Speaker #1: So, hello, hello to all of you. Welcome to Orange Q3 26 results presentation. For your information, this conference is being recorded. The goal today will be hosted by Crystal Edman, our CEO, and Laurent Martinez, our CFO, with other members of Orange Executive Committee for the Q&A session that will start just after the presentation.
Speaker #1: Thank you, and now let me over to the floor to Crystal Edman. Crystal, the floor is yours.
Speaker #2: Good morning, and thank you for joining our Q3 results presentation. Q3 confirms the group's strong momentum with revenue growth at 3.6%, EBITDA increasing by 4.6%, and a double-digit growth of operating cash flow at 10.3%.
Speaker #2: Revenue grew across all geographies, with Africa Middle East continuing its double-digit trend. Solid commercial performance underpinned retail services increase at 3.3%. Based on this solid results, we are upgrading our EBITDA full-year guidance with a growth now expected above 4.5%.
Speaker #2: A last word on our joint bid to acquire SFR alongside Bouygues and Iliad, Orange remains committed to constructive social dialogue which is ongoing, expected closing date in the second half of 2027 remains unchanged, subject to regulatory approvals.
Speaker #2: Driving into our financials: revenues are up 3.6% this quarter, reaching 12.2 billion euros, and growing across all geographies. This strong performance was driven by retail services and an outstanding meeting growth in Middle East and Africa.
Speaker #2: EBITDA increased by 4.6%, driven by top-line growth and continued focus on efficiencies. We also maintained discipline investment with ECAPEX to sales decreasing in the quarter and well in line with our full-year guidance of around 15%, driving operating cash flow up double-digit at 10%.
Speaker #2: Let's now look at key actions illustrating execution of our Trust the Future plan in Q3. First, last week we signed, together with Dutch Telecom Telefonica and Vodafone, a letter of intent to prepare a potential joint bid for the future allocation of spectrum for mobile satellite services in Europe.
Speaker #2: The initiative supports the European Commission's ambition to strengthen Europe's sovereignty, security, and resilience in critical connectivity infrastructure. Overall, we see satellite connectivity as a core complement to our networks to provide coverage completeness and resilience.
Speaker #2: Also in terms of innovative growth, Orange Business obtained a new Secnum Cloud qualification, extending its portfolio of trusted cloud offers. Orange Business was also selected to provide the European Union's backbone network for trusted data exchange.
Speaker #2: Our Super App Maxit in Middle East Africa keeps gaining traction, with 38.5 million active users. A 1.8 times year-on-year increase. We also conducted a 50-gigapon test in Belgium, achieving a near-zero latency.
Speaker #2: Moving to customer intimacy, in France we keep enriching customer experience launching new offers with a new home cinema set-top box for our high-end customers, and a 5G+ fast pass, providing dedicated connectivity at major events.
Speaker #2: We also introduced the Orange Marketplace, featuring over 8,000 high-tech products. Also, Poland launched its B2C Cyber App to protect users from cyber threats. About excellence at scale, the integration of Mass Orange is completed, and we renamed it as Orange España, to leverage our strong brand.
Speaker #2: In France we continue to simplify our network architecture and have successfully completed the closure of the 2G network, a new milestone in the country's nationwide transition to very high-speed network solutions.
Speaker #2: Also, we tested an AI scanner for fixed network to detect anomalies and prevent disruption. Finally, early September we issued a 4.1 billion bond at attractive conditions and 4 times oversubscribed, 4.1 billion euro bond, 4 times oversubscribed.
Speaker #2: It reflects investors' strong confidence and allows us to anticipate future financing needs. In the current interest rate environment, you can note that around 90% of our existing debt is at fixed rates.
Speaker #2: I now leave the floor to Laurent for the financial overview.
Speaker #1: Thank you, Crystal. Let's start with France, with the third quarter's confirming the strong trend seen in previous quarters. We delivered record net ads across the board in mobile, fixed, and particularly in convergence with the record since 2018.
Speaker #1: Our retention programs are delivering results. Mobile churn is down by more than 1 point year-on-year. While fixed broadband churn decreased by more than 2 points year-on-year.
Speaker #1: On value, broadband ARPU increased year-on-year, fueled by multi-services growth and upsell cross-sell actions. Convergence ARPU is up sequentially, while the year-on-year trends reflect mobile ARPU decrease.
Speaker #1: Globally, we actively push our more-for-more approach enriching our offering and using the quality of our network and services to support pricing power, while protecting churn and customer satisfaction.
Speaker #1: Turning to financial results, revenue is up by 0.5% in the third quarter, retail excluding PSTN is up 1.1%, reflecting our robust commercial performance. And compensating the decline of PSTN.
Speaker #1: Customer satisfaction remains a key differentiator. Orange maintains its leadership position, with an NPS of 36, 9 points ahead of our closest competitors, and best-in-class churn across all segments, while continuing to offer our clients innovative offers.
Speaker #1: Equipment revenues were driven by strong demand for high-end device, uplifting our market share. And finally, wholesale legacy activity decreased at expected pace. Overall, the resilience of retail services and our commercial momentum supported revenue growth in the quarters.
Speaker #1: We are therefore fully confident in reaching our 2026 outlook for stable plus EBITDA growth. Moving to Spain, with revenues increased by 3.5% in the third quarter, supported by solid growth in wholesale and equipment sales.
Speaker #1: Continuing the trend seen in the first half, services revenues improved sequentially by 0.5 points, led by ongoing B2B expansion across all market segments. Improving retail trends, including positive fixed and mobile net ads and growth in convergence ARPU, and finally a strong development in new services, with 169,000 customers subscribing to financial services home securities, energy, or insurance.
Speaker #1: Action is in place to continue services trend improvement over the fourth quarter. Supporting our outlook for low single-digit EBITDA growth in H2. Turning to Africa and Middle East, which continues to deliver exceptional performance.
Speaker #1: Revenues increased by more than 14% and was broadly distributed with 10 countries growing double-digit. Fixed broadband, data, Orange Money, and B2B are all growing above 14%, driven by strong increase in ARPU and customer base, supported by demographic growth and expanded coverage.
Speaker #1: This 14th consecutive quarter of double-digit revenue growth reinforced our confidence in achieving double-digit EBITDA growth for the full year. Turning to Europe 6, which we pursued a very dynamic of 5.3% in the third quarter in terms of revenue uplift.
Speaker #1: This reflects an acceleration on both convergence and exceptional IT and integration services. Net ads remains very robust in both mobile and fixed broadband, and convergence ARPU is growing by 5% in Poland.
Speaker #1: Orange Poland in particular delivered very strong results, overperforming the market with revenues up close to 8%. The acquisition of Nexera expands our fiber footprint by 30% and strengthens growth prospects of our fiber co-joint venture.
Speaker #1: Looking ahead, we confirm our outlook for Europe 6 with a mid single-digit EBITDA growth for the full year. Looking at Orange Business, revenues declined by 2.5% in the third quarter, reflecting an IT market still affected by macro-environment.
Speaker #1: Against that backdrop, we are executing our transformation plan. First, focusing on our go-to-market on trusted AI, notably with our live intelligence AI offer, trusted cloud with our flagship secure cloud avenue solution, and in key trust verticals such as defense and security.
Speaker #1: Orange Cyber Defense accelerated its growth to 12% and reached 1 billion revenues over 9 months. Second, accelerating on cost efficiencies in particular with the use of AI and resources mutualization.
Speaker #1: We are also starting to leverage our international go-to-market partnership with Techminder. That being said, the complex market environment is waiting on EBITDA improvement trends.
Speaker #1: With this, back to you, Chrysel.
Speaker #2: Thank you, Laurent. Our strong Q3 and 9-month performance gives us confidence in achieving our full year objectives. It also enables us to raise our EBITDA growth guidance once again, to above 4.5%, supported by solid performance across Africa, Middle East, and Europe.
Speaker #2: Thank you for your attention. We are now happy to take your questions.
Speaker #3: Hello. So I see that a lot of you have raised their hand on the team. So please limit your question to one or two questions, but no more.
Speaker #3: So the first one is Akhil Dattani, from JP Morgan. So Akhil, please ask your question.
Speaker #4: Hi, good morning. Can you hear me?
Speaker #3: Hello, Akhil. Don't forget to unmute. Akhil, can you try again? Okay. So Akhil will come back. So next is Joshua Mills, from BNP Paribas.
Speaker #3: Joshua, the floor is yours.
Speaker #5: Hi, guys. Thanks for taking the questions. A couple from my side. Just on French consolidation, can you give us an update on the near-term timeline here?
Speaker #5: I think in the last conference call you were talking about a signing in the second half of this year. And I believe the longest update is for December 6.
Speaker #5: So how significant is that date, and should we get more updates before then? With the works council discussions, as when the actual formal process by which they could block the deal, or is this just a normal negotiations?
Speaker #5: And then the second question is just around agentic AI, which is obviously being discussed a lot more as a risk for the sector by investors.
Speaker #5: I'd like to know how you're thinking about that at Orange. Are you taking any steps to block the apps? How are you thinking about evolving your brand strategy in a world where customers are probably going to use AI more and more to compare price points?
Speaker #5: Thanks very much.
Speaker #2: Thank you, Joshua. So on the French consolidation timing, you're right, the timeline is unchanged. We plan signing of the transaction by the end of this year, 2026.
Speaker #2: And the closing by the end of 2027. We have two process in parallel, both were initiated when we signed the MOU. The first one is getting the approvals of employee representatives, we have done so at Orange, Bouygues has done so for Bouygues employees, Iliad has done so with Iliad employees, and Altice has initiated the dialogue with Altice employees.
Speaker #2: In this context, there are some legal actions that Altice employees have initiated, which will continue to proceed, but we continue to have an open dialogue with the Altice employees and, as I said it, we are strong believers of social dialogue.
Speaker #2: So at this stage, there is no reason to believe that these actions and especially the legal action would postpone the signature of the transaction by the end of this year.
Speaker #2: In parallel to that, second very important item is the antitrust process, which we started when we signed the MOU, and this process is moving forward in parallel, and this is, of course, the process that will take most time and that will lead to the closing end of next year.
Speaker #2: On agentic AI, so of course, agentic AI is something we are actively engaged on. We have many initiatives in the company. This is true in customer experience, but this is also true in all our IT and software development internally.
Speaker #2: This is true for cybersecurity and Orange Cyber Defense is highly exposed to the booming evolution of threats, cyber threats in the environment. When it comes to agentic AI and especially agentic personal agentic AI apps, this is something that we follow carefully, but when it comes to the fear of automatic, I would say, price decrease by customers, first of all, this is something that we don't think comes as a news because we already have very transparent pricing ecosystem.
Speaker #2: In Europe, and as you can see, we have a low end of the market that is active, with actually very visible and transparent price points that are very different from our premium price points, and despite that, we continue to drive differentiation and to reduce churn on our customer base.
Speaker #2: So this is something that, of course, we follow carefully. More importantly, to make sure that all our tools and apps are well integrated into this new world of agentic AI, and especially Gen AI as well, but we're not worried about a massive downgrade in the price point environment, which, by the way, is something we got used to facing with the very competitive markets we work in.
Speaker #3: Thank you. So Akhil, can you try again? I see you are still muted. If you unmute, can you?
Speaker #4: Yeah, can you hear me now?
Speaker #3: Yes.
Speaker #4: Great. Thank you. So thanks for taking the questions. I've got two as well, please. Maybe first, if we could start on the French competitive environment.
Speaker #4: You've mentioned a very strong KPI performance that we've seen during the quarter. I'd love to understand a bit better exactly what we're seeing. I'm mindful that SFR suffered pretty high churn in June.
Speaker #4: Could you sort of talk us through the dynamics of the moment you're seeing in the market? And I guess specifically, what I'd love to understand is that we haven't seen these improving KPI trends benefiting your retail PSDN trends this quarter.
Speaker #4: I just wondered if there's anything to call out or whether there might be a bit of a lag there. So anything around that would be super helpful.
Speaker #4: And then the second question was on the comment Christelle you made around the MSS spectrum. Obviously, there's been a huge amount of debate in the industry around the threat from satellite I'd love to better understand what you're thinking around the role that you play in that environment.
Speaker #4: Obviously, you don't have satellites as a company or as a JV. So can you help us understand how you'd leverage that spectrum and how you think about the routes to defending yourself from satellite threat?
Speaker #4: Thanks a lot.
Speaker #2: Thanks, Akhil. On the French competitive environment and Jerome will complement, but we see and I guess your question is related to the dynamic around SFR.
Speaker #2: So first, when we look at our commercial performance SFR is not the only operator from which we are benefiting from. So we can track, of course, portability.
Speaker #2: And we've seen Q3 market environment very similar to Q2, with an overall stable competition on high end fixed broadband and mobile. And the low end, that's in the continuity of Q2, slightly more rational than what we saw 12, 18 months ago.
Speaker #2: And this has been the case already for a few quarters. The back-to-school period was as planned, with no change, I would say, from any B brand in the market.
Speaker #2: And on mobile, we have seen some improvement since the beginning of the year, especially on B brand, with entry price point that are now more around 10 euro for 20 gig versus 8 euro in Q3 25, so last year.
Speaker #2: So overall, a stable environment. When it comes to our commercial performance, I don't know if Jerome, you want to comment, but we continue to be driven by, of course, the convergent growth and especially you see the pressure on the mobile ARPO on convergent.
Speaker #2: Of course, we continue to go customers, and the new customers that are entering the cohort have typically one mobile only. When we have a customer base in convergent where the average is more 1.8, that's waiting on the average revenue per user.
Speaker #2: But this is nothing to worry about, and this is exactly as per plan. I don't know if Jerome, you want to comment more on the competitive dynamic.
Speaker #3: Thank you, Christelle, and thank you, Akhil, for your question. No, I think you underlined the strong commercial performance, which is reflected again this quarter with a record net ads on convergence since 2018, plus 57K.
Speaker #3: And as you said, on mobile, a very strong as well, 146K. And this is not only the result of gaining market share towards SFR, but to what's its net positive net ads towards all competitors in France.
Speaker #3: Pushing for value, of course, despite the pressure on the mobile ARPU and particularly by managing on cross-sell upsell including some tactical backbook price increase to protect our value.
Speaker #2: On the satellite and MSS spectrum, so as we commented, we find a letter of intent with Dutch Telecom Telefónica Vodafone to potentially bid for one part of the MSS spectrum that's being auctioned end of 27 for implementation in 29.
Speaker #2: And of course, the bid for this spectrum would then be open and wholesale to all telecom operators in Europe. And we see MSS spectrum really as a complement to our terrestrial network.
Speaker #2: And as we've always said, for us, the key element will be the customer experience and the handover from terrestrial to satellite and back and forth between our networks.
Speaker #2: Which really requires mastering both side of the experience, working also on the end sets and so this is really the way we see it.
Speaker #2: So when it comes to the bid and the consortium to bid for spectrum, it's still early stage, so we can't provide you more details.
Speaker #2: But again, the process is second half of 2027, so we will provide more detail as soon as we have.
Speaker #4: Great, thank you.
Speaker #3: Okay. So now we are moving to Android Capsec from UBS. Android, the floor is yours.
Speaker #5: Hello, I hope you can hear me.
Speaker #3: Yes, well.
Speaker #5: Okay, thank you. Good morning, everyone. Thank you for the presentation. I've got two questions as well. One is the follow-up on the French competitive dynamics.
Speaker #5: I guess, can you rule out that there is any kind of increased competitive pressure to, for example, already gain some of the higher value SFR customers that are already seeing higher churn at this point?
Speaker #5: You've raised prices as far as raised prices has raised prices. So I guess, are you confident in this environment despite the potential consumer pressure from what's going on in France?
Speaker #5: That's still going into 2027. We can continue to see positive trends on both the retail XPST and EBITDA growth in France. That's a question number one, please.
Speaker #5: And question number two, I think there's been a bit of in Spain, specifically, there's been a bit of a reversal in the trends following the stabilization that you flagged happened in June.
Speaker #5: I believe you have also raised prices in the market, and the bigger players Telefónica yourself and Vodafone are all seeing better trends. So can we expect a return to stability or any time soon, or is this kind of one-ish percent decline on the service revenue, something that we should get used to for the time being?
Speaker #5: Thank you.
Speaker #2: Thank you, Andres. On the French market dynamic and the SFR customer base, first and foremost, it's not as if we have seen a flow of SFR customers leaving SFR and willing to join so there is absolutely no massive trend in the market.
Speaker #2: So we see portability. Yes, but we also see portability going to SFR. So there is no massive leakage. And of course, we see a trend that we had anticipated as part of our bid for SFR, but not more than that.
Speaker #2: As you said, we have implemented some price increases. Very targeted, so no massive and some were, of course, in backbook, some on frontbook. Very targeted, as we had said.
Speaker #2: So this is nothing new. As you commented, some of our competitors also did. And it's a mix of more for more and same for more.
Speaker #2: Of course, in our case, we're also targeting copper customers to make sure that we align the price of copper up so that there's an incentive to move to fiber.
Speaker #2: And when it comes to the dynamic on the premium part of the market, I would rather comment on all the actions and especially the additional services we provide to make sure we create an incentive for customers to be willing to take our premium package.
Speaker #2: So the home cinema set-top box, for instance, that's attached to our premium package for broadband and for which we have seen a very good start.
Speaker #2: And similar across the board. So that's really our play. And we continue to execute on it. And we have no fear that this would change.
Speaker #2: But of course, we operate in a market that's competitive, so we continue to follow what the competition is doing. When it comes to Spain, so in Spain, as you can see and as we had said, we see a Q3 trend that's improving compared to Q2.
Speaker #2: We have some dynamic where, of course, our focus is on churn reduction because we have a market where given we have the largest customer base, of course, churn is the top priority to avoid I would say feeding the market.
Speaker #2: But so our action plan is absolutely to continue to improve. We've seen we plan to continue to improve the convergent B2C RP trend. And as we've always said, we expect also growth to come from Soros and B2B given our already very large B2C customer base.
Speaker #2: I think Maini, you're connected, so if you want to add something, please jump in.
Speaker #3: Maini, we have open your mic.
Speaker #6: Hello.
Speaker #3: Yes, we can hear you loud and clear.
Speaker #6: Perfect. Thank you so much. Thank you, Christelle. Yeah, overall, if you look at our results, we have been growing 3.5% in total revenues and if you look at the service revenues, we see a positive trend.
Speaker #6: We come down from minus 1.9% in Q2 to minus 1.4% in Q3. And that is a component by a positive mobile and FPP8 net ad strengths.
Speaker #6: And also important, we grow also in RPU. And in our analysis, we see that we are probably the only major operator in the market that grows RPU also in acquisition.
Speaker #6: And we have been able to increase our value share in the acquisition as well. So this is a very good base together with the growth in B2B and in new services.
Speaker #6: That we can say that we are optimistic that we will have a continuation of the improvement trend also in Q4 this year.
Speaker #5: Thanks, Maini and Christelle. Can you just confirm, please, so to follow up, can you please confirm that the outlook therefore based on everything that you were saying in France, is still positive growth for both retail XPST and EBITDA in France for 2027?
Speaker #2: Yes, I mean, our 26, 28 guidance is unchanged to the capital market day. And when it comes to the lending for this year, it's still as we said, stable plus EBITDA trend.
Speaker #2: So that's also what we see for and that's the trend for the full period. So we anticipate the same for '27.
Speaker #4: And just to be precise on that, we are expecting as well H2 stable as well, stable plus, definitely we don't want to go negative on the H2 on the EBITDA of France obviously.
Speaker #5: Thank you very much.
Speaker #3: Thank you. So now we are moving to Nick Lyall from Bernberg. Nick Lyall, the floor is yours.
Speaker #7: Hello, guys. I hope you can hear me. It was just to come back to French RPU, please, if you could. I mean, the RPU did seem a little bit weaker this quarter versus some of the improving trends last quarter.
Speaker #7: So was that, and Christelle, you've just mentioned, for example, differences in the addition of convergent subs. Maybe with one handset, not 1.8. So that might be a factor.
Speaker #7: But what's the sort of way on the RPU here of low French consumer confidence? I mean, we're seeing worse and worse numbers coming through.
Speaker #7: So what do you expect to see over the next couple of quarters in terms of sort of RPU development and how do you approach that, please?
Speaker #7: And then secondly on just general sort of government points, anything you could update us on an outlook for taxes or French government, maybe interference in dividends or others.
Speaker #7: Is there anything being discussed on that level, please? Thank you.
Speaker #2: Yeah, thank you, Nikolai. On the RPU, as I said, on the convergent RPU, first of all, it's stable plus quarter on quarter. But indeed, it's slightly down year on year for convergent, but as I said, it's mostly driven by the mix of offers of the new customers compared to the current cohort of convergent base.
Speaker #2: So that's what's driving. Our cross-sale strategy is efficient. And as I was mentioning, we continue to upsell on our base driven by innovation and innovative offers.
Speaker #2: And the example of the home cinema set-top box is a good example on broadband. And we've seen a very solid start already a few, I mean, that's two weeks from two weeks only.
Speaker #2: So it's still, of course, it's not in the Q3 numbers. So we will continue to work on, of course, driving I mean, convergence and reducing churn is really our focus.
Speaker #2: And then upselling and driving value, but continue to play as well on the low-end part of the market. That's very important. And from that standpoint, we have we play with all our brands and in the context of SFR, as you know, we will also acquire some MVNOs that will also complement our ability to play on the full spectrum of market segments.
Speaker #2: On the French tax environment, so for what is being discussed at the French Parliament, there is nothing unknown and no surprise. There is, as you know, last I mean, for last year already or two years ago, we had this surtax on income profit tax.
Speaker #2: And which had an impact of 50 million last year. There are some discussion on actually reducing slightly this surtax, but as long as the budget is not approved in the Parliament, it's very difficult to comment.
Speaker #2: But we don't see anything else specific, I think. I mean, nothing specific to the telecom sector. And as you know, in the current pressure on purchasing power given the very attractive and low prices in France for telecom compared to other countries in Europe, our sector is absolutely not targeted and we already pay a lot of taxes so I think we contribute to the full equation.
Speaker #7: It's clear. Thanks very much.
Speaker #3: Thank you. So Andrew Lee, was the next one, but obviously your rise is your end is no more displayed. So I want to make sure that it's not a mistake.
Speaker #3: Andrew, have you a question? If not, we will move to Mathieu Robillard. Andrew? Okay. So let's move to Mathieu. Mathieu Robillard from Barclays. Mathieu, the floor is yours.
Speaker #8: Yes, good morning. Hello, and thank you for the presentation. I had two questions. The first was about Spain. So as Maini and Christelle, you flagged that the service revenue trends have improved a bit.
Speaker #8: Compared to the previous quarter, but what I wanted to understand was what was driving that. The reason I'm asking that is because when we look at some of your competitors, we see some healthy service revenue growth, but it seems to come with very low margin.
Speaker #8: That is, losing maybe some high-margin telecom revenues replacing it and offsetting it with low-margin other types of services. So I wanted to understand how is the revenue mix evolving in Spain and if your target to stabilize service revenues is going to be at the detriment of the margin.
Speaker #8: And then the second question, was a broader question about the French political situation. We're all aware of what is happening. And I was wondering if you are seeing any impact on the B2B or the corporate segment from the higher uncertainty and maybe that is impacting OBS or not.
Speaker #8: Thank you.
Speaker #2: Thank you, Mathieu. On Spain, as you're right to point that we're the only operator to grow the convergent RPU and this is a decision to really focus not just on commercial net ads, but more on also value.
Speaker #2: And so we have taken some I mean, this is value-driven. So to somehow some less aggressive, I would say, price position in the market to try to have some impact given we have the largest customer base on the overall market dynamic.
Speaker #2: So this is something that we are absolutely focused on, making sure we focus on value and not just on gross ads and driving prices down.
Speaker #2: We have many brands in Spain, so we can play with our different brands the orange brand is of course our premium brand and we have regional brands, we have locals brand, digital locals brand, and so that's really what Maini and the team are working on to make sure we play on the diversity of our brand positioning to maximize the value.
Speaker #2: And that has also some impact and we hope that the full market will do so. On the French political situation, so of course uncertainty is never good for business and investment.
Speaker #2: When I mean, as a business, we like stability and to be able to plan. So this is probably not a good environment. Now, most of our customers and what we provide to customers, I wasn't mentioning cybersecurity or resilient connectivity is something that our customers are I mean, cannot compromise.
Speaker #2: So from that standpoint, of course, even though some decision could be postponed on some big transformation, when it comes to cybersecurity, connectivity, or secure cloud solution, this is not something that customers compromise.
Speaker #2: But of course, the overall environment and especially on the small businesses, customers tend to be conservative and maybe not aggressively embracing a new solution.
Speaker #2: But I don't know if Hugo or Aliette, you want to comment, but I don't think I mean, this is something you would expect in this type of environment.
Speaker #2: And as you can see now, in our numbers, because the situation is not specific to France, of course, we have also difficult environment elsewhere in Europe.
Speaker #2: And this is I mean, some of the discussion we've had in Europe for now many years on the price of energy is of course waiting on the P&L of companies.
Speaker #2: This is true also for consumers and purchasing power. But of course, that's not helping us in France with our orange business turnaround given of course that puts a lot of pressure on prices for customers.
Speaker #3: Thank you.
Speaker #7: Thank you very much.
Speaker #3: Thank you, Mathieu. So now it's Stéphane Béazian from Odoo. Stéphane, we are listening to you. You are okay.
Speaker #4: Thank you. I'm here. Yes. Thank you. I've got two is it is obviously too early to talk about 2027 in terms of guidance, but I'm clearly 2026 is a good year and sets a higher bar, higher base for 2027.
Speaker #4: I was just wondering whether you can already comment on some of the factors the growth drivers that you have today and I'm thinking for instance of the savings and to what extent you can maintain that drive into 2027 or which factors you expect perhaps to disappear and that have helped 2026.
Speaker #4: And I've got a second question. Is it possible to have an idea if such is still growing as part of your total customer base in France?
Speaker #4: And I was also curious how many customers do they have taken the cybersecure product? Thank you.
Speaker #2: Thank you, Stéphane. On 2027 guidance, as you said, it's too early to provide some details, but first, as we reminded, we are consistent with our CMD trajectory of an EBITDA CAGR of plus 3%.
Speaker #2: Of course, 2026 is off a very good year. With a remarkable performance of MIE, some one-off co-financing in France and a very strong performance of Europe.
Speaker #2: So we take that into account. But when it comes to 2027 and 2028, we want more of the same, which is focusing on solid commercial performance and continue to drive our efficiencies.
Speaker #2: To make sure we can deliver on this EBITDA growth.
Speaker #3: And I just want to add, Stéphane, that efficiency remains of course a top focus for us. You will see an acceleration on the efficiency in the second half of 2026 versus the H1.
Speaker #3: And definitely we'll continue to drive upward the efficiency AI and all our transformation in terms of operation will continue to bear fruits in 2027, of course.
Speaker #2: On the such performance, Jérôme.
Speaker #1: Yeah, thank you, Christelle. Such is growing as well as orange brand. We are playing on both A and B brands of course. On the past quarters volumes were mostly driven by the orange brand.
Speaker #1: Which is a part of our convergence strategy. But such is contributing positively as well. And we are focusing on churn improvement on both brands as well.
Speaker #1: And as you saw, we as well partnered with Carrefour to launch a C brand this quarter to be able to cover the whole spectrum of offers and customer needs.
Speaker #1: As far as cybersecure customers are concerned, we have more than 400,000 customers. So far, and we are increasing our range of product preparing additional services to enrich cybersecure proposition.
Speaker #1: On both B2C and B2B professional services.
Speaker #4: Thank you.
Speaker #3: Okay. So now we are moving to Roshan, Ranjit from Deutsche Bank. Roshan, we are listening to you.
Speaker #7: Great. Thank you for the questions. I've got two please. Hopefully very quick. Just touching back on the satellite topic and whilst I appreciate not a fully fledged perhaps D2D offering, can you give us some data on your Skylo product?
Speaker #7: I think it's now been just under a year of that product. Any adoption rates? Any initial feedback you have on that, please. And secondly, Orange Money, I think it's another quarter 15% revenue growth.
Speaker #7: Any details you could give on percentage of the Africa Middle East unit that is, and any changes in customer behavior? People using it more spend or is it just a volume growth that is supporting that revenue growth?
Speaker #7: Thank you.
Speaker #2: Thank you, Roshan. On satellite, you're right to mention we launched this first offer a year ago actually with Skylo in France. But as you know, we are testing several solutions.
Speaker #2: We are also testing Starlink in Spain and we have a pilot under preparation with in Romania with AST. When it comes to the Skylo offer, it's a very little I mean, we've been able to test the willingness for customers and the appetite in the market for this type of offer.
Speaker #2: That being said, the Skylo experience given its geostationary solution and it was devices, was very I mean, it was as expected. It was for us a test in the market to test the appetite to position ourselves on this segment.
Speaker #2: But of course, we plan to continue to add especially more device options given it was limited to only customers buying this new Pixel devices which was a very small part of the market.
Speaker #2: So from that standpoint, we achieved what we wanted, test the appetite, but we were not planning for massive adoption. But we know there's willingness for customers to embed this type of solution.
Speaker #2: On your second question regarding MIE and Orange Money, right opportunity to ask Yaser to comment on the exceptional performance.
Speaker #3: So thank you, Christelle. So maybe just quick on Orange Money, and specifically, I think we had a yes, as you said, we had a very good results and I'm not only happy with the results of the top line, honestly, because the underlying performance is the one that counts.
Speaker #3: So despite that we have some pressures on the top line and on the fees that we're charging, in fact, still we were able to do this revenue growth because of mainly three things.
Speaker #3: One is related to the customer experience and integrating our services on a digital platform which is now more and more maxet. The second is that we're pushing a lot on merchant payments.
Speaker #3: So if you see on our merchant payments, we have more than 50% increase only in the last six months. The same goes on micro credits where we also increased our micro credits with over 50% over the last six months.
Speaker #3: So these are maybe the three main activities that are ensuring that we continue to grow on Orange Money. And we'll continue to grow, I think, in the next quarters to come.
Speaker #3: Thank you. So now, Russell. Russell Waller, from New Street. You can ask your question.
Speaker #8: Thank you very much. Yeah, good morning everyone. I just have a couple, if that's okay, please. So obviously, as I'm sure we're all aware, rates are rising.
Speaker #8: The French 10-year obviously much higher. How does that make you think about the MPV of synergies? And also the sector has derated as well, obviously since the time that the deal was announced.
Speaker #8: Is there any risk that the price could be renegotiated with SFR? Is there any mechanism for you to do that, for example? Second question, obviously there's a French election next year.
Speaker #8: Do you have any idea what the other parties think about the deal? Obviously, if there's a change of government, there'll be your largest shareholder, therefore what they think is important.
Speaker #8: Can you give us any kind of pre-warning of anything that might change there? And then the third question, just a quick one. I think your mobile network faced an outage because of the kind of global problems.
Speaker #8: Should we expect to see any impact to the Q4 numbers in France? Thank you.
Speaker #2: Thank you, Russell. On the SFR transaction, you're right to mention that the debt and the interest rates evolution are obvious part of our market environment.
Speaker #2: But as you know, we have a solid balance sheet and most of our debt is I mean, is on fixed rate. We issued a new bond oversubscribed earlier in this year.
Speaker #2: When it comes to price renegotiation in the transaction, we have some mechanism to adjust the price depending on the performance of SFR over time in the transaction.
Speaker #2: But of course, we won't disclose the detailed mechanism. We had, as we said, we had foreseen for the evolution of the business of SFR and for the time being, the trend is as foreseen.
Speaker #2: So we don't see any change from that standpoint. But we continue to work first on signing the transaction and of course, very important, the anti-trust process was triggered by the MOU that we signed in June.
Speaker #2: Any renegotiation or something would have an impact on the anti-trust process and would have an impact on the calendar of closing as well. So this is in an environment where I think back to your question on what the political parties and the various stakeholders think of the transaction.
Speaker #2: I think there's a broad consensus that SFR is in a situation where the rise of interest rates is probably waiting on their financials. And that means they're probably even more eager to conclude the transaction that they were before.
Speaker #2: And as you know, SFR is managing critical infrastructure for France and for millions of customers. And this is something that I think all political parties are aware of.
Speaker #2: And we have not seen any negative comment to the proposed transaction from any political party in France. So from that standpoint, even though the anti-trust process is managed by an independent body, the anti-trust agencies independent from the political parties, we have not seen any bad reaction from any political party.
Speaker #2: On the mobile network outage that we had last week, this is not related to the overall security environment or that we saw in France.
Speaker #2: This is unfortunately something that happens. So it was a network outage driven by one equipment in our core network. And so it's unfortunately a failure.
Speaker #2: So it did not impact all our customers, but it impact several millions of our mobile customers. And it took a few hours before we've been able to identify what was the issue with the vendor involved and then to restore the traffic.
Speaker #2: Of course, we've taken proactive action with our customers to compensate them especially at doubling their data package for the next month. So we don't foresee any impact on our financials.
Speaker #2: In October, from that mobile outage.
Speaker #3: And I may had a few word, Russell, on the balance sheet that you alluded to just to remind a number of facts. So our fixed rate component on our financial debt is 92%.
Speaker #3: So we are extremely well protected in terms of interest rate increase. With as well a maturity of 7.2 years. So as well very long in terms of global maturities.
Speaker #3: And I just want to add as well that we have been issuing close to 14 billion euro in the last 12 months. And our liquidity position in June was 11 billion euro of available cash, not counting the 4 billion euro of incremental bonds we have issued and of August, early September.
Speaker #3: So very solid and very visible situation on our balance sheet.
Speaker #1: Thank you. So now we are
Speaker #3: moving to Fernando Cordeiro Barrera from Santander. Fernando, we are listening to you.
Speaker #4: Thank you for taking my two questions. The first one is related is a follow-up on Africa Middle East. Basically, we have seen in the third quarter a slowdown on the polling growth, particularly mobile.
Speaker #4: And I just could like to understand at which extent this is an impact of any non-recurring factor or if there is a change on the strategy on trying to move from volume to value in order to maintain the double-digit growth profile of the region.
Speaker #4: And the second question is, as a general topic on your devices strategy, we have seen an acceleration both in Spain, the activity remains quite strong.
Speaker #4: There is an acceleration in France. Where can we see the ceiling or the, let's say, the level of penetration of device activity within your customer basis?
Speaker #4: Just to understand when that growth or how sustainable the growth in devices is, not only just on the revenues, but also thinking on the churn impact.
Speaker #4: Thank you.
Speaker #2: Thank you, Fernando. On Africa Middle East, we have it's not that we've seen a slowdown in mobile revenues, but indeed we have a flat mobile customer base in Q3, but this is mostly technical and this reflects some implementation of KYC regulation in several countries, which we had then which had some impact on our customer base, but absolutely no impact on the business growth and the revenues.
Speaker #2: On devices and equipment performance, we have a very solid environment. And in most countries, actually, we overperform the market dynamic. This is driven of course largely by devices sale, but also by some of our marketplace activity.
Speaker #2: In Spain, but now also the new marketplace in France. But this is mostly driven by also the high-end devices in terms of growth. When on volume, actually, we see an environment with prices that are moving up because of memory and components, which of course is driving revenues up as well.
Speaker #2: So it's price-driven on top of the solid volume performance, especially on the high-end part of the market and the marketplace performance. We have NSET financing or device financing, you're right, in part of our equipment sales, which of course is a nice loyalty feature or churn reduction.
Speaker #2: But we have not seen any change on our practices from one quarter to another. And we are used to managing that with our customer base.
Speaker #4: Yes, that's a follow-up if I may. Can you share us at least qualitatively which is the level of device penetration within your customer base, particularly in conversion in your main markets in order to understand the still potential impact in China and consequently at the end on the rates going forward?
Speaker #2: Our device penetration is low given it's not offered I mean, first of all, most of our customers when they have a mobile package with us, it's not attached to a device sale.
Speaker #2: And depending on our brands, by the way, this is not even eligible. So we don't have the data of how much of our customer base is attached to a device financing or a device package.
Speaker #2: But it's a low it's a low number compared to our full customer base.
Speaker #4: Okay. Many thanks.
Speaker #2: And the difference in terms of churn when we have a device financing, especially in the European countries, is 4 point difference when there's a device attached to a mobile package compared to when there is not.
Speaker #3: Hello. So we are at the end of this Q&A session with financial analysts. I just remind to the journalists who are connected that the Q&A session for journalists will start slightly after 10.
Speaker #3: At 10 sharp. And now I end back over to Christel Edman for concluding remarks.
Speaker #2: Thank you. So thank you for joining our strong Q3 performance gives us full confidence in our 2026 guidance, including our upgraded EBITDA growth target above 4.5%.
Speaker #2: Commercial momentum is strong across our footprint and our efficiency plans remain firmly on track. Our financial position is solid. Our balance sheet and liquidity are strong.
Speaker #2: We remain focused on delivering our trusted future strategy and capturing the significant opportunities ahead, including the SFR acquisition that is progressing as planned. Thank you all and have a very pleasant day.
