Orange SA (ORAN) 2010 Q4 法說會逐字稿

Well, good afternoon, everybody. Let me first apologize for this rescheduling of our meeting. We have very sadly lost Bernard Izerable, who used to be our M&A Director of the Group. And some of us will attend his funeral later in the afternoon. And that's the reason why we are going to begin rather early this meeting.

Today, around me, Gervais Pellissier, the CFO of the Group; Delphine Ernotte, who's in charge of our operations in France; and the rest of the Executive Committee will be available to present you our 2010 results and achievements but also, of course, to answer your questions.

I will first quickly highlight the overall performance of the Group in 2010, comment and describe a few key milestones of the first year of our Conquests 2015 plan. Then Gervais will go into more details about our financials of the year. Then we will focus on the performance achieved in each country with a special focus of -- made by Delphine on the French markets, which is I know - and it's legitimate - at the core of your maybe concerns. And finally, I will provide you a general outlook on 2011 year and our midterm prospects for the Group.

Let me start - we are on slide five - with the key headlines for this 2011 year. To say it very simply and briefly, we have reached in 2010 all our targets, we have met all our guidances, and we have made very significant substantial steps towards the achievement of our Conquests 2015 strategy.

2010 has been a very strong, solid year in terms of results and performance. This has been made possible, especially thanks to a very dynamic commercial activity and trend, especially in the second part of the year. And in the same time, we have been able to manage and limit our margin erosion as expected and as committed in the beginning of the year. And this year overall, we consider it as a very satisfactory first year of our Conquests 2015 plan in terms of achievements and results.

To highlight very briefly some of the key achievements of 2010, I will start with what is the first part, first conquest of our Conquests 2015 plan regarding employee satisfaction just to say that, as you know, when I have been appointed as the CEO of this Group one year ago, we were living through a very troubled social climate atmosphere in France, a deep crisis that could have affected substantially our performance and our operations. And my first priority was clearly to reestablish, to restore a very good social climate. I think that we can say today that this has been achieved and that in fact no real impact can be measured on our 2010 results coming from the social crisis that the Group has lived through in 2009 and 2010.

Let's talk about the three other main topics of our 2015 plan to see how in 2010 we have been able to achieve some first big results regarding first the network. As you know, one of our priorities in our 2015 plan is clearly to upgrade our networks everywhere in the world and to bring high-speed services in both fixed and mobile worlds everywhere. And clearly, in 2010, we have worked on that topic.

I could mention, for instance, the fiber rollout plan in France. As you know, we have announced that we will invest EUR2b by 2015, the target being to reach 40% of French households with fiber access. But Delphine will go into more detail about that.

Regarding our customers that are going to be in the very core, in the very center of our strategy and concerns in the future more than ever in a very competitive environment and very competitive markets everywhere in the world, we have been innovative in 2010. I could mention, for instance, the quad-play offer opened in the French market that has been a tremendous success. And that has enabled us to reach 36% of conquest market share in the broadband markets in the fourth quarter of 2010. May I just remind you that we were at zero in the beginning of the year? And we will keep on being innovative in a more and more segmented approach of our markets, especially in the French market.

Concerning the fourth conquest, which is the international development of the Group, I think that we may say that we have been determined but in the same time very cautious and rigorous in the management of this international development. One of the substantial achievements of 2010 has been the acquisition of 40% of Meditel in Morocco. And when you are looking at the financials of this acquisition based on real 2010 figures, you can see that in terms of multiple we have paid less than 10, which is for an asset in an emerging country like Morocco and with a great potential growth, which is a very attractive price.

In terms of the main financial of the Group, the top line has slightly increased in 2010, 0.6% excluding regulatory effects, thanks to a good commercial trend and dynamic in the second part of the year. We have been able to reach an EBITDA of EUR15.6b. That is to say to maintain the erosion of our EBITDA margin under 1 point, which had been the guidance in the beginning of the year. We have been able to deliver the necessary CapEx, especially to invest in the networks, reaching 12% of our revenues with a special effort on the French network and on French operations, both in the network and in IT.

We have been able to produce an organic cash flow over EUR8b. And we have maintained a very attractive, solid financial situation with a ratio debt on EBITDA under 2 at 1.95 to be accurate.

Those -- this good, sound set of results enabled us to deliver a good shareholder value and also to strengthen our financial structure. Clearly, I recall and confirm you the very strong commitments that we have taken in July with the Board of Directors for a three-year period of paying EUR1.4 of dividend per share for every year from 2010 to 2011. And this doesn't mean that we will not pay any more dividend after 2012. And clearly, in the same time, we have worked all year long on optimizing our debts. Gervais will go into more details about that. And this has clearly contributed a lot to the quality of our results and of our cash flow.

A few highlights on the commercial achievements of 2010. To begin with the French situation, I mentioned the very remarkable 36% of conquest market share in the broadband market in France. But the performance has been also very satisfactory in the mobile market. Delphine will give you some more details about that.

I want also to stress the very good results from our Spanish teams. Jean-Marc Vignolles is here in this room. In Spain, we have been able to really regain customers on the competition, as you can see on those figures, especially thanks to the capacity to sell the iPhone and iPhone packages much better than our competitors. In the fourth quarter of 2010, Orange Spain has been the number one in Spain in selling iPhones.

In Poland also, a nice recovery, and thanks to very steady work and efforts in the end of 2010. And in Egypt, a good contribution to our growth. And when we are looking on overall figures, at the end of 2010, Orange had nearly 210m customers over the world, which is a 6% growth of our customer base. This is our main asset for the future.

A few more figures to underline the revenue growth, especially in the second part of 2010, just to say that we have been able to find this growth everywhere in all geographic areas, but also in all businesses. May I especially emphasize the contribution of Africa and Middle East countries with a spectacular 8.5% of growth but also the results and performance of our enterprise business branch that had been clearly hit by the economic slowdown in '09 and '10, but which has been able to recover progressively, especially in the second part of 2010, as you can see on those figures.

I want to make a very short and brief update about the situation that we meet in some countries that maybe you have heard about in the recent weeks because of the social and political events that occurred in those countries, just to say that in Egypt or in Tunisia, where as you know we are one of the key operators in the telecom markets, we are now back to normal. The operations are normally run by our teams. The expatriates that we had made back to France are now -- have joined their working, their work in Egypt. It is the same in Tunisia. And we think that the impact on operations and on revenues will be - of course, if there is no more, I mean, major events or upheavals in those countries - will be limited.

No substantial damage to our assets. We have been very cautious in terms of safety of our teams. This has been clearly the first concern. But today, we can say that there is nothing substantial to report, to mention about what happened in those countries. And we have seen political moves, not targeting especially foreign investments or foreign companies or foreign brands. Don't forget also that what we have seen in those countries is, if I may say so, the Internet revolution and that in fact our services and our products are in the very heart of the social trends that have appeared quite violently in those countries.

I will have a special word on Ivory Coast, which is probably a little less present in the media today but which is a real concern for us because, in this country, the situation is completely blocked. And we watched very cautiously on a day-to-day basis with our teams the evolution of this country, where we operate one of the major players in the telecom market.

A few words to recall that we are still implementing strong performance programs that has made us in a position to save more than EUR600m in 2010. We are managing our cost structure steadily. We are steadily improving processes and efficiencies. And this order of magnitude of EUR600m is more or less the same as in 2009. And we will keep on clearly managing very rigorously our cost structure in the future. This is one of the reasons why we have been able to contain the EBITDA margin erosion at less than 1 point. Gervais will give you some more details about those efficiency programs.

And eventually, for this introduction, a word on the evolution of the Group governance as of March 1, 2011. As you probably know, the Board of Directors of the Company has appointed me as Chairman and CEO as of March 1st. I am very honored by this mission. I want to stress the quality of the transition process at the head of the Company that Didier Lombard and myself have organized and managed since September 2009. I think that this has been very good for the Company, for the employees, and for the shareholders.

And I will now as Chairman and CEO working with my executive team around me unchanged, clearly, with the exception of Delphine, who is going to talk in a few minutes that Delphine will be appointed fully responsible of French operations in a few days, which honestly will I think change little regarding his current life.

So this is the very quick introduction that I wanted to deliver. I am now asking Gervais to give you some more, much more information. Thank you.

Thank you, Stephane. So just to start with the main KPIs before I do (inaudible) in terms of trends and guidance, I know you may not like it completely. But I just remind you that the commitments of the Company are on CapEx rate, on cash flow and that we try to help you to see how we see the business in terms of revenue evolution, in terms of margins. But again, don't forget that both revenues for sure and to a certain extent margins are not completely in our hands, whereas we see we keep completely the gear on what we can master without jeopardizing the future. And this is what we have done in 2010, increasing the CapEx because we thought it was necessary to come again to the right level but without issues on the cash flow, which is achieved as expected, and on the debt situation of the Company, which remains clearly sound financing, the most sound within the industry in Europe.

Another point, which has been commented by Stephane, and just as a first indication of it, if you have any questions, our HR Director Bruno is with us. But we have this idea to introduce within the incentive and within the performance appraisal of the top management in France and later on worldwide, a social indicator, which is on one hand based on a few detailed KPIs in terms of human resource, departure rate, number of women, percentage of people appraised on an annual basis, percentage of employees with training or without training, absence rates of the employees. And on top of that, it is a mix between those indicators, which are factual indicators, and a survey to check what is the climate within the Company. And this is part now of the bonus of the top executives as well as the quality of service. And you may comment if you have questions also on quality of service with our colleague. Jean-Philippe Vanot is also with us.

We think it's important, by the way. We think that some of you consider that it is important. And in such a business where people is key, we know that if we don't improve on this level, it is quite difficult to improve on the overall objectives of the Company.

To come back now on the economic figures themselves, to mention that the customer base has increased by 6%, about 10m to reach now 210m, nearly 210m customers. Most of the growth is coming from mobile activity and from emerging markets. But that doesn't mean that there is no growth at all in other markets. But let's be clear. These are the two drivers of growth for the customer base. And on top of that, there is another driver, especially in major markets or more developed markets. This is the fact that we continue to acquire customers, thanks to the penetration of the data usage in smartphone, which is a new way to acquire new customers or to add a second subscription for existing customers. And this is part of the increase.

The top line itself on the next slide is back to growth, as commented by Stephane, with a real change of perspective in second half compared to first half, as you see it on the right-hand scheme with a real return to growth. Again, we comment before regulation. What does that mean? I guess most of you understand, but this is what is invoiced to the customers, so slight difference, which is included in the customer invoicing is European international roaming, which is the only regulated retail price we have in our industry. All the other prices, retail prices are not regulated.

And however, the wholesale price, termination rate on one hand, unbundling prices on the other hand, when you are the incumbent on a territory are regulated. And there is still a strong pushdown, which again, we comment that on major markets is a transfer of margins between operators, the fact that the unbundling charges, for instance, in France for the last three years, there has been no decrease of the street price of DSL. It is just a transfer of margin between operators. So we don't say it's good or bad. It's just a fact that the -- we are -- we think, again, that price regulation is probably at the limit of its effect to drive down the prices for consumers.

And on the other hand, there is another question we raise and we raise often between investment and preparing the future and short-term price decrease. What is the best for the long term of the industry and of its consumers?

Second point on the top line, you see that most of the geographies are -- have improved, you see, over time, including those with a more difficult situation, like for instance, the enterprise division, OBS, which was declining minus 7% at the beginning of the year and now declines minus 3.5% at the end of the year.

And last point, again, as well as for the customer base, growth is driven by Africa and Middle East, where except Egypt, we have between 8% and 9% growth all over the year. And our colleague Marc Rennard, who is at the Head of Africa and Middle East, could also answer your questions, whereas also we have a good recovery in Spain, as commented by Stephane, and quite a strong resilience in France, which that will be explained by Delphine.

To go a little more deeper into the revenue production within our business, you have on this slide the split between mobile and fixed business, fixed being PSTN plus DSL. And again, when there is a strong PSTN base, there is a pressure on PSTN decline, especially in France and in Poland. Even if in Poland, we have lost less lines in 2010 than what we lost in 2009 and 2008.

Regarding now the split of the revenue and the balanced portfolio as a Group, France is at 49%. And you see that the biggest geographies represent between 8% and 9%, where as the Enterprise division is 15%. And the other countries is 17%, about half for emerging markets, half for European developed markets.

Now to comment our profitability on the next page, again - and I think it's an achievement, and I think most of you were not so convinced we would do it at the beginning of the year - we have been able to keep our margin erosion below 1 point of revenue. And this is due - you will see that afterwards - to strong work, as commented by Stephane, on the cost structure. So the fact that we may have had social issues that we may take care of the employees and we may improve the work conditions does not prevent us from continuing to work on our cost structure, including in France.

Second point, I think when we look at the evolution of EBITDA in the different geographies, there is a margin pressure in France that will be, again, commented by Delphine, mainly linked with a need to feed the sales machine and the increase of commercial costs, which has been -- which has had a real impact in 2010. But on the other hand, we see already some geographies where margins were depressed and had been decreasing for a certain period and where we are now able to recover our [inventory too], the typical case being Spain but also Poland as regards to its mobile margin and also not to forget the fact that within OBS, Enterprise division, we have been able to keep more or less the margin at that level in spite of the strong pressure on revenues.

In terms of cost structure, as I commented, there are different trends. First of all, the first big impact is regulation, EUR900m impact on the revenues, EUR270m impact on the margins, which is more or less 40% of the margin decline all over the year, which means that in this industry we have to run even faster to keep the margins at the same level with already a couple of stones in our bag. We hope those stones will decrease in the future but not in the very near future. We think that for 2011 there are still some stones in the bag that we'll have to carry with us in this race.

However, a couple of good news, the revenue increase before regulation has helped us to improve our economic performance. On top of that, the performance program that we have introduced are also providing some positive impact on the cost structure, especially on the fixed cost structure of our Company in France and outside of France, whereas for the future with the strategic decisions we have made on content, for instance, we will progressively decrease the cost of our investment in content.

Regarding the efficiency programs themselves on the next slide, just to illustrate some of the figures that were given by Stephane, we are decreasing our spending in networks by two ways. One is the network sharing, which has been started first in Spain but which is now expanding to some other countries, including, for instance, what we expect to do, we hope to do with Deutsche Telecom, for instance, in Poland or what we are also doing in the Everything Everywhere, where I just remind you that network sharing is about more than one-third of the synergies expected in Everything Everywhere.

Second area is on some specific program on cost efficiency, especially, for instance, what we have been doing in Spain. In Spain - and you will see that later on - we have been able to go to breakeven in terms of DSL business in Spain, broadband business in Spain. And this has been mainly due to the fact that we have reduced the cost to provide and to invoice the service to our customers. We had poor quality. We had poor systems. And we have been working on that to reduce the cost to provide the offer.

There have been couple of programs of the same type in other countries. In France, for instance, this is on the distribution chain and the mix of distribution that we have been saving costs for the last two years.

Those savings may be not enough, but those savings have been reallocated to commercial spending. Why? Because there are two reasons, one, defensive, for sure, there is an increased competition. In France, we recognize there is a new player coming at the end of this year or the next year. But there is also a change in the way the industry's evolving, especially in mobile with a progressive shift from voice to data. And we need to push that. We know that the future business and the future revenues of the industry will come from data and this is what is shown on this slide.

You see, for instance, that the smartphone customer has an ARPU which is 2.5 times the ARPU of the non-smartphone customers. And at the same time, through the increase of commercial spending has had a positive impact in terms of reinforcing the postpaid base compared to the prepaid base, which is also, just remind you, that there is a big difference of value between a prepaid customer and a postpaid customer. So we think that those two items are positive in terms of dynamics for the future of the business, even if some of the moves could be defensive. Other are offensive.

Regarding the peoples cost, there is always questions on the situation of French Telecom Orange regarding that. Just to mention that we have limited increase of the labor cost in spite of the fact that we have reopened the opportunity to hire new people in France. We need that to prepare the future and also to the fact that we have tried to keep a satisfactory payout to our employees in France and outside of France with all the different systems, with is basic salary plus other incentives we distribute to our colleagues.

In terms of people working for the Company, total number of people has increased. But we are trying to continue, especially also in France, to manage the workforce itself and the senior part-time program that has been introduced at the end of 2009 is a way to help our senior colleagues to progressively decrease their working time in the Company whilst hiring not one for one but hiring some new people in the Company. So we see that we continue to try to manage also slightly down the total workforce of the Company in terms of time spent full-time equivalent within the Company.

There is also - and this is on the next slide - what is good news and bad news always as described for France Telecom Orange, good news because in the next couple of years, between 2011-2020, about 40% of the French workforce will retire. So I think most of you say good. They will save 40% of their payroll in France.

Life is not that simple because even if some of you may doubt it, all the employees in France Telecom are working and do I think useful work to provide the services we need in the Company. That's why we will not save all this. We may save some of it. But it is also a way for us to change and to renew our skills, to change our processes, and to be better ready at the end of the decade to the new challenges within this industry, with a new set of skills, complementing the existing skill set of skills of the Company but facing the new businesses we have to deal with for the future. So this is in our view a way to be more flexible in the right sense of the word to the benefits of everybody to prepare the future we have in this Company.

And the senior part-time program that we have provided for is a way to accelerate that move in fact. It's a way to take it a little in advance. It's just instead of just waiting the normal departure time of the people.

Now comment on that just at this time now, regarding the EBITDA, I guess most of you have observed there are a few big items that we consider as not as exceptional within our EBITDA for this year. There is the DPTG litigation, which is linked with the litigation for TP Group in Poland and where based on the result of the arbitration in Vienna, our colleagues and the supervisory board of TP have decided that they had to account for an additional reserve of EUR266m, Mr. Witucki, who is the Chairman of the Executive Board of TP, is with us today and could also answer to your questions on this topic.

We have also two items which are linked with our strategy. One is this renewal of skills and the way to manage the skills of the Company. This is the senior part-time agreement. We have provided for an additional reserve of EUR490m. And there is the reserve we have built to take care -- to take into account the decisions made on the future of our TV channels in France, both on Sport and on Cinema Series.

The reasons and the way those results have been constituted are described on the next two pages. But I prefer to leave you asking answers if those slides are not self-explanatory.

Next to come now on the net income and to say that we reached a EUR4.9b net income with some changes compared to last year, maybe two items in terms of capital gain, one, this is a capital gain which is recorded with the JV Everything Everywhere. The fact to bring -- to carry our Orange operations, to bring our operations into the JV has left us with a capital gain of EUR1b. You have to take it as a result of the cautious way, quite conservative way in which we try to count --- we count for our goodwills within this Group. In fact, when we have faced the value of external valuations and the value of our market, we have recorded this EUR1b capital gain.

On Egypt, we have recorded a capital gain of EUR336m, linked with the fact that we have taken the control again of our Egyptian operations. If you remember, it was one of the first decisions of our new CEO when he was appointed to end the litigation we had with Mr. Sawiris and to take again the control of our Egyptian operations. But in the second half of the year, the performance, especially the financial performance has not been so strong. And we have considered also in the light of the current political situation that we had to take a reserve to protect our assets of EUR471m. These are some of the big moves within the net results. Others are commented also on this slide. And if you have questions, we can come back on that. But just to keep in mind that if we take out some of those big operations, the net result is increasing because there is increase -- a decrease of the financial result, some decrease of the income tax, and some other good news.

In terms of CapEx, CapEx is at 12.1% with a strong increase in France and a strong increase in Poland, mainly linked with the fixed network. There is some investment in mobile network. But most of the increase is in the fixed network and in France also in for the improvement of our IT, especially our big IT systems.

So to mention that we have started again fiber with EUR60m spend in second half 2010. In Spain, that we have started on top of the RAN sharing program with Vodafone, we are also doing -- we have also launched the RAN renewal in Q4 to improve the quality of service and the bandwidth. In Poland, the agreement signed with the regulator is deployed. We have drawn more than 400,000 DSL lines, which is clearly on track with a program agreed with the regulator of 1.2m lines at the end of 2012. And in the other countries, especially in emerging markets, there is a little less investment, even if the investment rate is rather at the level of 20% because we have no new operations started except Orange Tunisia. But Orange Tunisia is not, excuse me, consolidated into our figures.

In terms of nature of CapEx, as I mentioned, most of the CapEx are still dedicated on network and a huge part on IT, so a slight increase on network, a big increase on IT, and a big increase on customer promises equipment. This is the renewal of the box base in the different countries, whereas we are stable in terms of solid platform and slightly below in terms of shops.

As regards to the cash flow to conclude on this first step, just to mention that our cash flow at EUR8.1b restated from spectrum and licenses and from the EUR960m paid to the French state after the litigation with the European Commission on taxe professionnelle. This EUR8.1b is made of a couple of good news. We have a little less cash income tax. We have some improvement in working capital, but which is not bigger than the improvement we had a year ago. And we have some increase into the restructuring charge compared to what we had in '09.

In terms of income tax, maybe some good news, we confirm today that we will not pay tax this year in France and that we expect to pay probably a little less than half a year in 2012. However, unfortunately for us because that's life because we are making profit now for some time, we will pay a full year of tax in France in 2013.

As regards to the VAT increase in France, the impact to our figures for 2011 is EUR130m. And we have paid in '10 EUR150m of TV tax in France and about EUR30m in Spain. That will continue in '11, even if there is clearly a claim in France of the European Commission that could conclude by decision positive to the operators. But we don't know yet.

Now to conclude on our debt, just to say that our net debt-to-EBITDA ratio also is stable, that we have dedicated EUR1.1b of our cash to acquisition, EUR3.7b to the dividends you'll receive as France Telecom shareholders, EUR600m dividends for the minority shareholders of our other companies.

Regarding the debt itself on the last slide, just to mention that we keep our liquidity position, we try even to reinforce our liquidity position. We got in 2010 the best-in-sector refinancing conditions. We had EUR4b at 3.4% and a 10.7 maturity. We have increased the maturity of our debt. We have renewed our back-up facility early this year at the EUR6b level. So this is more or less the fact that we keep a very sound financial situation. Thank you.

Thank you, Gervais, and good afternoon, everybody. Before going into details of our financial results in 2010, I want to underline our strategic role in the French market. We are the leader on those markets with more than 46% on mobile and on fixed line. We're also a leader in terms of commercial acts, thanks to our very vivid distribution network. And because we are a leader, a dynamic one, a very proactive one, we had a very successful year in 2010.

Let me just mention our three main successes in 2010. The first one is our recovery on the broadband market. It was a challenge. And we did it. We were committed to reach 30% of net add market share. And we have achieved it with 36% of net add market share in Q4.

Second success, we have renewed our Origami line, our contract line by the end of October in order to be ready for Christmas sales. And those -- this renewal was very successful, especially an Origami which is called Origami Style dedicated to the net generation. And last, but not least, we were very pleased with the success of our new convergent offer Open, launched in August last year.

We are dynamic and very proactive because as a leader we -- our strategy is based on what we understand of our customer needs, and what we anticipate of our customer needs. And our strategy aims at increasing the value of our customer base in the short term, but also in the long term. And to do so we have many assets that set us apart from our competitors, three main assets for me.

The first one is our networks. It's not only networks, it's also the skills to manage the quality of service of those networks. It's both on wireline and wireless networks.

We have also a big cutting edge with our proximity towards customers, our distribution networks, more than 1,200 shops, Orange all across the country. And at last with our new organization we have a constant focus on customer experience.

Of course, we knew for a while that 2011 was not going to be simple, it was going to be tough, and in fact it is tough. But with what we put in place on the marketing side with our investment in networks and our constant focus on customer experience, we are ready to face the 2011 challenges.

So let's turn to our 2010 successes. We've worked -- our strategy was based on the main drivers of customers' demand. One of the main trends is digital. We have more than 30% of our customers, which are already digital and we expect them to be 50% by the end of 2015.

Our Origami Style proposition under EUR30 per month with 500 mega -- per month for an average usage of 180 mega, perfectly fits the new generation, the new young digitals. Since October 300,000 customers have signed up for this new offer.

Second deep market trend is the customer demand for simplicity and also consolidation, all their accesses in one provider. The Open offer is a perfect example of a convergent offer, simple package, one bill, one customer care. At the end of the year we have 300,000 customers, households I may say, who have already taken this offer. And within those customers more than half of them are new customers, new mobile or new ADSL customers. I just want to remind you that we are the first big leader in Europe to launch such an offer.

Third very big trend of the market is the eagerness of our customer for more reliable services, more reliable relationship with their operator. And in that field we have very big strengths. I pointed out our distribution network, and for the first time since maybe two years we've seen the affluence of our distribute in our shops increasing. That's because we have opened new big stores in big cities with a corner to help customers to -- for more usage and more after-sales services.

Lastly, we have also the most effective networks in terms of coverage, with 95% of the population covered in 3G at the end of 2010 and also in terms of ADSL coverage with almost 100%. So we plan to leverage on those 2010 achievements to meet and to ensure our commercial success in 2011.

Of course, we will continue to have a big priority on our customers, to enhance their loyalty by renewing our customer loyalty plan, develop new care services, also more usage on Pay TV and VOD and launch a new TV interface in H2 in order to boost value out of the customers. For instance, as we know that tablets is a new device, very attractive, we are going to launch in Q2 an offer in order to allow the customers to use and to use their data on both screen, smartphone and tablets.

We will also be focused on digital customers by enriching Open. Open is still a very big weapon for us to increase customer loyalty and to regain market share. We are also, as we did in the past, set new prices to increase, to stir up more revenues out of data, increase the penetration of smartphones and renew our broadband offers.

Like we did on the mobile with a very segmented but simple approach, we are going to do the same thing on the Open markets, and focus on three main types of customers. Senior one who wants simple packages and assistance, digitals who want the very best of the network, all the services and a new TV interface, and also the family who wants more entertainment and more communication.

Our network still remains a very big strength, and we are going to enhance the coverage. We forecast it to be at 98% 3G coverage at the end of 2010. We are also enhancing the capacity of this network up to 42 megabytes per second and also increase the capacity of the ADSL lines for our customers.

Following from this another major goal for us is the FTTH deployment. We've already announced that we, and we confirm, that we are going to invest EUR2b. That means we are, by the end of 2015, we are going to deploy the fiber in 3,600 cities around 220 big urban areas. That is 10m households by the end of 2015, and 15m households by the end of 2020.

On the mobile side we are now doing extensive testing of the LTE. And after the auction which is supposed to take place around the summer we will be able to roll out -- to begin the rollout of the network next year.

In fact, with those two enhanced networks we seek two main objections. The first one is to stir up with more services, more value out of our markets. And the second one, because it's focused on very big cities, very big areas, is to give us more weapon to battle in these very dense areas where competition is very high.

A few words now, because we've set up a new organization in France in order to be more efficient, more focused on the efficiency of our operations and our financial efficiency. Our former Territorial Manager used to be more Human Resources Manager, but we want them now to be fully in charge of the whole business, Human Resources, of course, but also sales, churn, customer satisfaction, OpEx in order to make them more responsible for the model, economic model of the enterprise.

This new organization has three very combined goals, first of all become the leader in terms of customer experience, customer satisfaction, enhance the wellbeing of our employees and also enhance our financial performance. It's key, this new organization, it's key to reinforce our position in mid and long term and also to be best in class in quality of service.

Now back to the figures, to the financial figures, so as you can see on the slide Orange activity had a very, very good Q4 with a growth, excluding regulatory impacts, of 1.4% mainly thanks to the mobile activity of 7.3% excluding regulation. Marc Rennard, I wanted to tell you that it's a growth very similar to an emerging country one.

The growth of mobile is of course driven by Open, it's driven by revenue of the data, driven by the MVNOs, it's also driven by the continuous development of smartphones.

Our EBITDA margin restated of part-time senior plan was down by 1.8 points due to the PSTN decline we faced for many years now in home, due also to the regulation impact, which is very high in France, and also to the level of our commercial costs.

In fact we did decide in 2010 to push up the smartphones. As Gervais told you a customer has a smartphone has an ARPU 2.5% bigger than a customer who has no smartphone. So it's a sort of investment for our next year future revenues.

On -- if we dive now on the personal markets, our network market share is stable at 46.6%. Our constant focus on contracts, we had a very -- we improved our mix amongst our customers, our contract mix among our customers, up to 70% when we were at 68% at the end of last year.

We had a very good Christmas time thanks to the Origami line with 369,000 net contracts net adds in Q4. Our annual rolling ARPU, excluding regulation is up by 1.2%, driven by data ARPU. Data ARPU now represents 33% of our mobile revenues. It means that we have succeeded in compensating the decline on non-voice by increasing the value of the data and the data revenues. This is allowed by our 3G networks and also allowed by the smartphone penetration. In our customer base we have now 30 -- 26% of our customers equipped with a smartphone.

On the home side, as I told you we did it, we achieved our objective of 30% in H2 and 36% in the Q4. And I want to point out that it is the best level since Q1 '09. This is clearly explained by new tariff mid-June and the launch of Open mid-August.

Home usage ARPU increased by 2% up to EUR34.9, mainly due to the Internet services. It shows how Internet services have increased their weight in home revenue and how migration of our customers toward triple play has preserved value. Broadband ARPU increased by 2.2% and reached EUR37 thanks to the mix evolution with more naked ADSL and also the increased services like Pay TV and VOD.

That's all for the figures. As a conclusion I just want to tell you one thing. We have to face very big challenges. We know that. But we have a management team in Orange France that is very excited and also very confident in the fact that we are going to face those challenges and be successful in 2011.

Thank you. And I leave the floor to Gervais.

Thank you, Delphine. Now let's spend now a few minutes on the rest of the Group, which is a little more than 50%. But I think it was important to show what we do in France. I know a lot of you are concerned or asking questions on how do we manage the French business. My colleagues are here also to help me to answer the questions on our foreign operations.

Just to mention as a starter that the -- what is deployed in terms of marketing, especially on mobile in France is also applied outside of France. And we try, and sometimes we have questions, do we have synergies within the Group.

I think that now at the marketing level, especially in mobile, we think that we are able to deploy synergies and to replicate good practice, or good offers or good marketing offers from one country to another. And I think this is what has partly helped our, I will say this unique source of improvement, this has partly helped our colleagues in Spain and Poland, for instance, on how to improve the marketing in their mobile operations first.

And this is what is described on the first two pages on this section, with the Animals offer now transposed from one country to the other. And where you see how at least it has helped to improve the customer base in terms of pre -- of postpaid, in terms of data, in term of how to increase the value of the customer base.

Now to come to the countries themselves, to start with Spain with good financials, so revenue for the first time the revenue growth, even after regulation, is now slightly positive and is 0.9 above -- 0.9% compared to GDP, so above GDP.

We have also a revenue growth which is driven by the customer base, a fact that we continue to acquire customers. And that we are gaining market share against our competitors either on the retail or -- but also thanks to what we do with MVNOs. And also to the take-up of data revenues which is a change in Spain compared to the previous years.

EBITDA margin is up by 1 point at 20% thanks to the performance in personal which remained stable, but also to the improvement in home where for the first time now we are at breakeven after a couple of years (inaudible) whole years where we made no money in the DSL business.

Regarding the operational KPIs on the next page, just to mention that we continue to grow the contract customer base, 8% growth, we think that this is also a push for value.

And as that -- as the Animals offer launched in May is a strong success, especially of the Delfines offer which is a data voice plan, have led to a real improvement of the contract churn as it appears on this slide where you see the strong decrease of churn in the second half of the year whereas the net adds are continuing to increase. Just to mention that we have the best mobile market share in Spain, and that we are the leader in profitability in the last quarter of the year.

Regarding the DSL business, broadband ARPU has continued to increase, and we have also recovered in terms of net adds even if, even if we are not that -- there yet at the level where we would be. But recovering in terms of ARPU, recovering in terms of net adds and at the same time back to breakeven, we're seeing for the first time breakeven in this business.

For Poland, TP group they have published their results yesterday, so I'm not comment them completely just the operational figures again. Just to say that margins have been under pressure in 2010. They continue to be under pressure for the fixed line division, because of the pressure on PSTN mainly. But with some improvement as you saw in my previous slides on mobile, especially compared to last year.

Back to positive growth in terms of revenue for mobile. Almost half the decrease in revenue in Poland is due to regulation, don't forget that, and that the restated EBITDA margin erosion is limited to 1.4 points compared to a year ago. So personal on the mobile EBITDA margin is increased by 0.6 points in 2010.

Regarding the operational figures themselves, again the customer mobile base continued to grow with more than 14m customers, a trend of 4.5% growth, especially on contracts with 5% growth. The growth is supported by strong mobile net adds compared to last year. More than half of these net adds are contract net adds, and we even saw in Q4 an improvement of the contract churn.

Smartphone and data penetration are not very high yet, but will increase with the arrival of low cost device. Don't forget that also the smartphone pricing for Western Europe remains quite expensive for Eastern Europe countries and such that Android-base smartphone or maybe some of the future Nokia and Microsoft smartphones. Mobile ARPU remained almost stable over the last quarter, which is a sign of softer competition of the market after the big trouble we had in 2009.

Regarding the fixed line activity PSTN plus broadband, more optimism on broadband, but also a slightly more optimism also on PSTN with a lower rate of decline in terms of PSTN lines, now a little less than 800,000 lines lost in the year whereas we were losing more than 900,000 and nearly 1m two years ago.

Regarding broadband market net adds, market share improved and this is what is reflected on the left hand part of the slide, back to market levels in every speed option since October 2010.

And we are now with our agreement with TVN it has helped us to push the TV offer. Don't forget that in Poland we have to compete also mainly against cable operators. This is why to have a strong TV offer is very important to continue to compete.

For the other countries clearly two different landscapes, one is emerging markets, Africa and Middle East, with a steady growth 4.9% in total for the year, and a little less than 4% in the last quarter of the year. This includes the consolidation of Egypt. If we exclude Egypt growth is between 8% and 9% for the same period.

The growth in other markets comes from some western countries, especially Belgium, Luxemburg and one Eastern country Moldova whereas other countries have had a little more difficulty to sustain revenue growth. Typically Romania where the economic situation is still an impediment for the spending of the households in Romania, there our revenue continued to evolve negatively. And also some revenue contraction in Egypt linked with the very strong competition on this market since the beginning of 2010.

EBITDA margin for the other markets has -- is at 35.7%, above the EBITDA margin rate of the Group. And this has contributed EUR3b of EBITDA.

In terms of personal figures for Europe you see that we have now 22m customers. In five out of the eight countries where we are, we are number one or number two in terms of value and volume market share. And this shows the strong operational positions we have including in terms of EBITDA margin rates, because when you are number one, number two your margins are generally better than when you are number three, number four or even number five like in some countries.

The contract customer base increased by 5% to reach more than 10m customers, and now 47% of the customer base is pay monthly, are pay monthly customers. The growing maturity of the customer base allows us to increase the customer value, improve it operationally and [value] productivity, including the sale of data plans.

Don't forget that also the resolve for growth within the mature markets and within the value customers is to move them from voice-based plans to voice and data plans through the subsidy of smartphones. This is also a move we observe in those countries.

Regarding AMEA, 97% of the customers are positioned in operations where we are number one. Number two in terms of volume market share. It's certainly more complex to measure the value market share on this market. However, the customer base is up by 23% with more than 11m new customers coming from Egypt, Ivory Coast and Mali mainly.

There is also, and I guess it's an important message to investors that we commented on some of the politically risky situations at the beginning of our speech this afternoon. Just to mention that our risk is rather dispersed. Egypt is our biggest asset which is between EUR2b and EUR3b value, whereas other countries are quite smaller and in different political and economic profiles.

So even if there could be difficult situations, first of all, as Stephane mentioned we don't believe that the current situations with the except with the Ivory Coast situations are really damaging for our business in the medium term. We think on the contrary they are providing us with eventually more business. There is a discussion of the risk which is also a protection in the current environment.

And last but not least I think it is not something new for you, and I think we have commented on that and can comment again if you need, don't forget that on top of the investments we made in terrestrial sites, antennas, physical backbones, terrestrial backbones, we have also a big investment in submarine cables which is also in preparation of the internal development as a fixed or mobile on those geographies.

Egypt, they have also published their figures I think it was last Sunday, so you can go into ECMS release, however, just to mention that we have been consolidating fully Egypt since July 1. This has created an increase of the debt of the Group of EUR3b with the commitment we have vis-a-vis the minority shareholders to buy them in certain situations.

There is a huge increase of the number of customer plus 19% in one year. And in spite of the very intense competition, which has put a lot of pressure on the ARPU we have a much better commercial situation in the second half of the year.

And last but not least, the Enterprise division, Orange Business Services, with still a difficult revenue evolution minus 4.8% for the full year, but with a change of trend between first half and second half. I said that we started the year with minus 7% and we finished the year with minus 3.5%, so we are improving. This is mainly due to the strong pressure on the legacy business, which is eroding probably quicker than what it was before.

Because of the economic crisis where companies are cutting costs, and because of the move to IP and to IPVPN they see that when they have fully IPized their network they no longer need the traditional lines that they kept as a kind of backup. So this is mainly that.

We are developing other businesses as we have been explaining to offset part of this decline. And I think the good achievement is also we have been able to keep the margin rates more or less at the same level than a year ago.

The Enterprise Division, and this is effective on the next two pages is developing in new areas IPVPN, which has been now the move for the last half a decade within this division, but also very high speed access for certain customers. And voice and telephony over IP, which is also a strong move, which has by definition a negative on the PSTN for Enterprise.

And at the end of the game this division is also preparing the future with new business areas, including cloud computing development where in fact telecom operators are legitimate to provide power, because of the increase of the speed of the networks, the mix and the balance of power between networks themselves and pure IT power is different than it was probably in the past, which gives us some legitimacy to provide this business. And we have quite strong ambitions with EUR500m revenue expectations at the end of 2015.

There are also other areas like machine to machine, videoconferencing which are smaller segments, especially for videoconferencing. But also the focus on emerging markets in order to better match between our consumer footprint and our B2B footprint. I think we are not leveraging probably enough, the fact that we are already present in 20 countries, especially in AMEA in terms of B2B activity.

And just a few words, again our colleagues from Everything Everywhere have released their results, I think it was yesterday, so here we have just an extract of what they said. Just to mention that we are pleased with the progress made in Q4 last year. Again don't forget the timing. We created the company on April 1. We merged really the teams on July 1. So let's be clear this company has started really to operate as one single company only at the end of Q3.

So we are not so surprised that the performance of the first three quarters of the year especially in terms of commercial activity, were not so different from the performance of the two separate companies before, which is not such a bad performance for Orange, and a quite disappointing performance for T-Mobile.

This has changed in the last quarter of the year with some recovery for T-Mobile. This helps to sustain the synergy plans for the future. And again this JV also delivered in terms of cash flow and will deliver in terms of cash flow in 2011.

I give the floor to Stephane to conclude.

Now a few words on our prospects before clearly answering your questions. I will start with talking about 2011, and by telling you that in 2011 we want to capitalize on good positive dynamic trends that we have attended in 2010 and to continue to keep on implementing our strategy as defined in Conquests 2015 plan, in allocating a major part of our cash flow to our networks and customer franchises, while of course and clearly very seriously and rigorously limiting EBITDA rate erosions.

By major region or business I would like to highlight the key targets that we have ahead of us in 2011. In France, we will implement a new decentralized and customer driven organization as it has been described by Delphine. We will keep on upgrading customer experience and maintaining price premium in the market. We think that this is the best way to prepare to Free's arrival in 2011.

We will keep our commercial and top line momentum on revenue growth, especially serving on the data mobile explosion in demand and in traffic and on the quality of our 3G network in France, which is as it has been mentioned, by far the best available network today, which means that it is the best conditions to really take advantage of the nice smartphones and tablets that are today in the market.

And we will also keep on our rollout program in high broadband networks both in fixed and in mobile networks.

In the rest of Europe, we want to outperform the markets everywhere in a hopefully recovering economy. And we want to maintain the good momentum that we have achieved in 2010 both in revenue and in some countries in EBITDA improvements.

In emerging markets we will try to capture all organic growth potential, which is still great in most markets. We will be clearly very professional and very cautious about specific situations when it happens. And we will once again deploy fixed and mobile broadband everywhere in those countries to both dense and rural areas, which is clearly one of the differentiators for us regarding the competition.

And in the Enterprise market, we expect to leverage the market recovery in international business and in IT services, and I think we are in the best position to be successful.

Since the beginning of this year 2010 -- 2011 sorry, we have announced already a few substantial milestones on the Conquests 2015 way. Beginning of January I appointed an ombudsman, the French word mediateur, in order to improve the way we are taking care of the most fragile people that we have in France. This is one of the answers to the social crisis that we have been living through in the recent month.

Later in January we announced both the creation of a JV with Canal+ on the content side, and the acquisition of 49% of Dailymotion's shares. This clearly illustrates the strategic move that we have decided from a policy, content policy focused on the addition on a stand -- by ourselves, and 100% of content mainly TV to a multi-content and focus on partnerships policy regarding content.

And later in February, we announced a first set of agreements, cooperation agreements with Dutch Telecom, and actually we see some very promising and interesting areas of value creation and cooperations with other big telcos in the European playing field.

And especially with Dutch Telecom in some areas like network sharing, which is more or less the basic philosophy of the JV creation in the UK, but also in Poland or in maybe in other countries. But also we are working together on joining our resources on forces on some R&D issues for instance.

In terms of trends and of guidance, which is clearly I can imagine one of the major things -- output that you expect from this meeting. I want to make it clear to begin with that as it has always been the case we have a cautious approach of the future. And the confidence that we have in our assets and in our positions in all the markets will not make us forget this realism and cautiousness about the way we are seeing the situation and the prospects.

And despite this we are today in a position to commit very strongly on a few key points. The first of these points is to keep a positive trend in our top line in our revenue, as it has been seen in the second part of 2010. And we expect to keep this slightly positive trend in our top line over full year 2011, of course, excluding regulation in European countries.

We will also, as it has been the case in 2010, contain and manage the EBITDA erosion to around 1 point of EBITDA margin, which means more or less the same order of magnitude as in 2010. And to be very clear this is essentially linked to the situation in the French market. All of us, and we are perfectly aware that the French market is going to be very competitive in 2011 and in 2012 after Free's arrival. And we will clearly focus on managing this impact in the French market, and in terms of EBITDA overall for the Group, the commitment that we take today is to contain the decrease in EBITDA margin around 1 point.

We will continue to invest in 2011 around 13% of our revenues, which is slightly more than it used to be in the recent years. But we have been criticized in the past for not investing enough. So I don't expect to be criticized today to invest too much.

As it has been made very clear we have a strong effort to make to upgrade our networks and to bring high-speed services everywhere in both fixed and mobile networks because that is what our customers demand, and that is the area where we can expect to monetize new revenues coming from new traffic.

In terms of financials, we commit very strongly on the production of EUR8b of organic cash flow. We still have some levers in order to reach this target. And it is a strong commitment of the whole management team to reach this EUR8b level of organic cash flow, of course, excluding exceptional items like licenses or spectrum expenses that we will have to make in 2011. And of course, I confirm the EUR1.4 dividend payment commitment for both 2011 and 2012.

The next big meeting that I want to invite you, and I expect that you will be able to attend, will take place end of May 2011. We will organize an Investor Day in order to give you a lot of explanations, information and share with you our views on our strategic prospects and financial priorities.

This will be a financial and economic translation of our Conquests 2015 roadmap. This will be held in Paris on May 25. and this will give us the opportunity to detail our financial prospects in the mid-term and to comment about what we see as our main value creation levels with a central target in the mid-term, which is to reach EBITDA stabilization overall in the Group.

We think that we can, but we will talk about this more in detail end of May, but we think that we can probably see this EBITDA stabilization prospect around 2013 which means between one year and 18 months after Free's arrival in the French market as the fourth player. We think that it is a decent prospect to work on such a target of stabilizing the EBITDA overall for the Group around 2013.

Of course, we will give you some information and details about the other named priorities that we are working on within our Conquests 2015 plan, such as the new growth opportunities both in business and in geographies or portfolio managements, since we think that it is -- it can be necessary and useful for us to review certain positions that we can have on such countries in order to optimize our portfolio management in the Group.

Thank you for your attention. And now we are available to answer your questions. A lot of members of the Executive Team are here in this room including Jean-Marc Vignolles Head of Orange Spain, Maciej Witucki, Head of TPSA. So I think -- and Marc Rennard, of course Head of Africa and Middle East operations. So now we are listening to you. Thank you.

Hello, good afternoon, Dimitri Kallianiotis from Citigroup. I just have two or three questions, the first two on the French market. My first question is regarding margins in France, which are coming down quite sharply especially in Q4. And you've talked about the impact of smartphones, the positive impact on revenues, which is very clear.

But in terms of margins when do you expect to see some more stabilization in terms of margins? Because the smartphone is not completely new in terms of the iPhone has been around for quite a while. So should we expect the negative impact of smartphone on margins to basically wash out?

My second question on the French market, again this time on the fixed side of the business. I just wanted to know what's your expectation on CapEx? CapEx was up quite significantly in the French market for -- and I was just wondering is it really driven by fiber, new boxes for broadband? And is that supposed to continue for 2011? And do you still target a 30% market share of broadband for this year?

And my last question if I may on emerging markets. You've talked about the current crisis in these regions, does that make you -- is that changing your view on portfolio management in terms of still -- you still want to spend EUR5m to EUR7b of -- in terms of acquiring assets there, or do you think it's -- you need to delay that, any changes in terms of your point of your view based on the current crisis? Thank you.

Maybe you start on the questions on the margin and CapEx [in fact]. Margin, clearly if for Group, at Group level we said stabilization during the course of 2013. This is mainly due to France, because other countries are either at the bottom as we have seen or again -- increasing again when I take -- around the European markets are still some pressure on the margin on the emerging markets, because they are very high in some countries and they will probably go down to a more normalized level, for instance, [African] countries where EBITDA rates are still at 60% in mobile.

We think that it is not a lasting, a long-lasting figure forever. And that at the end of the game will come back more -- at more normalized margins. So this is clearly the question for EBITDA at Group level is also the question for France. And there what is the picture?

We have a fourth entrant coming with a different scenarios, they are scenarios where prices could be this, prices could be that, marketing policy could be this, marketing could be -- and I think that different scenarios we are working on those scenarios.

I think again we are really looking at that on top of the fact that there are new sources of potential revenues, and also the fact that we are increasing the value of our base. So we'll see with all the work we have been doing in terms of commercial spending and how to increase the value of the base, what is the [picture] of the customers.

Some good news, and maybe Delphine can comment, is that we have had quite a good resistance even in the VAT crisis.

Yes.

Maybe you can comment that. It was a first real -- in real life a first, let's say, big attack I would say on the existing base with the opening of the base with the change of the VAT rates. Maybe you can comment a little that.

Yes. So the VAT story, in fact we were the first operator to give very precise, very honest information to our customers in November. And we are -- were also -- we accepted for instance a cancellation even in January. We could have just said to the customer just call back in February. But we were -- we try to keep a good relationship with our customers. And it was quite efficient.

We had very poor cancellations in January, and we had a lot in fact of connect disconnects on the mobile side, because for the customer it was an opportunity to renew his device. So we knew it was more a commercial cost in January, but less commercial costs in maybe three months later or six months later. So we managed it quite well.

What strikes me in this story is the fact that our initial attitude honest, very straight forward, very precise with our customers had a direct link with the business. Some of our other competitors didn't act the same way, and their result was not the same as well.

But nevertheless, we decided to move backward, and (inaudible) decided early February to move backward and so did we also because we thought we couldn't be the only operator in the market to stay with the person, the VAT person on our mobile base. So it's -- that's the story.

So just to conclude, stabilization expected I think in the course of 2013 for France as for the Group again that's the same.

Regarding CapEx at Group level with the 13%, around 13%, as we said, we are at the mid-term, medium term level we think which is adequate for Group to accommodate two new phases of investment, one which is to start with fiber, then fiber in the course of the future years will progressively replace some of the DSL and also some of the copper investment. So in the first years we are investing on both sides. It will be to continue to deploy some DSL network in France and at the same time fiber. At the end of the half-decade we will be reducing -- start to reduce the investment in copper.

Second point is that we'll have the second phase which will cover other countries and not only France, which is LTE, and LTE is expected to start very slowly in 2012 and other for 2013.

Regarding the situation in emerging markets, first, the only target that we set and the only guidance that we gave to the market is to increase the level of revenues coming from emerging markets and the number of customers.

I never mentioned, except in comments made by a news agency that we will spend a certain amount of money to make M&A, which is stupid. It is -- it doesn't work like that. You don't have a budget that you are going to spend like if you go to the supermarket as you know. So, the only operational target that we have is a percentage of revenue and the number of customers.

What we can say today is that with what we have currently in the existing footprint of the Group, and consolidating medium term, which will be the case by the end of our plan 2015, we are on track to more or less double the revenue coming from emerging markets. Due to organic growth, we are not far from a double digit organic growth. And we are in Africa and Middle East area not far from 60m customers at the end of 2010, which is more or less the same amount of customers as in France.

So no stress on M&A, no stress on M&A, we don't need to make M&A or major M&A to reach our targets in terms of increasing the exposure of the Group to emerging markets. And why, by the way, do we want to increase slightly progressively, reasonably the exposure of the Group to emerging markets? Because it gives growth, as you can see in 2010, 8.5% of growth in those countries.

And now the recent events that we have attended in some countries do not question this long term strategy, because the potential of those countries in terms of demography, in terms of economic growth are intact. And of course we have to be, as I mentioned, cautious about very short-term lending, let's say, after those political troubles. But from an economic and strategic point of view this absolutely does not question the choice to invest in the long-term prospect in those countries. And that's it. So no change in our strategy, and no stress on M&A please.

Thank you. It's Andrew Lee from Goldman Sachs, a couple of questions on your French businesses, and particularly how you think about the evolution of competition in mobile and fixed. In mobile as we await Iliad's entry and maybe as we look to evidence a fourth entrance in the past, I wondered do you think the French mobile market as it stands today, and the fact that Iliad already had a brand positioning and a customer base to which it can cross-sell in France will make the entrance of a fourth player more damaging in France than fourth entrants have been in markets in Europe over the last eight years.

And just a follow on to that, has the competitive acceleration ahead of Iliad's entry come sooner or harder than you had expected?

And then just on fixed what do you see as the biggest threat to your fixed business through 2011 and 2012? Is it weak price competition, Iliad's aggressive rollout of fiber or is it something else? Thank you.

So you say that the competition is going bee very, very high, well, actually, it is already very high. We've seen moves on the market, in the market since mid-2010 in fact. We've seen in January for instance all the good moves and the bad moves of the competitors on this market.

So I think that as a leader we have two things to do. First thing is to stay calm, because as a leader we cannot afford bad moves; it's too expensive for us. That's a first point.

The second point is to be very reactive and to react -- to be able to react quickly to -- with the good moves to competition actions. And I think we've proved in the recent months that we were able to react quickly. For instance, one of our competitors announced free calls towards mobile from boxes to mobile in their Internet tariff plan. We were able to give a proper answer just half a month after the announcement.

So first, stay very calm. Second, be able to be very reactive if we need to be so. But I think we have very, very important strengths. First of all what -- our marketing policy is one of our strengths. We are -- we know this market and how to address very precise types of customers.

I told you about Origami Style, Origami Style is an offer. I would say maybe, I don't know, I don't know what Free is going to do, but it's a Free like offer under EUR30 with all the data that this type of customer needs, and also voice, because they need some voice. So it's really designed to be dedicated to this type of customers. And this offer is already in our market, very successful, first point.

Second one, we have a very strong weapon with Open. More than 50% of our customer's new Open customers are new customers for us on the ADSL side, on the mobile side. As a leader it's a huge [suck] of new customers in some way for us. So we are going to enrich Open and continue to push up this offer into '11 to increase the value of our commercial acts.

So I don't know how -- of course, we can make plans and we think we know what's going to happen. I am not sure we are completely right. I just want to remember also that being a mobile operator it's quite a new job. And for us it took us some years to become able to have all the skills to build a network, but to manage the quality of service of a network.

So it's a new job first of all. Of course for Free having all ADSL base is key to enter the market, because they will be able to do cross-sell as we are able to do cross-sell and other operators are able to do cross-sells.

And don't forget by the way that in the customer bases of Free we have a relatively slow market share as a mobile operator around 20%, which is half of the national market share that we have, which means that the first impact is the cross-sell which is likely to happen will be for SFR and retail.

Yes, hello, it's Will Draper at Espirito Santo. A couple of things, one on the spectrum and one on the UK. Firstly, on spectrum, I wonder if you could just outline for us what you expect in terms of timing of spectrum auctions and likely costs in France and the UK and around your other countries. And particularly whether you think there are any scenarios in which spectrum costs could impact on your dividend guarantee.

And secondly, on the UK, I guess the thing that was -- couple of things that were most disappointing were the almost flat mobile data revenue growth against 15-odd percent growth at your competitors and the margin decline when we might've expected the margin to improve, given the consolidation in the UK. I wonder if you could comment on those two features of Everything Everywhere. Thank you.

On spectrum itself, the global envelope we mentioned for all countries except the UK is to spend between 2011 and maybe 2013 because there could be some different timing, is EUR1.5b. We don't say it would be exactly this amount because, again, these are auctions. And again, in most of the countries, there is a debate between the Ministry of Finance, who generally are trying to get the most from these auctions and the regulators who are trying to get the most possible regulatory conditions from this auction, which is a way to push the price down.

Don't forget that, for instance, the first auction is Switzerland. With the way it is designed, I am not sure that there will be many auctioneers except than the incumbent and still questions to be raised on the table. Okay? So this is part of the picture. So we, again, we don't think today that it is jeopardizing the dividend capacity of the Group with what we see today.

As regards to the UK, we were not expecting an increase of margin after just six months of operation. I'm sorry. It's a little difficult to do a couple of things at the same time. First of all, if I take the synergies regarding back office, we have started the layoffs at the end of the year. So there is no gain in terms of labor cost in this first year of operation. If I take the network, we have said that to merge the two networks would take around 24 months because it is a long work, a long time. And at the beginning, there are some extra costs to merge the network. So we were not expecting an improvement of the margins in this first part of the picture.

Regarding the UK mobile revenue and data, there we have a technical issue that we have to discuss - by the way, we have colleagues from DT - is that we don't measure in the KPIs the mobile data revenue coming from smartphones. What appears in the figures published by the UK is only the revenue from 3G USB dongles and 3G without voice plans. So we need to review that.

Don't forget that in France, on the contrary, the strong push for data is in the smartphone through the bundles on the sales platform between voice and data plan. So we need to see how we can measure that for the future. So this is for the difference in the UK reported figures. So these are the two main points.

Last point, in the UK, clearly, the recovery in terms of net adds for T-Mobile at the end of the year is really important to us because in the JV assumption, we don't expect to grow the market share. Don't forget that the global network market share of this JV is already 51%. We don't think that neither the competition nor the regulators will allow us to be much bigger than this. But what we want is to keep the market share as it is. And it was not the case at the beginning of the year.

Stephane Beyazian, Raymond James. Three questions if I may. Regarding football, haven't you found any option, let's say, to value the existing subscriber base? Or should we just understand that since you will not be bidding anymore the [CRVs] will just be stopped? Haven't you been able to find some partners, like for Orange Cinema, for instance?

Regarding the new broadband offers in France that you're planning, I was just thinking -- are you thinking about, let's say, rebundling with adding more value, like for instance, DSL or (inaudible)? Or are you planning some changes in the pricing strategy as well?

And my third question would be regarding the free cash flow guidance. On one hand, you expect the free cash flow to be more or less stable at EUR8b. But on the other hand, you also expect even, let's say, regulation obviously but some margin erosion, more CapEx as well. So could you just tell a bit more on the levers you mentioned in order to reconciliate the two? I mean, is it around working capital, for instance, changes in the perimeter, the dividend from the joint venture in the UK? Thank you.

Okay. Regarding the first question, we are still working on looking for partners for our sports channel. Nothing has been achieved so far. But we are still working on several options. I just want to recall that first we have announced clearly that we won't bid for the next auction in soccer rights in 2011 or in 2012, sorry. That's the reason why we made a provision in our 2010 accounts regarding the expenses of acquiring those rights within 2012.

Clearly, we would prefer to find a good exit for our subscribers, less than 200,000 people for this channel by maybe creating a JV in the same kind of approach as what we have done with Canal+ on the Orange Cinema Series channel. But if it is not possible, clearly, we will close the service.

In the same time, we think that we could have some opportunity to sell the residual rights that we have by 2011, 2012, if we can reach an agreement with a partner. And this will probably enable us to save some values about the cost of those rights.

Now regarding the French --

Well, for the new broadband offer that we're going to launch in Q2, even if I would be very delighted to explain it in details, at that stage, it's confidential. So I told you that the approach is very similar to what we did in the mobile side with a more segmented approach. But on the price side or what's in the offer, I keep it for Q2.

Regarding the cash flow, you could've raised the same question last year to a certain extent because, last year, we said EBITDA erosion and CapEx increase. Okay? We have done. Unfortunately, we got an EBITDA erosion. And fortunately, we increased our CapEx. So in spite of that, we do more than EUR8b cash flow. That doesn't mean that we are trying to take security at each line in our way to prepare. However, we are trying to be cautious. This is what Stephane explained at the beginning before presenting our guidance. We try to keep our reputation in terms of being cautious in the guidance we provide you with and the commitments we take vis-a-vis our shareholders and our board.

However, that's true that on the pure [arithmetical] basis, if EBITDA decrease and if CapEx increase, the EBITDA minus CapEx will decrease. However, there are a few items. First of all, we continue to decrease our financial expense. We continue to work on our debt. And this is the line that will continue to reduce.

Then there is something that a few people forget from the past is that we have strong restructuring charge from the past coming from the pre- retirement plans that are phasing out and that will phase out, that are phased out between 2009, 2010, 2011 and will completely disappear after 2011. 2011 is the last time where we have the cash flow impact of the Group pre-retirement plan that was in place in the Company until 2006. So this is a second source positive cash, which is not included into the EBITDA since it is covered by a reserve put in the balance sheet some time ago.

Last point, regarding the increase of CapEx, the first year of increase of CapEx has no impact on the cash flow because it is financed by the working capital. Don't forget that we are in a business, especially on the retail part of the business, it's not true for OBS, but the retail part, our customers pay us in advance compared to the time with which we pay our suppliers. The only suppliers, if I can say that, which I broadcast to my HR colleagues, we pay rapidly are the employees. But all the other expense are paid after generally 90 days. So this explains why, even if there is some pressure on the source of cash from operations, we have the ability to offset that and to confirm clearly our EUR8b guidance for this.

Again, maybe one point to be sure that everybody has not forgotten it, don't forget that this guidance does not include the spectrum or license. It's true that if you have to spend the EUR1.5b in one year, it will impact this cash flow. But again, the EUR1.5b, we think we spread at least over two years.

Yes, hello. It's Antoine Pradayrol with Exane BNP Paribas. Just a very detailed question, I'm sorry, about the provision on content addition of EUR540m, so you are booking the losses in 2010. So it means that in 2011 and '12, you will not be having these costs in your P&L anymore. Can you give us an indication of the benefit that this is giving you in terms of EBITDA in 2011 and '12?

In 2011, we expect about EUR100m benefit. The rest will come after because, you're right, it's part of the spending in 2011, 2012. But it is also - and maybe I didn't explain it enough before - but it is also to prepare. It's also some restructuring cost of creating the JV. When the new JV will be created, it will have an excess of means and an excess of rights compared to what it could afford. And we have also taken a reserve for that. This is not cash spending or an EBITDA impact in 2010, 2011. It is -- in 2011, 2012. This is beyond 2012. This is why it's EUR100m for 2011, probably more in 2012, and the rest beyond 2012.

Hello. Nicolas Cote-Colisson from HSBC. I understand that you can't really answer on pricing power and the French market on the fixed line side. But if we assume you keep the same kind of pricing premium you currently have in the market, is it still compatible with the kind of net add market share you currently achieved at least in the Q4? Can you still go for 30% plus net adds? That's my first question.

My second question is I haven't seen any reference to in-market consolidation. Is it still something you are considering, especially in Europe?

On the French market, of course, our aim is to maintain a premium price. For that, we have many strengths to do so, first of all, the quality of our networks, 3G on the mobile side, ADSL, the coverage, and the enhancing speed of our networks and tomorrow fiber and 4G as well.

Second point is that we are very focused on customer experience. We set up a new organization in order to have all our people in the field also forecast on customer satisfaction. So we think we are the operator who can make a cutting edge with customer satisfaction and afford a premium price in the midterm.

So the question is how it's going to be in 2011, even if the satisfaction is going to improve in 2011. I think that we don't know how the market is going to be agitated or not agitated, first of all. I said previously that we need to be very quiet in some way, calm, and also very reactive. And indeed, we are very able to react very quickly to move in the market.

But I think that we need to leverage what we've done in 2010 and leverage it constantly to have a good 2011 year, leverage our Origami line, the segmented approach, leverage Open, which is a real weapon for net add market share, also, well, retention, acquisition, and net add market share and also leverage our shops, leverage the new forums in our shops to convince more customers to stay by us or to move by us.

Regarding the in-market consolidation in Europe, I would say that it is still in theory an interesting area. But in practical terms, I'm not sure that there's very much to expect from that side, especially because I think that in most European markets, even where there could be some need for consolidation, there is, let's say -- or there is no consensus in the political environment locally to implement this kind of consolidation. We should keep in mind the Swiss episode example in 2010, where I think the majority of stakeholders were clearly in favor of the merge between Orange and Sunrise and when the political decision makers blocked the process.

So don't be -- let us not be too optimistic in terms of real prospects to implement in market consolidation in Europe, even though theoretically there would be some room for that. But I think also that we can try to improve our profitability in some European markets by looking for network sharing. And this is clearly one of the main topic where we are working on. We mentioned what we are trying to do with Deutsche Telecom in Poland. Or it could take place in other European countries.

I also mentioned in my introduction this notion of portfolio management, which means that there are probably in Europe some situations where we should question our long-term presence in those markets. And that's what we are going to do in the coming weeks. M&A is not only acquisition. It can be also to manage a portfolio of assets. We are not in such countries for the eternity. And if we think that at one stage that our assets are mature enough and that there is no real potential for value creation or for growth in those assets, we will have to ask about rotating those assets.

Thierry Cota, Societe Generale. I have three questions. Turning to VAT, you mentioned -- you made some very reassuring comments on the situation of French mobile. Can you make similar comments on broadband? Your clients can move now freely to the new offers of SFR and Iliad. So have you seen that, first?

And secondly, on CapEx, you did mention the CapEx rise expected this year. You mentioned LTE and fiber. Can you be more specific in terms of more France or more abroad, more fixed line or more mobile?

And lastly, just a specific question on Spain, fixed line margin, I think we expected -- you expected positive EBITDA for the full year when, if I'm not wrong, we are around zero. Can you tell us what kind of profile you expect for '11 and/or more interestingly maybe medium term margin target for the fixed line in Spain? Thank you.

So on the French market and the French boxes in some way, yes, of course, we're well aware of what we've been -- what we've -- what was launched in the market by our main competitors.

What I want to stress is the fact that we also have new software, always new software in our boxes. For instance, our new live boxes Live Box 2 is enriched each month by a new release. I was in the field last week with a French technician in the field, a man who assumed the after-sale services. And we were, of course, chatting. I was with him. And I visited a customer. And I asked him what do you think of the Live Box 2. And he told me perfect.

So when a France Telecom technician can tell you this live box perfect, I think it's mainly true. It's just a kind of joke. But we have boxes that are very efficient on the quality of service and the price as well. It's not expensive boxes.

Anyway, we are launching -- we're going to launch a new user interface, TV user interface in Q2. And also, hardware will come in 2012 as well.

(inaudible question - microphone inaccessible)

In fact, no -- well, yes, of course, a little bit of churn. But the level was not surprisingly high. And it was quite the same level as last year. So it was not so different on the broadband market.

I think there's no particular reason because everybody increased prices due to VAT, so --

Yes.

(inaudible question - microphone inaccessible)

It is a different question. If the question is, did we add churn because of the new box coming from Free, this is a different question than VAT. VAT's not -- has not been a differentiator in the market, since everybody increased prices after VAT increased. That's just what I meant. Then the box, the new box impact.

Well, it's -- new box is two things, new box and the mobile calls for free from the boxes. So it's a mix of the two that has a big impact or maybe a big impact on the market.

On the second point, I just want to remind you that we were the first to include free calls to our mobiles in our tariff plans more than one year ago. It was one-hour free calls to mobiles. And in fact, it was convenient for our customers. The average usage was rather 20 minutes rather than one hour per month. So we were the first to do so. Nevertheless, we had a move on the market. And we decided to react quite quickly. And since the beginning of February, free calls from the boxes to the mobile phone are free in all our Open offers. And since February 15, we have an option, like our competitors, a EUR3 option for all our triple-play base to have these free calls toward mobiles, even if we are -- we have already one-hour free call in all our packages.

So this is not anymore a differentiator either, the unlimited, offer in terms of call from box to mobile. So the remaining point is the new box. We will see because I think it's a little early to draw any conclusions. But what we can say is that first and without being, I mean, aggressive to our Free friends, a lot of new services that are made possible by the new box are not available today. So it's a small problem I think for the users. But it will probably come in the next month.

And honestly, if a new box has a -- is able to have a major impact in the market, a sustainable impact in the market, over a few months' period of time, we don't believe so. So probably, we will see a peak in the beginning of the year after the release of the new box. But we don't expect this phenomenon to be sustainable.

Second question?

Regarding the CapEx situation, probably is a still some increase of CapEx for France. For the -- you're right. The FTTH plus the RAN renewal in France, the fact that we are also switching to 3G to prepare also for future deployment of LTE in the coming years, there is also some increase expected in Spain and some other European geographies linked with the RAN renewal as well as the follow up on the DSL plan in Poland, which is still in the second phase. I just remind you that the commitment is to be executed in two years.

And for the fixed line business.

So regarding broadband in Spain, I believe we delivered what we committed, which means a positive full-year margin, positive margin in half two compensating for negative EBITDA margin in H1. And regarding the future, the prospect is clearly following this trend of improvement, both through top-line growth and growth of the base and growth of ARPU and improvement of the mix.

As you've seen, we've grown very significantly the (inaudible) share in our customer mix and then also improvement in terms of cost base through streamlining of operations. In particular, you should bear in mind that we are still managing two lines of products, Orange and [Yacov], the two brands, and that we are now completing a full-fledged integration program of our network and IT infrastructure that could be completed this year and should bring significant savings in terms of our ITN and operation costs.

Yes.

Frederic Doussard from Oddo. Two questions, first question regards ADSL. And if I understand well what you said, that means that in Q1 because of the new free box, you expect your net DSL market shares to be maybe below 30% but afterwards to be at 30% around even with your current live box.

And second question regards -- so your comment, you said that you could potentially consider some disposals. If you do that, in that case, what would you like to do with the cash?

So in the ADSL market, first of all, we have a seasonal effect on the net add market share because, when the market is low, because we are the biggest operator, the cancellation mathematically are the biggest. And if the gross adds are low, the net market share is rather low for the leader.

It's quite the case in Q1, Q2 because it's not the best period for ADSL sales. At the opposite, the back-to-school period and Christmas are very, very active sales period on the ADSL market. So first of all, you have in Q1 and in Q2 a seasonal effect on our net add market share. On top of that, yes, we can see that our competitor made some reservation in fact in December and may have a quite good - we don't know yet - but a quite good net add market share in January. And we'll see -- because we reacted very quickly in February, we'll see how it's going to improve. But a 30% net add market share is a good objective for us in 2011.

And if we decided to dispose such-or-such asset, we would try to have the smartest use of cash between investments and the legitimate return to shareholders.

This is the last question.

Benjamin Rousseau, CMC -- sorry, Benjamin Rousseau, CM CIC. Two questions if I may, could you please clarify the regulatory impact you anticipate on your revenues this year compared to the EUR900m you recorded last year? And second question on France on Iliad again, do you anticipate to start discussions with Iliad regarding the 3G roaming topic? And could this be a lever as of 2012 to strengthen your EBITDA, your domestic EBITDA? Thanks.

Regulatory impact in terms of revenues is to be expected in the same order of magnitude, maybe slightly smaller around between EUR800m, EUR900m, so let's say below EUR900m, but still quite huge, and at EBITDA level, EUR260m, including the VAT impact in France.

Regarding the 3G roaming topic with Free Iliad, I have no comment to make about this. The only thing that I could say is that my personal view on this issue is that it will happen. Somebody will have to come to a kind of agreement regarding 3G roaming with Free. That's it.

Okay. Thank you very much for your tight attention. Have a nice day.