Orange SA (ORAN) 2009 Q4 法說會逐字稿

I will start. So good afternoon ladies and gentlemen. Welcome to the presentation of our 2009 full year audited results, as approved by the France Telecom Board of Directors yesterday evening. Then you have the traditional slide. I hope you have already read it. Then the agenda, which is very classical. And now we jump on the matter itself.

I know that you have already received the slides, so you know almost all what is pointed out on this slide. I would like nevertheless to recur some of the highlights on the past year.

First of all, we are very satisfied about our financial performance, as our broadband base is up by 4.9%. And our mobile customer grew by 8.8%, with a good level of commercial adds in Q4 all over our footprint. This is at the same time a good proof of the good behavior of the Company, and what is more important, a good start for the next year.

Our EBITDA margin is under control, the deterioration being limited to 0.6 point. And so it shows that we have controlled a lot of parameters to achieve this performance.

The main guidance, which we used to indicate which is organic cash flow, we have reached it, and we have done a little bit better than the guidance at EUR8.35 billion of organic cash flow in 2009. And once more it shows that we controlled the parameter to reach our commitment in fact.

What is of prime interest for the shareholder is the level of the dividend. The shareholder meeting will be proposed a EUR1.4 dividend for 2009, in line of course with the commitment we have taken through the year. The balance due is EUR0.80, and will be paid in cash the middle of June. Gervais will tell you exactly the date.

Concerning the M&A strategy, we confirm our disciplined behavior. And in 2009 we have done two moves. Probably you were not waiting some of them. The first of all is creation the joint venture in UK. It was of use since a long time that the UK market needs to be consolidated. But if one player buy another, it is too expensive for him, and he works for the other. So we are fine with my friend Rene this solution, which is to merge our two assets in UK. And we are waiting the final agreement of the European Commission, probably, cross finger, in next week.

In the same type of problem of restructuring the market in a country where the commercial behavior is difficult, we have moved in Switzerland with the project of merger with Sunrise, which is on its way. It is that which allow us in fact to be in a better situation in front of Swiss Telecom, which is very strong. And if we want to really make good businesses in Switzerland we have to be bigger. And we are fine with our colleagues, the owner, the shareholders of Sunrise, this solution of merging the two assets.

Finally, and of course we don't have to forget it, because if we want that operation will be safe, we need to have a peaceful social atmosphere. and we are working on the social contract in France. We have already announced a part-time senior plan in November 2009, which has been supported by most of the unions. And negotiation for the follow-up are on their way, and we are waiting probably next week, or the following weeks, the final signature of one of two agreements, which will show to everybody that we are on the way of coming back to a peaceful situation.

Let's now examine the commercial performance country by country. I am sure you know that the commercial battle has been tough, as always, in all our geographies in Q4. But most of our operation delivered quite well, increasing our customer base by 5.7% year on year.

In France our mobile customer base reached 26.3 million, and our network marketshare remained flat at 47%. Fixed broadband share of conquest remains below 30%, but is slightly recovering over the last two quarters. And of course, we are working to improve that.

In Poland we succeeded in focusing on value customers, with a net gain of 456,000 contract customers in a very difficult market. In UK, even if we had this big merge project, we continued our contract value policy. And of course, the end of the year was marked by the extreme success of iPhone launch, which give us a positive impact for 2010. It is good for 2009, but it is also a good start for 2010.

In Spain, which is a very difficult country due to the shape -- the stages of the global economy in Spain, we have a better dynamic than our peers, with a very good result in mobile net adds. Of course with this macroeconomic conditions, which are not so kind.

In all the other countries we have a dynamic activity for the mobile activity, and we have also some encouraging share of conquest in fixed. Gervais will go in more details concerning this.

This is a very traditional curve we have already shown several times, which shows the way our revenue evaluate in front of the GDP of the area covered by France Telecom. After the slowdown recorded each quarter since first quarter 2008, GDP in our area showed resilience since the third quarter 2009. There is kind of recovery, let's say, modest recovery.

In Q4 2009 the Group revenue, excluding regulatory impact, recovered and still outperformed the weighted GDP evolution on our footprint by 0.6 points. Which is a continuation of the previous statement we made, which was we have always a positive difference with the evolution of the GDP on our footprint.

So weight of regulation has increased in H2 '09 compared to H1 '09. For example, in France the mobile termination rate has been cut in July by 44%, which is not so small. And in Poland, for example, mobile termination rates in March has been cut by 30%, and in July by 22%.

Usually we never talk about this regulatory pressure because the growth of the Group absorbed the difference. But in a period where there is a global recession of the economy, and when the regulators continue to cut the termination rate, there is a kind of impossibility to follow -- to compensate for the regulation affect with revenues which are not growing any more. That is the reason why we have mentioned it in details this time.

Concerning financial performance, as you know, they have been above expectation. We stated from the regulatory effect our revenues grew by 0.2%, close to EUR51 billion. For the first time organic growth was not sufficient enough to compensate regulatory impacts.

EBITDA reached EUR17.25 billion, driving margin to 33.9%. We managed to limit in H2 the H2 erosion, essentially thanks to the cost management we have made. We have adjusted our CapEx spending all around the year to our customer's needs. Mobile 3G and new operations benefited from increased investment, during the period where the investment on 2G are no more necessary at the same level.

In absolute terms FT Group CapEx amounts to EUR5.7 billion. Organic cash flow, as I mentioned earlier, stands at EUR8.35 billion, slightly above our EUR8 billion commitment due to Q4 CapEx phasing, so we are exactly in fact online.

A word about the decision which has been taken yesterday evening. I proposed to the Board of Directors to split -- to separate the function of Chairman and of CEO. This has been accepted. And so I will serve as Chairman of the Board beginning 1 March, next Monday. With a special role defined by the Board concerning, in particular, the technology group strategy and the meetings with the partner, customer and big partner of the group. Stephane Richard will become CEO of the Group. And in a few minutes he will be here and will announce his team.

So it is a good occasion to make some windbag about what we have done, what I have done during -- or we have done with the Group during the five last years. It is exactly the anniversary, because they had been nominated on 27 February 2005. And we have some key achievements. I will not give you many figures, just a short summary.

We have added 69 million new customers, growing our customer base by 9% per annum. And I think it is really a key parameter. 68% of our customer base is now under the Orange brand. And as you know, it is very powerful in terms of strength in the market. In mobile we managed to capture the explosive sector growth by adding 70 million mobile customers. We also got a substantive share of the mobile data opportunity, adding 27 million mobile broadband customers.

As I will mention at the conclusion later on, I really think that 2010 will be a kind of a big step in the direction of mobile data. Growth of mobile data will be the key parameters of our future. So it is very important to be there and to capture a majority of new customer in this field.

In addition, we have added 8 million ADSL customers, providing them a full range of multimedia and communications services, in line with our strategy of it convergence within the context of continually expanding customer equipment, fixed line telephony, broadband Internet, television and mobile. And, of course, we will have to improve in the future this behavior to try to be more, let's say, more integrated than ever.

Last, but not least, we have grown our non-legacy enterprise revenue by 10% per year, which is very strong. Offering services of our DSL, fibre, IP networks, mobility solutions, and more advanced services suggest integration and outsourcing of critical communication applications.

Then we added to (inaudible) and peers new IP technologies, allowing us to effectively compete with emerging alternative network operator. As a result, we have the first largest Voice over IP subscriber base, and the first pay IPTV subscriber base in Europe.

If you remember, in 2006 it was one of the key moves we have done, which was to accept that the majority of our customers will choose Voice over IP for their telephony instead of the normal PSTN. And I think it was a good choice, because we keep the customer with us.

We spearheaded the convergence of networks, which were previously separated by application -- voice, data, television and radio. Now everybody does that, but at the very beginning it was not really the majority song. At that time Modus was the pure player song, and now we are -- everybody is on the same line.

Orange provides an increasing number of services on the same network (inaudible) the same to the audiovisual context on all three screens. And this is also a major move. We have seen that in the [Las Vegas] show, the main priority of all the manufacturers, the telcos and all the Internet players is to do that, provide the same content on all the screens. And the event of last weeks which was the announcement of iPad, introduce a new type of terminals in between the big screen and the iPhone. And all this type of new screen will add something to the conversion strategy.

We launched groundbreaking convergence offers. It is a Flybox product range, Flybox Unique, business everywhere and Internet everywhere.

Our track recording on innovation is based on an industrialized process, making R&D and techno center to our local markets, in collaboration with Orange Labs networks across the USA, Asia, Europe and the Middle East.

Something which we have not really published previously, but which is important, over the 2005, 2009 period we have significantly improved the compensation and training referred to our employees. At Group level the average employee pay grew by 13% over the period, which means 3.1% per year on average. 3.1% is also the annual growth rate for the average employee pay in France, to be compared with a 1.5% annual inflation on average.

Incentive pay in France grew by 13.3% over the period, which means 3.3% per year on average, which is highly consistent with the above. And this is excluding exceptional incentive pay and share buys compensation, which we awarded on top.

And the last point, which is perhaps more important, concern training, annual investment was multiplied by 1.8, and training hours per employee were multiplied by 2.3. This is very important, because as you know our technology is moving very fast. And if we need -- if we wish to be efficient, we have to be sure that our employees get the appropriate information and the appropriate training to follow the new technologies which we are providing to our customer.

Concerning the international development, we have been as you know very prudent. We have what we call a [selectivity acquisition] policy focused on fast-growing markets, growing our customer base by 46% per annum and our revenue by 19% per annum in this part of the footprint.

This performance has come as a result of our strategy of becoming number one or number two in all the countries where we operate, mostly using our business strength to grow market position, as opposed to buying out existing players. In fact, it is cheaper and more efficient. It is a little bit more time, but I really think it is more efficient.

At the same time we have disposed of nonstrategic assets. I think a majority of people have forgot it, but we have sold our activities in Netherland to Dutch Telecom. And we have sold PagesJaunes, which was former Group's directory subsidiaries in excellent condition. And this gives us a margin to do the other part of the job, which is to invest in developing countries.

As shown on this slide, over the period 2006, 2009 we have divested more nonstrategic assets than invested in new operation, license or skills.

Finally what about the financial performance. We have generated the highest return on capital among European large-cap telecom incumbents, showing our ability to extract value from our investment. This is based on our external -- on an external source, whereas [we' achieves nearly 13% return, just ahead of Telefonica, when the bulk of our telecom operator, Orange, in a range of 6% to 9%.

We have stabilized or increased our organic cash flow up to EUR8 billion annually, allowing us to reduce net debt by 34%, down to EUR32.9 billion. And we have raised the annual dividend by 24% up to EUR1.4, which is the dividend proposed this year.

To conclude my presentation, we have a look on our financial performance did translate into shareholder value. We have grown the curve between 1 January 2007 and now. And it shows that the total shareholder return for France Telecom stock overperformed the CAC40 Index, and match the STOXX Telecom Index.

This period demonstrates the better resilience of the telecom sector to the downturn, and is also proof of France Telecom's varied strategy in the telecom sector at large, including both incumbents and alternative operators.

Final words of conclusion. I will pass over the Chair of CEO to my friend Stephane two days from now. I think the Group is in good shape. 2010 will be probably a year of important change in the telecom sector because the integration between the content Internet provider -- the telcos and the manufacturers, all these players will continue to fight, in fact, to disintermediate us from in the relationship with our customer.

It is extremely important that we focus on the quality of service. And we have to adapt to this new situation during this year. And I think it will be a part of the project we have prepared with Stephane, which will be announced during the spring period. We will give you some details later on. And I think it is a good time to pass the chair to Stephane, because in the life of big companies you have periods. We have a marvelous five year -- we have together, a marvelous five year period. And the personnel of France Telecom is really outstanding. They support me, and I am very happy to of been successful during this period.

And the follow-up will be a different one. We have to adapt to new problems, to new structure, and this will be done under the leadership of Stephane. And I am particularly happy to pass over the CEO position to Stephane, staying during one year as Chairman to help everybody to adapt to the economic situation, which will be of course probably difficult. But we have shown previously that we can overcome all these difficulties as a very powerful and engaged group.

Now I will pass the floor to Gervais, which will give you all the details about our financial results. So Gervais, the floor is yours.

Thank you, Mr. Chairman. So, I go through a little more figures just to help you to wake up. It is the middle of the afternoon. Stephane will comment the French figures in his role as head of the French operations. So I go on the other fields in Group consolidated figures.

Maybe first [roaming], I guess you have seen it, our caveat, (inaudible), to use the Latin.

And for a primary statement for our figures, just to explain that, because of the particular situation of the UK, we are cutting to the accounting principles, the UK being under a transaction situation, is now considered as a discontinued activity, both in the set of figures for 2009, because these are a set figures of 2008. So the official figures reported for the Company do not include the UK until the EBITDA line or (inaudible) line.

We take the UK for its contribution in terms of net result and its contribution to the cash flow of the Company. However, I need to -- I think I need not to remind you that we have not changed the real substance of the Group in that, first of all, until the closing we still own the UK. And even after the closing we will own 50% of the new entity.

So regarding the revenues, just a table of revenues. If you compare the situation after a couple of elements, one, we sometimes forget, but we [suggest] its importance in 2009. This is the forex situation. EUR1.5 billion of our revenue loss because of the repatriation of the British pound and the Polish zloty. We hope, and I think the first figures for '10 shows that, we hope that this will not be the case in '10.

And when we look at the other figures, we have also strong regulatory impact, which was commented by Didier just a minute ago, which is more than EUR1 billion, EUR1.1 billion. And this is just the tariff cuts in terms of termination rate cuts, roaming cuts, our wholesale price cuts in the different geographies.

This is translated into the figures of the countries where -- and I think that is very important, there are two or three important points when we look at our retail figures. First of all, there is some recovery -- some recovery, I will not say a full recovery, full stable recovery, but some recovery in Q4 compared to the situation [before] our group level, where the revenue is just eroding by 0.2 compared to a year ago before regulatory impact, whereas it was eroding by 0.9% in Q3.

And this comes from a better situation in the UK and Spain, better so from the good performance of Africa and Middle East, and some resilience on the French market, even if last quarter is slightly below.

Poland, other European countries in enterprise are suffering more, with a still difficult situation, especially for enterprise and Poland in this last quarter of the year.

Regarding the EBITDA evolution. Just to comment that in spite of those difficulties, in spite of the regulatory impact we have already been commenting, we have had a good situation (inaudible), but better than what we expected, with an erosion limited to 0.6 points over the year, and 0.3 points in the last quarter of 2009.

Commercial performance has been sustained and quite good. It has been already commented -- we commented again in countries. Just maybe two major comments. One, this is the fact that we continue to push to get more contract payments (inaudible) customers in our customer base. This has been the case clearly in France, where the balance between prepaid and postpaid is clearly with a lot of postpaid. This is the structure of the French market. But it was sometimes put into question by the consumer decisions. We have seen that we push too much for customers in long-term commitment.

I will just remind you that in France commitments are now limited to 12 months plus 3 months notice period. Whereas maximum -- whereas in the UK now people are signing contracts of 36 months. Most of the contracts are now above 24 months -- of 24 months, but now they are contracts of 36 months. So this is a different picture. And I don't think in the UK there is less freedom for the consumers than what we are in this country here.

Regarding broadband, again addition -- more customers in broadband, in fixed broadband, even 7% in France in spite of the challenge on the market. This is quite a good increase. There is now nearly 9 million customers. And also some growth in Poland and in other countries, whereas the situation has remained quite difficult in the UK, but also in Spain. In the course of 2009 in Spain we feel the market has not been very (inaudible) with the overall situation, including in terms of number of houses -- house constructions, whereas there has been some decrease in terms of global installation.

If, and I will come back on that when I look at the different countries, just here you have the global picture of the revenue evolution. So as I said, minus 1.8% in terms of revenue for the Group parameter result the UK -- minus 1.9% including the UK. With again, the strongest (inaudible) of France, and also the very good performance of emerging markets in the rest of the world line. Whereas, again as we said, UK, Spain, Poland, and to a certain extent, Orange Business Services, have been impacted much more by the economic situation.

In terms of EBITDA, maybe one or two points. Just the whole, there are a few countries where EBITDA has been eroding, but remains quite strong. I would like to mention, for instance, Poland where we are still at a very high EBITDA rate at 38%, one of the highest within the Group. And even if there has been an erosion of 3 points, this remains a very high rate.

If I take rest of the world, so the other countries except the big countries, so this is a mix between emerging markets and quite [miniature] markets in Western Europe, in all this portfolio the EBITDA rate to revenues of (inaudible) 39%, which is very good performance when you look at it. Whereas UK and Spain are more challenging. This are the most challenging markets for us, with EBITDA at 18%. Maybe one difference between the two, in Spain we have improved by 3 points, whereas there have still been some pressure in the UK, mainly linked with the sales and commercial investment which has been made, especially in the second half of the year, with the launch of the iPhone in the UK.

And in the enterprise division, EBITDA looks weak compared to the consumer markets, at 20%. And just to remind you that this is probably the best -- one of the best amongst our peers in terms of B2B activity, and that it has been steady. You see that [AT] is even slightly improving in spite of the revenue [area].

If we look at the performance of the Group, not in a (inaudible) made by geographies, but looking at the global P&L and cost structure, this is the other part of the metrics. We have seen the geographical lines, and now we look at the overall cost structure.

Maybe one or two comments. First of all, we have continued to push down some of the cost we can push down, especially the G&A, the cost to operate the business. Whereas some lines have been under pressure, as because of the external events or also because we did not want to touch them so much.

So there has been some cost improvement within the Group in spite of all what has been said, including on the social climate or social structure within the Company. Labor costs are s slightly up, but not very much. And there it was at 18.6% of our cost.

Interconnection has been decreasing, but they are -- in fact, it is the result of two different phenomena. One is the decrease of the regulated cost, which is a positive effect. But not big enough to offset the increase of interconnect links with the increase of (inaudible) offer, especially on the SMS part of the business. Voice offers, we are already very rich in terms of unlimited or partly unlimited usage. It has now extended to (inaudible) especially to SMS.

Other IT network costs are still impacted by the launch of new operations, but this is investment for the future. Whereas G&A are showing the first benefits of our performance improvement programs that were launched last year. And this in spite of the -- of taking into account the new TV tax in France for the cost and the Chatel law. Remember, we are really mentioned that for a (inaudible) cost of EUR178 million.

As regards to the commercial and content costs, you see that we have been able to accommodate the increase in content costs by reducing the SAC -- SACs within the Company. This line remains stable in absolute terms, and slightly increasing in percentage tied to revenue. This expense is how we kept the EBITDA erosion limited to be 0.5%.

I just commented the fact that we have continued to push our performance plans to improve the efficiency in the cost structure of the Company. If we had done nothing, we would have eroded our EBITDA by little more around EUR1 billion, if you [get this] slide. If you take into account what would have been the EBITDA before cost improvement, it would have reached EUR15.8 billion, which is more or less EUR1 billion less one we had achieved a year ago. It is because of regulatory pressures, the interconnect costs and the content costs.

The difference from that we already described in the previous quarters have been [unique] to us, about EUR500 million, a little more than EUR500 million improvement. And this will continue in the course of the years. We think that there are still margin [maneuver] on all the lines of cost of the Group, even excluding the labor costs.

Regarding the financial results of France Telecom now, and to conclude on the Group global performance with this page for the P&L, operating income is down to EUR7.86 billion, mainly due to the EBITDA drop. Again, the EBITDA drop being explained by operations as just described, but also by the two extraordinary items we have already mentioned, which is on one hand the cost of the litigation on the French Taxe Professionnelle for a little less than EUR1 billion, and the accural -- professional accural for senior part-time program in France for the EUR570 million. And also some goodwill impairment, especially in Poland for EUR400 million that we took this year to take into consideration the drop of the share price, and the competitive situation, or the competitive pressure, on the Polish market.

This negative impact has been partly offset by better financial results. Financial results, a real improvement linked with the decrease of the debt and the decrease of the cost of the debt. And rumors apart, linked with the fact that, you may remember that in 2008 that we had taken a cost of -- if I remember, of about EUR800 million for the liquidity close for the minority owners of Orange Spain. It was accounted for into the financial cost line this actual. And this doesn't come again this year, so it is an improvement between the two years.

Net income of discontinued operations related to the UK is down, mainly due to the fact that we are paying income tax in the UK. We had credit in 2008 of EUR100 million. We now at a cost of EUR43 million. And (inaudible) from all those exceptional effects, our comparable net income would have amounted to EUR4.8 billion, slightly below what was achieved in 2008 in published terms. So our net income amounts to a little less than EUR3 billion.

CapEx. That has been a question all over the year whether we have reduced our CapEx too much. It is true that we've reduced our CapEx. We have reduced in a couple of areas. First of all, we didn't buy any real estate, which was what we did a year ago when we bought for EUR160 million of technical buildings in France, where we had the opportunity to buy some buildings where we know we would stay for long -- for more than two or three decades.

Another point, and this is what appears on the right part of this slide, we have decreased our investment into 2G, mainly in Western Europe, but also in terms of 2G capacity in Eastern Europe, Egypt and Dominican Republic to adjust to the traffic evolution. We have also decreased our investment in CapEx for DSL in dense areas, including in France. And we have stopped the FTTH program, because of the situation of the regulatory framework.

On the contrary, we have continued to increase in some areas. EUR150 million more for the operations. EUR60 million more 3G capacity. EUR40 million more for some submarine cables. You know how important is in network of submarine cables for coverage, especially in emerging markets, and how it is key in order to prepare for the future growth of data transfer.

Content platforms have also expense CapEx that was increased by EUR40 million. And infrastructure in the (inaudible) work to support the traffic growth, EUR90 million. And also some investment into the shops that we continue in 2010.

Cash flow. If you take all those figures into account our EBITDA, minus CapEx, including the UK, is down by EUR400 million. And there has been some improvement. We have spent much less interest in expense in 2009 from 2008. And on top of that by rearranging some of our debt structure, especially the (inaudible), that we have been able to buy back at very cheap price, as well as additional cash flow for about EUR500 million -- EUR553 million there has been a decrease of the interest paid.

Regarding working capital, you see an improvement. But let's be clear, this agreement is artificial. In fact, our working capital has been deteriorating by EUR200 million. Why do I say that? Because within the improvement of EUR775 million, which appears on this slide, you have in fact within the balance sheet the debt vis-a-vis the French government Taxe Professionnelle, the end of the litigation, and the Luxembourg court, which is -- which has been paid, in fact, just in January '10. So if you count the cost in the P&L in '09, and if we pay in '10, this creates artificially an improvement into the working capital of 2009. Other elements have been positive, and this brings the level of cash flow at EUR8.35 billion, slightly above what was achieved a year ago.

We take the opportunity, as we think to answer on some questions that are put on the table by most of you regarding the tax profile of Group, both regarding income tax because there there is some tax in France. Regarding income tax, we can confirm today that we don't expect to cash out more than what we are cashingout today between EUR600 million and EUR700 million for 2010 and 2011.

We expect to pay tax in France again in 2012. And if we pay the full rate of tax in 2012, it will be around EUR2 billion, we hope. We are working to try to get this down, but this is more or less what we should pay, because we have been benefiting from a tax credit now for a couple of years. And we still -- fortunately, we make profit in France, so one day we will have to pay tax, but we are working to postpone that as much as we can.

Regarding French Taxe Professionnelle -- for the existing Taxe Professionnelle, you know that it has been replaced by two new taxes with a neutral impact on us on the short term. Not such a positive impact in the medium term, whereas Taxe Professionnelle would have obviously decreased over the years. But we are currently seeing whether -- and I guess some of the French press has been reporting that -- whether we can get some relief of those costs by slightly increasing the wholesale prices, especially on the fixed network.

Regarding the TV tax, so as I said, it is a yearly cost for France of EUR150 million. This is (inaudible) for TV by the Open Commission. And as regards to the Spanish situation now the implementation of the tax is still blocked by local judiciary decisions.

Regarding the debt of France Telecom, we are quite happy to remain maybe more conservative than some of our peers, but at least as conservative as the best of our peers, with a decrease of our net debt from EUR35.9 billion down to EUR32.9 billion. And this by paying the dividends, the dividend for minority shareholders. And I guess that some of you are also shareholders of Mobistar, our TP Group. And also by having been able to buy back the minority shares in Spain, and to do a few other operations.

So that management has remained as conservative in '09 as it was in '08, with a good liquidity position at the end of the year. Now debt repayment schedule where there is no annual installment above EUR4.4 billion. You see the biggest is in 2013. And we have continued to extend duration of our debts. The average maturity is now more than seven years.

We have the new debt, which was raised in 2009, has been raised at an average cost of 4.7%, which we think is quite a good performance. And what we have achieved since we have done since the beginning of the year are even at a lower rate. And we have, as I said, tried to optimized the long-term cost of debt of France Telecom by repurchasing EUR2.4 billion of debt out of (inaudible) EUR1.4 billion of (inaudible), which were very costly. And we continue to ensure it is the best rating in the sector with A minus, A3 rating.

As regards to the future. You know my reluctance and our reluctance to predict. (inaudible) we are not better predictors than you, and probably worst predictors than you. And so we don't comment very much, especially on the operational indicators, especially with the uncertainties on the market and on the [economy].

However, with the few signals we have had since the end of the year, we think that we should be able to keep our revenues flat before impact of price cuts -- regulatory price cuts. And we think that those regulatory price cuts will still represent an impact around EUR1 billion on our revenues, and also some impact on our EBITDA margin. And we expect also a regulatory impact on EBITDA margin of around EUR500 million, as we had in 2009.

So pressure on the EBITDA will continue because of regulation. And we think that even if we continue to improve our efficiency, as well performance (inaudible), it will not be enough to avoid the pressure on the margin.

We will, however, spend a little more in CapEx. There is a fibre plan [inference]. There is preparation of the extension of capacity on 3G to accommodate the mobile broadband business which is growing, as described by Didier a minute ago, and you have to prepare to that. So our CapEx to revenue should be around 12% in 2010.

With all these figures, we see although that we can confirm our 2009, 2011 cash flow mission, which was to reach 3 times EUR8 billion. And we confirm as a guidance EUR8 billion for 2010, excluding license and spectrum. This is something we don't know exactly when we will have to pay for it, in which amount. But we know -- if you remember, we gave a few months ago an overall (inaudible) that we would have already have to spend between EUR1 billion and EUR2 billion in terms of license and spectrum for all Europe in the next 2 to 3 years. It was what we said last year. We don't see any reason to change this global picture of what we would spend.

And also it is excluding the litigation on the French Taxe Professionnelle, which has been paid in January, and which was already taken out from our debt situation two years ago.

This helps us to confirm our financial policies. So our dividend policy is confirmed with the shareholder remuneration approved by the Board of EUR1.44 for 2009 to be paid -- the balance of EUR0.80 being paid on June 17. Interim dividend will be, as usual, be decided in July depending on first-half results.

As regards to M&A, we have tried to convince you that we are not yet full than what you think sometimes. There is no transformational deal contemplated by the management team, even the management team after March 1. And there is clearly a focus on in-market consolidations. There are maybe a few other opportunities after the UK and Switzerland. If you ask the question which one, I don't know. But there are a few ones we may look at. And clearly a strong focus on emerging markets, especially in Africa and Middle East. As regards to that, we think that it is not the time to change our perspective and our cautious approach on that.

I go very (inaudible) through the countries. I see you have a lot of pages on the countries. I am just [going] one page by country. But you have figures and you can raise questions. And my colleagues from the countries are here with me -- Olaf, (inaudible) and Jean-Yves to answer to the questions on the countries and so as we go through.

So UK, I think on the (inaudible) I already commented. So maybe just an update on the JV as it is on page 37, please. So on the JD, so regulation we expect, as Didier said, we have done all what we could with Deutsche Telekom to fulfill the requirements of the European regulator, but also the British regulator. And we should get an answer from the commission next week. We expect it to be positive, but who knows, but this is our expectation. And in that case we could be able to close the transaction before H1. I say even clearly before H1, if we can. So the earlier the better.

As regards to the business, we have prepared -- we have started to prepare. We have constituted the first part, the first high-level of the management team, and we will continue. We will have meeting with our Chairman colleagues and British colleagues in the next two weeks to work on the new JV management team. And there is also the day one preparation. And we can confirm today after having worked on the potential remedies that could be requested by the regulators, that we can confirm today those EUR3.5 billion of synergies on this transaction.

As regards Spain, my only point is that we are quite happy with two points. One, the positive situation in terms of marketshare, the growth of the contract base, and the strong improvement of the EBITDA margin, even if Spain is still below the average and the benchmark we expect. We have been suffering a little more on the broadband business, but we think that will improve over the next year.

Poland, our colleagues from TP have published their results two days ago. And [Marchez] is with us to answer on them. I would say, besides business figures, I see very one important achievement in 2009 is the agreement which has been reached with the Polish regulator. I will just remind you that we remain under the threat of functional separation of the network. It was a request, a strong request from the British -- from the Polish regulator. I'm sorry, UK means from the UK, so sorry. So from the Polish regulator.

This we have been able to convince the regulator and the political authorities in Poland that it was not such a good idea. And we reached an agreement where we have committed to further invest into the network in Poland toward our benefits -- toward benefits of competitors (inaudible) benefits -- in exchange the relief on this decision for the time to come. We should also mention in Poland the Group penetration of IPTV, which is quite a success below the French videos up to now, but it seems that it is a very good performance.

If you look at the other countries, I have already mentioned the high-growth of Africa, Middle East and Asia. And I think I will not comment on it. Maybe just commenting page 46, if I can get it. Okay, you see here the customer base growth, with very impressive rates of growth, for instance, in Egypt, Senegal, but also in money, but also very good growth in some other countries to reach in total 16.5% growth for those countries.

Whereas maybe another interesting data is what is on the right part of the slide. The fact that there is now a real existence of data revenue on the mobile networks, including a country like Egypt, where it represents 7% of the service revenues. So it is not so bad. Data revenue is a trigger for growth not only in major markets, but also now in emerging markets.

The last slide is on the enterprise division, where you see that the pressure on revenues comes mainly from the situation on the legacy business, with a strong decrease of PSTN voice, and traditional voice, but also leased line at the profit of the IP networks. This is also some business we take on the other side, but the economic crisis has been the occasion for most of the companies to rationalize their telecom infrastructure more quickly than it would have been done without the economic crisis.

Thank you very much, and now the floor is to Stephane.

Good afternoon to all. I would like now to comment on the performance of our operations in France in 2009, and share with you my views about 2010. As you know, I took over France Head of Operations in late October within a particularly difficult context. Still as I visited the different sites in France to meet the staff, I realized that the social crisis had not shaken the motivation of our teams, which remain totally committed to the success of the Company. As it in evidence of this unchanged ambition, we had a strong Q4 in France with a good commercial performance. We also had a better profitability than was expected.

The French market is probably one of the most resilient markets in Europe. And in this market Orange has kept a strong leadership. The revenues in France increased by 1.6%, if we include regulation, which is an outstanding performance.

Our active marketing policy in the mobile area bore fruit since revenues are up by 2.6%, and even 5% if we exclude regulation effects. This is thanks to a successful marketing approach based on segmentation, with the launch of Origami offers in 2008.

We thus managed to increase our customer base by 4.5%, and the nonvoice revenue by 20%. Fourth-quarter revenues, excluding regulatory impact, grew by 4.3% in line with the trend of the third quarter. As to the fixed revenues we kept them stable in 2009, excluding regulation effects. Besides the steady increase our broadband revenues is offsetting PSTN revenue decline.

We also managed to maintain EBITDA in France at the outstanding level of 41%. This thanks to a tight monitoring of G&A, [ITN] cost and commercial expenses. This is obviously essential for us, because it balances the new taxes, (inaudible) tax, and also the content investments.

If we look a little closer to the mobile area, as I said before, 2009 was a good year in terms of general performance in mobile. Thanks to our marketing policy, MVNO's in-license agreements, we increased our marketshare, which reached 47% at the end of the year.

Into Q4 '09, and particularly in December, we recorded the highest level of commercial adds since 2000, with 1.8 million adds. We attracted a huge number of prepay customers, while keeping the focus on contract net adds. Then our marketshare has increased from 46.4% at the end of the third quarter to 47% at the end of the year.

The second major achievement of this year has been the ARPU growth of 1.6% excluding regulation, mainly due to the continued improvement of nonvoice revenues. It represents in the fourth-quarter 28% of our service revenues, versus 23% last year. The number of mobile broadband users grew by 23% and reached 13.6 million at the end of last year.

Clearly the iPhone was, as you know, a tremendous success in France, and a strong driver for us with a little more than 1 million handsets sold in 2009. We are the second seller of iPhones in the world, and we have now 70% of the iPhone based in France. In spite of exclusivity loss last year, we kept the leadership in France in iPhone net adds. And clearly we intend to maintain this strong momentum and leadership in the market with a set of new, attractive offers to be launched soon.

In the home markets, and after a strong customer acquisition in 2008, as we anticipated 2009 was a more difficult year, with a highly competitive market, this for three main reasons. First, we suffered from a premium of between EUR5 to EUR10 on our product because of regulation constraints. Second, we had clearly an aggressive [price] policy, especially on cross marketing. And third, the SFR leveraging of Neuf acquisition on its distribution network produced significant impact on the market. In spite of this, we succeeded in resisting the competitive pressure on broadband with a conquest stabilized around 30% at the end of the year.

Our aim is now to regain a better share of conquest thanks to a more segmented approach with a set of new offers to be launched in 2010. These offers will include new services designed for broadband and fibre. In Q4 '09 the ARPU has reached EUR36, one of the highest ARPUs in the sector, thanks to new services such as Pay-TV or video on demand.

And last in 2008 the number of copper lines grew -- continued to grow by 2%. And we are currently reducing the trends of [PSDT9] decrease, which is clearly a favorable factor for us.

Let me give you briefly a few thoughts about the French market -- telecom market in 2010, at least as we can see it today. We identified four main trends. First, the economy -- global economy is slowly recovering, and we can expect a positive trend in consumption. And the French telco market should be -- or should remain -- resilient as compared to other European markets.

Second, mobile growth should be maintained at around 2% to 3%, mainly driven by data and multimedia usages. Data traffic has been multiplying by 2.5 in 2009, and should at least double in 2000, thanks to smartphones and 3G bundled development.

Third, in the fixed broadband competition will continue to be strong, as the market is becoming mature, and is more driven by churn and less by newcomers. And forth, we can expect that quadruple play packages, combining fixed and mobile broadband, will meet with growing success. That is the reason why we are going to launch our own quadruple play offer in a few months.

Let's see now the main priorities in our marketing approach for the coming year. 2010 will be clearly a crucial year to prepare Orange to the midterm market changes as we see them. We will optimize our marketing approach and positioning thanks to three key marketing gear, which are also landmarks to customers' choice on the French market.

First, the range of offers will be redesigned both in mobile and broadband. In 2010 we will launch our segmented approach with new offers such as low price mobile packages -- this is also a way to prepare to the fourth player arrival in mid 2011 -- and also the family packages. This segmented approach, which has already proved successful, will be extended to the broadband side.

Second, we are going to update the range of handsets and boxes in order to better fit with customer needs, and foster on new services, and also in order to optimize the return on commercial investments and subsidies.

Third, the service, which is what really makes the difference for the customer choosing Orange will be reinforced and improved, especially around the Orange Care program, a new entrant portfolio of care services, which covers insurance with data backup services and recycling for the handset. This program has proven very successful in the UK and we're going to develop it in France.

A few words now about the fibre to the home program. As you know, one of our priorities in 2010 and beyond will be the launching of the fibre program. With the clarification of regulation and customers' growing demand for more bandwidth, it is now the right time for France Telecom to launch a very high broadband plan.

With this investment in fibre our objectives are clear. First, to develop services and content usage to create a new source of revenue. Second, to retain and win back customers, especially in very dense areas and -- or to improve customer retention. To stabilize, third, our increased retail access revenues.

By midyear a new offer for fibre will be unveiled that will encourage our customers to migrate from DSL to fibre. It will include such options as multiscreen TV or online data backup and storage. And in the lower dense area we hope that further clarification of regulation will allow us to upgrade the network and provide our customers with a higher bandwidth.

Fibre is one of our major ambitions in the coming years. More precisely, EUR2 billion are going to be invested under this plan, covering 45 urban areas by 2015. This should enable the Group to pass 9 million homes by the end of 2015.

We will give preference to investment sharing with other operators and local authorities with external contributions to the investment burden, potentially amounting to 10% to 20% of FT's overall CapEx.

I would like now to come back briefly to the social situation in France, and comment the different actions we put in place since the beginning of October to restore the social dialogue in our country. First, we launched with the support of the audit firm [Tecnologia], a questionnaire to identify the main weaknesses in management. As you know, 80% of our staff, a little bit more than 100,000 people in France, answered to this questionnaire.

Second, we set up what we called (spoken in French), which consists in listening to our employees so as to get direct feedback on what could be improved. And our staff was really eager to find solutions to end the social crisis.

Third, unions and management are discussing, and still currently discussing, six main items around the issue of stress at work, more precisely, the mobility question, which is a crucial question, work/life balance, work conditions, the revision of employees representative governance, which is also a heavy issue within the Group, and working practices. Those discussions are still going on. And we have good hope that by the beginning of March the two first major agreements on mobility and work/life balance will be signed by a majority of the unions.

In the same time the French executive committee has firmly addressed these issues by both looking into the necessary changes and starting a series of concrete measures, including for instance, the nomination of 150 local human resource managers, and a set of measures to improve work conditions immediately, especially in our call centers, such as a 20 minute time every day to enable our employees to login and delogging their work position.

A few figures and words about a very important issue for the Group, which is the natural attrition issue that will accelerate in the coming years. In France, as a matter of fact, we are at a crossroads. The average age is a little -- is about 46 years, and half the staff -- half the staff -- will retire between now and 2020. We therefore face one challenge and one opportunity. The challenge is to keep senior workers motivated until their retirement.

It has been one of the major purposes of the senior part-time plan that was signed in November '09. This plan should concern 10,000 people in France. And as you know, we have set aside EUR570 million in provision to this end.

The opportunity is to design a new recruitment policy to bring new skills and attract young professionals. To this end we have started in 2009 an ambitious part-time training policy. We have today 5,000 people that have been enrolled so far. This is an increase of 30% compared to 2008.

This new social context that we are looking for will bring a lot of, and very soon, of positive effects on our business. First, more responsibilities will be given to the teams directly dealing with customers. Operating modes will be made simpler and easier. This higher responsibility level will increase reactivity and improve the quality of service.

Second, we are also improving working conditions to make our employees feel better at work, and therefore more committed and efficient. Third, we are working towards renovating a social dialogue in order to keep on adapting to the major business changes, while making sure everyone has a say.

Last, as I mentioned before, we need to make skilled young professionals want to join France Telecom, and thus become one of the Europe's employers of choice within the next few years.

This is what I wanted to tell you about the French situation. Let me now introduce to you the new organization of the Group and the new team that is going to work around me. This new organization was designed to serve the best interests of the Company, and more specifically to enhance the efficiency of the decision-making and a better partition of responsibilities.

I tried to strike a fair balance between experienced people who have known and worked relentlessly for the Group within the past few years, and some new people joining the team today, who have also proved by their experience so far that they could be a real appreciation to our group.

This new organization matches two main objectives that will be crucial in the near future. First, the team will be responsible for setting up the new project of the Company that is currently in the making. Namely, one of our ambitions in the project is to achieve and optimize quality of service and reliability for our customers. To this purpose, I decided to appoint a director in charge of quality and service, Jean-Philippe Vanot, to make sure this promise is kept.

Second, we want to simplify and rationalize the organization of the Group to make the interaction easier between the operating level and the top management. For example, Jean-Yves Larrouturou will supervise our international operations. Another example, Jean-Paul Cottet, will head the new marketing function, made up of various marketing units that were so far scattered in different sections.

At last I have decided to largely renew the team with nine new members of the executive committee, including -- sorry, excuse me, nine new members of the executive committee coming from the Group, and also three persons coming from outside. Two high professionals coming from the media industry, namely Christine Albanel, the former French Minister for Culture, and Pierre Louette, who is going to take the function of Secretary General, and a top-level specialist of human resources, Bruno Mettling. This is roughly speaking what I wanted to tell you about this new team. Of course, I will be pleased to answer any questions that you might have on that subject.

I would like now to conclude this speech by two elements. First, I would like to give you a few rendezvous in our agenda. The beginning of March will be, as I mentioned, deadline for the signature -- the first signature of social agreements, at least the first two elements of the social contract that we are offering to build in France.

At the end of March, Delphine and I -- Delphine who is going to supervise the French operations with me -- will announce the major measures that we are going to launch for France to draw the conclusions of what we understood as the main improvements to bring to our French organization. At the beginning of April this new organization will take effect.

And last, before the summer, the project of the Group will be presented with a press conference and a series of internal roadshows in France and in Europe. This project will be later presented to investors, probably in the third quarter of 2010.

If I wanted to summarize what is our approach for this Company, in a nutshell, I would tell you that what we are going to try to do is to work our best at Orange to address the needs of all our stakeholders, and create value for each and every one of them.

First, for customers. For customers we want to provide the best network, the most efficient access and the best services to achieve a top quality customer experience for all our customers.

For shareholders, we strive to maintain a solid balance sheet. We make sure they get return value of their investments. Let me take this opportunity to tell you that I will personally invest in the total for an amount of one year of my salary in the next days, just to show you how confident I am in our future.

For employees, our aim is to attract and retain the highest skilled people and make them work with us. Our policy is to associate all the staff to the success of the firm they contribute to achieve, and make sure they have a share in all the benefits of this success.

And last for (inaudible) society, we support and contribute in the advancement of developing countries. We take an active part in environmental concerns. And we fully commit to corporate social responsibility. This is what is our ambition at Orange. Thank you.

Now we are ready to answer your questions.

Nicolas Cote-Colisson, HSBC. I've got two questions. The first one is I would like to have a bit more color on [net data] on your 2012 transformation plan. And I would like to make sure you are still committed to the EUR1.5 billion of savings in terms of cash flow by [value].

The second question is on your fixed line operation in the UK and in Spain. I was wondering what kind of churn rate are you experiencing in these two countries? And beyond that, what is the fixed lines for 3G in these two countries, UK and Spain? And could acquisitions could be a solution or not?

Gervais is going to answer the first question and Olaf the second one.

So on the transformation -- Orange 2012 transformation, so we have been reassessing all this. And as you have commented, the fact that we already reached around EUR500 million -- at almost EUR500 million savings in 2009. We work as in the frame of the project performance improvement, and the performance plan will be part of it. And we will reevaluate all this.

Don't forget that this was done even before as the economic crisis impact. This designed before the economic crisis impact. However, I guess you have noticed that we confirm not only the (inaudible) for the 2010 cash flow, but also the ambition for the 2011 cash flow. This means that whatever it means -- whatever will be the transformation project, or the performance project, we will need performance project to reach these figures.

I leave maybe Olaf to answer on the UK and Spain home situation. Just keep in mind on the UK that the fixed business is part of the JV and the future of this business (inaudible) now a common decision between Deutsche Telekom and France Telecom.

So just starting with Spain, maybe two points. In terms of our strategy for 2010, we will continue to work like we have seen Gervais demonstrate, to work on the P&L, which has significantly improved in 2009. The underlying fundamentals, the cost base has been one of the key reasons that we were able in the P&L overall in Spain to get 3.7 points of improvement in EBITDA in 2009.

For 2010 the focus is to continue to do that. We have started in the middle of last year a program which is called [Fin] to transform further the economics of that business. But in addition, we are of course going to drive more sales and accelerate the number of net additions that we can make in 2010. So that is in a nutshell the strategy for Spain.

For the UK maybe two points. First of all, similar to Spain, we want to continue to address the issue of the cost base in the P&L. The performance of the whole P&L, as you have seen, was negative for 2009. But what you didn't see is that the second half was significantly less negative compared to the first half. So we are in a trend to improve the underlying P&L for home in the UK.

We believe that, if we look at the number of multi-play customers in the UK, that it is essential to continue to work really hard to improve the sales and to get this business improving better.

Thierry Cota, Societe Generale. I would have two questions here. I would have two questions, if I may. First, on (inaudible) regulation in France, where do you stand on the cross-selling and bundled offers with cross subsidization, as your competitors are doing, and I think you're looking into that as well? When do you think you will be able to do the same or have your competitors prevented from doing it?

Secondly, I am not sure I saw the restoration of the minimum 45% of free cash flow to be distributed to shareholders going forward. Is that something that is being maintained?

Concerning the cross-selling approach, we clearly have some different regulatory constraints, different than our competitors. But we are trying to do the same in fact, and we have begun to do the same, first, on relatively small samples of our customers. But clearly we asked the Competition Authority about the distortion that we suffer from the cross-selling approach going from our competitors while we are not positioned to do the same. And we are ready now to clearly practice the cross-selling in order to compete on the home market.

In fact, the precise point is that Competition Council decided to consider the question. Which is not the conclusion, but a major step in the direction of what Stephane said. For the second question, I think Gervais --

On the second question, if you come back on the slide we said we confirm the dividend policy. Why we didn't reconfirm exactly the 45%, because this year if you had applied strictly the 45%, we would have get (inaudible). If we confirm that cash flow, and we confirm the dividend policy, this means that the (inaudible) is expected to flow for the year to come -- for the years to come.

Antoine Pradayrol, Exane BNP Paribas. I have two questions. The first one is just a clarification on what you said for the mobile revenue in France and your guidance perspective for 2010. You talked about 2% to 3% growth for the French mobile market in 2010. Is it before or after regulation?

The second question is on the -- sorry, the second question is on the unbundling of the local loop and the wholesale rates in France. You said that you had made an application to increase that. How confident are you that you can get an approval for that?

On the first one, on the market growth, we said between 2% and 3%. And we intend to grow like the market, which means including regulation impacts, which means before regulation impact we expect slightly more, as we did in 2009. Where I remind you that before regulatory impact it is 5% growth, and after regulatory impact it is between the 2% and 3%.

Maybe for the second question we can ask Jean-Yves to answer.

So regarding the (inaudible), we are a bit early to give to you a precise answer. If you remember correctly, last year it was just at the end of May, I think something like 29th of May. I think that we were in the position to give the (inaudible) for the full year 2009. We just transmitted a few days ago our full-year (inaudible) regulatory accounts to the asset. And we are now with a discussion in which will be underway for the coming weeks regarding the precise level of our (inaudible).

It is clear that in the context created by the new regulation, by the new law and by the impact on the regulation, the assets once can lead to others and room for discussion before a conclusion.

I am confident we will have a position, a clear position, let's say before the end of March regarding the (inaudible), which if it is a case it will be also earlier than last year. So we wait for the decision.

Guy Peddy, Macquarie. Just one question. A couple of years ago when we were last year, we are hearing about a scenario where CapEx to sales ratio was sort of 13% sustainable. We are now looking at an environment where you are arguing perhaps 12% is sustainable. I would be interested to know what has changed, given that in the past two years the requirement for mobile data capacity has expanded dramatically, you have announced further fibre plans, etc., both of which would imply more CapEx rather than less. Thank you.

In fact, as we have given some information about the different items on which we will spend the CapEx, as you have seen on the slide. Due to the crisis we have made a very precise analysis of the different chapter of expense. And we come to a period of time when a lot of investment on the previous network, like 2G, is now fully terminated in most countries. And we have focused all the investment on the new geographies, the 3G coverage, and we have making all of our evolution.

We think that 12% is sufficient to accommodate the needs for the reasonable FTTH plan which we have, which need a lot of -- to start again all the mechanism to install FTTH is not a simple story. We have to gain productivity in this process. Because even if we have made experiments in (inaudible), we continue to have to improve our efficiency. So we will start in 2010 with the number you have seen on the slides. And we will be very reasonable in this matter, even if we think that it is a good (inaudible) to regain marketshare in big cities.

On top of that, we have to complete the coverage in 3G, plus the markets in Africa, but what is shown now in our computation is 12% is sufficient to cover all our needs.

The only change, which may happen, but not next year, probably one or two years later, is when we will start to invest in LTE technology in the main center of the towns and things like that. But at that time the 3G plus will be over. So it is a kind of mechanism where you substitute continuously new investment to the investment you have already done on technology and which are fully installed.

So the 13% was a figure which correspond to the state-of-the-art, as I said two years ago. I think now 12% is really sufficient due to the state of our networks and of our business. So I'm very confident about that. I can tell it, because now as you know I will -- from the Chairmanship of the Board, I will check that this investment is appropriate for the development of the business. Thank you.

Frederic Doussard, Oddo Securities. Three questions. The first question regards the net debt to the EBITDA guidance. So we [raise] the rates, the guidance from net debt EBITDA (inaudible) in the midterm, not for 2010. So -- in the press release. So I don't know if that is just something you forgot, or if you would reiterate the net debt below 2, yes, for 2010 as well?

We reiterate it with one caveat. If there is -- we said no transformation deal, but if we do a deal of EUR2 billion at the end of the year, I am not sure we completely reach the 2. We could be slightly over it. Let's be clear, we can reiterate around 2 for end of year, and clearly below 2 for the medium term, then it is definitely in line with what we think.

Then two small questions on operatings. For France -- mobile in France you guide for 2% or 3% growth. While in H2 your growth was only 0.8%, so you expect an improvement. How do you explain that? What makes you confident on this point?

We expect this mainly due to nonvoice revenue growth. As I mentioned, in 2009 we had more than 20% growth on nonvoice revenues, and we expect this trend will keep on 2010. And this is the main reason why we assessed the trend in the market around 2% to 3%.

And next question, on regards the marketshares in UK and Spain, obviously, we recover strongly these two subsidiaries in UK and Spain in marketshares. How do you explain that? And do you think it is sustainable over the coming quarters, over 2010?

So on the -- indeed, where the teams in the UK and Spain have done a very strong job, particularly in the second half if you look at the numbers in terms of our commercial performance, and on the back of that the marketshares that we have enjoyed. We have seen on the mobile side that we typically were running between 25% to 30% marketshare on the gross adds in the UK and around 25% in Spain. So indeed very solid.

Now the question was why are we performing well? You can say what is similar between the two operations is -- and then there are of course many differences. But one is a significant effort in 2009 on a routes to market. One, to develop more controlled routes to market, like online, franchisees, franchise stores, and owned retail stores. In both markets we have significantly expanded our own distribution efforts.

The second one, which is more in the UK and less so in Spain, is the smartphone portfolio. Of course with the Apple, and in Spain we had other smartphones, but the Apple iPhone is certainly in the second half has helped. We did, to give you an idea, we did 222,000 units in just a few weeks, which is quite a phenomenal performance. In fact, it resulted in the highest contract quarter we have ever had in the UK.

But certainly also in Spain we have worked very hard on the device portfolio. And we believe that for the first half of this year (inaudible) we had a very, very strong portfolio to continue our momentum.

Then thirdly, again this is similar, but especially strong in Spain is the fact that the teams have worked very, very hard on the cost base to be able to just be more competitive from a cost perspective and pass that on partially to the market in terms of offerings and products and services.

Dimitri Kallianiotis, Citi. I have two questions. The first one on your strategy for broadband in France to regain marketshare. You talk about segmentation, what sort of impact do you expect on the ARPU? Is it just going to mean more discounts for some lower-end offers?

My second question is on the new project -- I know you will talk about that in the third quarter -- but could that translate into any changes in terms of your long-term free cash flow guidance of EUR8 billion? Thank you.

For the first question, first, I can tell you that our target in terms of conquest share for 2010 is 35%. As you have noticed in '09, we have been at the end of the year around 29%, 30%, which means that we clearly have the target to regain a conquest marketshare during 2010.

As I explained to you, we suffered mainly in '09 from a gap in price in our offers compared to the competition. We are -- the segmented approach in marketing is clearly aimed to cover the market and the demand, both by a low price offer that we launched a few days ago, family packages, and also the high end of the market.

In the same time we are going to work on improving the ARPU for the broadband revenues by launching new services. I mentioned the VOD services. We are going to enrich our offers in VOD. And to prepare also a new offer for fibre in the midyear. Maybe for the second question --

I think if we reiterated the ambition for 2011, this means that it is done after for sure a consensus between previous management and new management, myself being the leader of both. So I think there is no doubt on this, so 2011 is an ambition. Let's say (inaudible) 2011, for sure we would like to reach that. But I remind you one point is that in 2012 we [reap the] tax. So by definition, even if you reach the same operational cash flow, if you pay tax in France, by definition the cash flow should be (inaudible). But I guess a lot of analysts have already -- and that is added to their calculations that we should -- will pay tax in 2012, even with the same operating cash flow.

Of course, I should have mentioned this from the beginning of this meeting, but Gervais is going to remain the CFO of the Company. So everything he said in the previous years will be still valid in the future.

Jonathan Dann, Barclays Capital. You mentioned the 45% payout of the EUR8 billion. What would actually have to happen to make you increase the dividend?

I think again the -- you know, and I guess some of you are probably considering we are rather conservative. I am not sure, for instance, that it is a very good thing to do in a company to increase the dividend when you have a prospective to decrease the cash flow. Some of our peers are announcing that. I am not sure -- I think when you invest into the company you take your dividend and try to get out immediately after. So I think it is not -- for me it is not a real good sign given to the financial community.

First of all, and I think this is one thing where France Telecom has remained consistent over the period, is that debt remains no longer an issue that remains something we have to take care of. I think what has happened on the financial markets and the debt markets at the beginning of the year with the sovereign debt is not so, let's say, good for the future in terms of access to funding in the years to come.

I think if I discuss with my colleagues, with a lot of people in the financial community, when we see the huge amounts to be raised by the different states in 2011, 2012, there are a few questions on the access to funding in the years to come. So to remain careful in terms of debt, I think, is important for the sake of the Company.

The second point, and this is something which has been mentioned by Stephane, this Company, if it wants to grow its cash flow per share, needs to look after growth -- nonorganic growth through measures -- through acquisitions in emerging markets, maybe a few additional mergers, operations of market consolidations, which require a few funds. But also some organic growth. (inaudible) this all what we are discussing on France, for instance, is a way to generate organic growth with the same customer base, increasing slightly the marketshare, but increasing even more the ARPU as much as we can on the different markets. So these are things that will require some funding if you want to have a growth engine in the Company.

Taking this into account, what is a split between keeping money for inorganic growth, debt coverage and then shareholder remuneration, the balance of 45% has been designed on the current level of cash flow, with also the idea that we don't pay tax in France. This is why we are to a certain extent below the average of our peers who distribute more than us.

I think if you want to maintain the dividend at the same level as today, beyond 2012, your would have to increase your payout. This is a decision which hasn't been made, which will have to be discussed in May -- proposed by the general management and made by the Board afterwards. This is a question in front of us. This is clearly the real question I would say beyond 2010, and especially for '11 and '12 to be decided upon, I think. So it is premature to ask it.

But again we have tried for the last years to keep a consistent strategy in terms of dividend policy, trying to increase the dividend year after year, or to keep it stable when the cash flow was not drastically increasing.

Matthew Bloxham, Deutsche Bank. Two questions please. One on in-market consolidation. Are there realistic opportunities for you to do more in 2010, or is it something that you might have to wait a bit longer for?

Then secondly, just on the change in accounting treatment for things like ECMS, which you will kind of I guess take your share of the dividend rather than a proportionate cash flow. Does that have any material impact on how much cash you get from those assets or is it relatively small?

On the second question, it has very little impact on the cash. The impact is very minor. Also impact on the number of -- on the revenues, but as yet there has been no question on Egypt, but our hope is to be able to consolidate Egypt again at the end of the game. And to have then a full consolidation, not just a (inaudible) integration.

Regarding your in-market (inaudible) of operations, the things are a little more difficult than the ones we have been doing because we don't see so many mobile to mobile consolidation opportunities. Some of the opportunities will be more complex to operate. And if we work on them, we would speak on them.

Just to remind you that we had been preparing Switzerland for three years before announcing it, and yet [unable] to not to speak about it for two years and a half.

Okay, thank you to all of you. Bye-bye.