer fixed and mobile offset headwinds from those wholesale fixed growth revenues abating? And how realistic is it that France grows this year? Secondly, enterprise is down 2%. You're saying it's going to improve into the second half of the year. But across Europe, structural challenges to B2B is being highlighted from your incumbent peers. What do you see as the structural growth outlook for enterprise going forward? And thirdly, group investments are clearly paying off, but it's also rising. Could you talk us through your CapEx outlook for the group for the next 3 years, what that -- what any incremental investment is being spent on? And should we should we still see a material drop-off in group CapEx in full year '19?

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Fabienne Dulac, Orange S.A. - Senior EVP of France [32]

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For the first question, I think your question about the sustainability of the revenue trend in France and maybe is supported by broadband, the revenue trend is driven today in France by 2 kinds of revenue, broadband service revenue and by fixed wholesale revenue. On the broadband service, it's confirmed to growth at 5.5%, and I think it's really sustainable thanks to the good commercial performance and thanks to a continuous ARPU increase. This broadband revenue is driven by the growth of customer base, you can see plus 3.6% year-on-year growth, by growth of premium price and the recent price increase we made with the launch with the new box and on the fiber. So it's really sustainable because, as I said, fiber convergence is the key to success for Orange and for the market. So there's no reason to have them retuned. I hope it's clear. Maybe if you want to precise your question.

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Andrew J. Lee, Goldman Sachs Group Inc., Research Division - Equity Analyst [33]

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I think it's more a broader to -- is it realistic that French overall revenues will grow this year? So does that broadband growth offset the other headwind that you see, i.e., wholesale fixed growth declining and potential ongoing competition in mobile?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [34]

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This is Ramon. I think we have nothing to change to what we've said when we had the same question in February commenting for full year 2016. What we said at the time that -- is that we were expecting, as we had said in 2015, by the way, going towards stabilization over the year in 2017. So it's you have a trend. You can see the elements. As Fabienne said, our broadband is really growing very nicely. Wholesale, I think Pierre will come back to the wholesale part. And on mobile, there is this kind of structural minus 1% on mobile service revenues, which should be quarter-over-quarter in 2017 still the same impact as we had seen in 2016. So we are going in the right direction in this environment, which is the one we have. And with the assets we have, I think it's clear that we have the keys to sustain this improving performance, and the trend is what we just said. Pierre, on wholesale?

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Pierre Louette, Orange S.A. - Deputy CEO and General Secretary of the Group - Orange Wholesale France & Group Purchases [35]

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Yes. On the wholesale side, and actually, we have a very solid and satisfying and even surprising performance on the wholesale side, which is great news for all of us. We are able to compensate the roaming agreement program decrease of revenues by 2 main factors. The one -- the first one is actually the dynamism of the cofundings that we receive from our competitors. We have rolled out most of the existing FTTH plugs and they do now cofinance heavily, which was not the case 2 years ago. It started being the case last year and is increasing this year. So this is very impressive. It's more than 100% growth with regard to the first trimester of 2016. Actually, our competitors have also benefited from fiscal incentivization, which has helped us in this regard. And the second thing is that we benefit from the development of what we have called wholesale new territories, which is a program we launched 2 years ago. And we have signed major contracts in that scope with the French rail company SNCF, Eurostar also. We have opened also some of our optical nodes to our competitors in the very dense areas, WIC has signed a contract with us. So all of those revenues put together with the sound performance of actually the legacy copper because of the price effect. All of those effects put together give us a good increase, and we are pretty confident that we can protect ourselves with the same trend until the end of this year, probably with the help of our activities in the very less dense areas, what we call the RIP areas, the contracts we do, the territorial connectivities, this is also growing. So we have put some new engines at work in order to compensate what was programmed, which is the decrease of the roaming agreement revenues.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [36]

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Maybe turning -- we are going to turn to Thierry on the OBS question, but and, once again, look at the convergent figures. Once again, look back to the Slide 5 and to the slides devoted to France, where you can see this is 25% -- close to 25% of total revenues now in France are convergent revenues. This is a customer base which is growing by 10%. This is revenues growing by 10% with a churn difference, which is key. When we say there is a difference of 2 points in churn, this is a comparison with the total broadband base. If you compare a broadband convergent customer to a broadband only customer, the difference is 6 points, right? So all this is going to contribute to the progressive improvement of revenues in France. And I think we are very well on track to grow in this stability and then growth in revenues in France which will be following this process, so very encouraging signs. Thierry, on the OBS? And then after, we will go back to the CapEx question.

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Thierry Bonhomme, Orange S.A. - Deputy CEO of Orange Business Services [37]

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So I will try to answer your question about the structure of our market and why we are more confident than other incumbents within Europe. First point, it's about technology. Probably more and before than other competitors, we invested within the IT transformation at an Orange group level both for our voice services and for our data connectivity offers, investing more than others within the hybridization of networks, combining MPLS and Internet technologies. And that's something we have still been working on when it comes to the future. SDN is one of the key technologies we have been working on for more than 4 years. And we are, I think, again ahead of competition here. Second point, customer base. It's true that it's through regulation, the regulatory bodies, when it comes to the roaming prices evolution in Europe or on the fiber unitary prices in Europe, it's true that there is a pressure and competition is still there. But it's true as well that our customer base, when it comes to the enterprise market within Orange Business Services, is no more -- it's not only local or European customer base. We have been working on the MNC market for years. And as I said in answering the first question a few minutes ago, we have been facing solid strong growth within the MNC market worldwide outside of Europe. This is a good news and a difference when comparing to the other European incumbent. And last but not least, it's our growth strategy. We took the risk a few years ago to invest within IT integration services, and it's well embodied by our Orange CyberDefense offers, our Orange cloud offers, our Orange application offers where we have solid strong growth and pipeline. So the competition is there, pressure is there, that's true, but we have differences.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [38]

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In terms of CapEx, as we said in February, we expect this year to be investing around EUR 7.2 billion, which is going to be slightly higher than the 2016 figures, both in absolute and in relative terms to sales. I think it's good to have in mind that these investments are really building the networks which are going to be key in the future to grow revenues and to win the competition. And we have a very focused process in terms of selecting the best investments which will provide the highest returns. And I have also to say that when you look at the increase in these investments, it's not only very high broadband networks: first, fiber; second, 4G. It's also when we accelerate a little especially in Spain, where we see a very direct impact on revenues and margins. And if you look at the Spanish figures, once again, I think you don't need much more explanation. In terms of a perspective for the next years, our expectation is that we will reach a peak in 2018 around the same figures as for 2017. And then starting in 2019, we should start to go towards a downward trend both in absolute and relative terms. So we will come back to you with more details in the second half of this year to give you a more precise update on what are our expectations, but this is what we have in mind now.

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Operator [39]

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Our next question comes from the line of Jefferies' Jerry Dellis.

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Jeremy A. Dellis, Jefferies LLC, Research Division - MD and Senior Telecommunications Analyst [40]

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It's Jerry Dellis from Jefferies. I have 2 questions, please, related to EBITDA. Firstly focusing on the Q1 '17 performance. You reported organic EBITDA growth for the telecom activity of 2.0%, but you highlighted the favorable comp. And I'd just like to explore that in a bit more detail, please. I think looking back to last year, you reported employee share plan costs of EUR 50 million. There was also the EURO 2016 cost of EUR 16 million I think Orange Belgium reported a pylon tax provision of EUR 16 million as well. So if I take the EUR 50 million and 2 lots of EUR 16 million and I add them back to the Q1 '16 carryback EBITDA, and I get a clean number for Q1 '16 of about EUR 2.630 billion, and again, with that backdrop, your Q1 '17 number of EUR 2.598 billion looks like about a 1% year-on-year decline. Is it fair to sort of say that the underlying performance on group EBITDA in the first quarter is about minus 1% year-on-year? Or are there other factors that we should take into account? And then the second question is if the underlying run rate is minus 1% at the Q1 stage, your guidance is obviously for full year EBITDA growth, and that was the outlook on which you predicated the proposed return to dividend growth. But as we look forward, you'll probably have incremental drag from roaming. You'll also be lapping the benefit from Q4 '16 of the reversal in Belgium of the pylon tax provision. And I think you also have quite a much harder comp in EBITDA in France in the second half of 2016, probably related to a slightly easier promotional environment in H2 last year relative to H1. So first, the question is what, therefore, gives you the confidence that we really can see an improved underlying EBITDA performance in the balance of the year given the starting point and what do you look to be somewhat more difficult comps?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [41]

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Okay. So first, regarding Q1. I mean, when you look at EUR 10 billion revenue figure and to EUR 2.6 million EBITDA figure, you have quarter-after-quarter, a number of one-offs. Some one-offs are positive, some one-offs are negatives. What I was telling you introducing this discussion was that if you eliminate all the positive and all the negatives one-offs in Q1 2016 and Q1 2017, the Q1 EBITDA 2017 is absolutely flat, okay? So you have identified a number of one-offs that we had been discussing last year, especially on the employee share plan and a few others. But if you take all these one-offs, we are flat. This is crystal-clear. So looking ahead, I have -- I'm perfectly confident about what we have been saying in the beginning of this year with an expectation of higher EBITDA in 2017 on a comparable basis. There is strictly nothing to change to this guidance. Total confidence on my side. And you very well know that there is a kind of synchronicity of quarters after quarters. The first quarter is never the best one, clearly. And we are very much confident on, for instance, the consensus in terms of evolution for the year. So that's what I can say. Going into all the details of every single one-off I don't think is going to be extremely interesting. But you can have my word that if you take everything into account, you're flat.

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Mandeep Singh, Redburn (Europe) Limited, Research Division - TMT Specialist Sales [42]

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Could I just briefly follow up? I mean, just in terms of the outlook for the balance of the year then, your confidence on the ability to grow EBITDA on the organic basis through the year, does that require more than just Spain to be growing? So would you say that you're confident that France too will demonstrate positive EBITDA growth for the year?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [43]

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Why not -- we said, for instance, that for the Enterprise business, we expect the second half to be better than the first half. I also said on Africa and Middle East that the second half will be better than the first quarter, et cetera. So all in all, I mean there is a profile of our operations in our different regions. Of course, we expect Spain to remain very strong this year. So there are a number of elements which are contributing to this performance, and there is nothing that I can see which would deviate us from this perspective.

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Operator [44]

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Our next question comes from the line of Arete Research, Louis Citroen.

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Louis Citroen, Arete Research Services LLP - Analyst [45]

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I have 2. The first one is on France and fixed narrowband. Normally, every 2 years, you have a price increase that's authorized by this regulator. I was wondering if this was something we should expect this year. And the second question was on the content side, there is a review ongoing by the competition authority which results are to be known I think end of Q2 or beginning of Q3, and on the pay-TV market in France. I was wondering if Orange had any hope of -- or things they'd like to get out of this review, whether it's on exclusives, content purchasing, what's your philosophy regarding this ongoing review?

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Pierre Louette, Orange S.A. - Deputy CEO and General Secretary of the Group - Orange Wholesale France & Group Purchases [46]

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So the first question regarding the price increase, there is actually -- you are very right. There is now a 2-year period which is going to end, and we're in the midst of a review of all the fixed markets in this country. The fixed market review is triannual, and the increase is now every second year. We're not expecting a major raise in the prices of the copper loop now for the coming years because of the balance, actually, that the authority makes between the incentivization to roll out fiber and also the price, which is supported by historical costs that we have in our accounts. So this is the first element. And on the content review, actually, what you're describing is the end of the period in which the competition authority has described measures that Canal+ had to take and injunctions that were made to Canal+. So the review is focused actually on the end of this injunction period. We have contributed to the authority's reflections on that. And then of course, we will defend positions that we have defended in the past, which are that no one should be deprived, actually, of the high-quality contents and no major exclusivity should be granted to them. We are consistent with the positions we had developed actually already 2 years ago.

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Operator [47]

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Our next question comes from the line of Citi's Simon Weeden.

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Simon Weeden, Citigroup Inc, Research Division - MD and Head of European Telecoms Research [48]

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Simon Weeden from Citigroup. I just wondered if you could elaborate a bit on what you see is the impact from the next stage of the international, or intra-EU roaming regulations. In particular, there was a news item today saying that Telenor has seen a 900% increase in data volumes on roaming over the last 12 months or so. I imagine there's quite a few moving parts for Orange at the EBITDA level with Spain and France in the group, and large in the group. So I was just wondered if you could fill in some gaps for us on that.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [49]

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Just if you want one comment on that. The situation of the group is that except Poland and Belgium, most of the countries are net receiver, and France being neutral, which means that's a big difference. Just as you said, only 12% of the French are traveling abroad. So -- and this is not because if you give more data package in the roaming that we will pay the travel ticket to travel. Whereas the Nordic countries are sending many travelers, which I think everybody understands, especially in summer. So this is the first factual fact. And if you take -- for instance, if you take Telefónica, for instance, Telefónica is a net receiver in Europe and not a net sender. So how will we see that with the wholesale price? That's very difficult to predict today in terms of roaming in. We have difficulties to really evaluate what will be roaming in and we see relatively low elasticity on the roaming out.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [50]

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At group level, the expectation is that the impact in terms of revenue will be around EUR 130 million for full year 2017. This is negative, of course. Gervais is asking me to say negative. Yes, it is negative, but this is the figure we have taken on board looking ahead for 2017. I think we have down...

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Simon Weeden, Citigroup Inc, Research Division - MD and Head of European Telecoms Research [51]

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Have you (inaudible) the EUR 130 million into EBITDA?

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [52]

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This is revenue which is not very far away from -- not very far away, but this is a revenue figure.

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Operator [53]

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Our next question comes from the line of New Street Research, Russell Waller.

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Russell Waller, New Street Research LLP - Founding Partner [54]

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I'm on an Orange plan. I just had a quick question on the fiber ARPU growth, because if I look on your website, and it looks as though there's heavy promotions around fiber. So I'm just -- I just want to confirm that the increase in the fiber ARPU is coming from value-added services. And if that's the case, presumably there's quite a high cost associated with that. So is it quite low-margin revenue? And then, obviously, you say you're taking 51% -- sorry, 51% of fiber customers are new to Orange. Could you just explain who or sort of how that works? Because is that -- who are you winning those customers from and in which regions? Is that in the dense areas or the less dense areas?

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Fabienne Dulac, Orange S.A. - Senior EVP of France [55]

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So on the fiber ARPU, as you said, we raised the price of the fiber last year, so we have a fiber ARPU better oriented than ADSL with a fixed (inaudible) gap between ADSL and fiber. And the mix is, at the same time, well oriented. 57% of our fiber customers made the choice to take a premium offer. So at this point, the growth of the customer base, the mix offer and the price has a very good -- a good result in the fiber revenue. As I said each time, the impact of the promotion is very light. It's not so important. I want just to remind you we only have 2 promotion and very short-time promotion in this quarter, at 99 -- around EUR 20, and the sales realized on promotion offers are on less than 20% of the gross sales. So the majority of the gross sales are realized on premium offers. That proved by the figures I said just before. We expect the broadband ARPU to growth on year-on-year with the 3 points I explained just before.

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Unidentified Company Representative, [56]

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[Foreign Language]

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Fabienne Dulac, Orange S.A. - Senior EVP of France [57]

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[Foreign Language]

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Unidentified Company Representative, [58]

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[Foreign Language]

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Fabienne Dulac, Orange S.A. - Senior EVP of France [59]

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[Foreign Language] Oh, yeah, sorry, the second part of the question. The new customers on fiber from very high dense areas and medium dense areas. I didn't answer the question, sorry. It's a win-back in the majority of the case, so they come from the competitors, and it's a good thing.

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Ramon Fernandez, Orange S.A. - Chief Financial & Strategy Officer and Director of Middle East & Africa [60]

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Okay. So I think except if our friend of Morgan Stanley is back, I think we will put an end to this discussion, and we will catch up with him to try and find out what was the question we were not in a position to answer. Thank you very much for attending this call, and have a good day. Bye bye.