Orange SA (ORAN) 2011 Q4 法說會逐字稿

Good afternoon, everyone. Welcome to this meeting.

2011 has been the first full year of our Conquest 2015 plan. And this full year has been, all in all, a success. And we can summarize this in 10 figures, the first being, one, one like first, we have been ranked the first mobile network in France according to the ARCEP. This has not happened in the last few years and we are very happy to see our efforts in terms of investment and upgrading our network recognized by the regulator.

Two, like 226 million customers. This is the total amount of customers, Orange customers in the world. It is a very impressive number, which shows a substantial increase compared to 2010.

Three, like 38.4%. This is the net adds market share that we reached in France in the fourth quarter of 2011. This is the best level in the last 3 years. As you know, our midterm target in terms of DSL market share was, in the beginning of 2012, 30%. And in fact, we have been able to reach this 30% average on the whole year.

Four, like 4G. As you know, we had to manage spectrum auction in a few countries in 2011. And I must tell you that, regarding what happened in France, we are very proud and happy with the result of this auction insofar as we have been able to get the best part of the spectrum available at, I would say, the most competitive price if I look at the difference between the raise of price and the price we effectively paid.

Five, like 57%. It is the very impressive increase in sales of smartphones across our European footprint. This is, of course -- this shows that we are really in the market in all those European countries. And it is clearly, also, the basis on which we will be able to develop our business and our revenues in the future.

Six, like 6.5, which is the EBITDA -- the multiple, exit multiple of our Orange Switzerland subsidiary. We have been able to sell this activity. This will be finalized in a few days now at a very attractive level in 2011.

Seven, like 7%, which is the outstanding performance that we reached in Spain, despite a tough environment, but also in the middle of a highly-competitive market. Orange Spain is definitely a success story and has shown it once again in 2011.

Eight, like 88%. This is the proportion of our French employees that consider that working conditions, generally speaking, at France Orange is at least as good or better other in any other competitor in French. Just remind what was the situation two years ago. I think that this is, once again, very good news to see that the climate within the Company in France is back to normal.

Nine, like EUR9.3 billion. This is the operating cash flow that we generated in 2011. This is above what we had announced. This is above expectation and this shows our capacity to deliver; to deliver, of course, our guidance and to deliver the cash.

And at last, (inaudible) 10, like 1 million. We have today in our portfolio several-million-customer or plus products. Open, for instance, in France, 1.4 million subscribers; Deezer, which is the streaming music site we -- that we are partnering with and which is a very popular now service for our customers; or again, Orange Money, which is the mobile banking range of services, very successful with more than 3.5 million customers today.

The main figures of this 2011 year. Revenues, slightly positive trend in revenues, all in all, excluding regulation impact.

EBITDA margin with an erosion under control limited to around 1 point of EBITDA margin, 1.1 exactly, and this is definitely compliant with what we had announced to the market.

CapEx, which are still slightly progressing in 2011 at 12.7% of our revenues. This is due to also the effort that we sustained to develop next-generation access networks, like fibre or very high broadband in wireless.

Net debt to EBITDA, which is something very important for us in the financial management of the Company. We have been able to keep this ratio around 2; we are at 2.09, thanks to, I think, a very serious and professional management of our liquidity and debt positions. Gervais will give you some details about that.

And at the end of the day, operating cash flow at EUR9.313 billion, slightly above the expectation.

This has been achieved despite a quite challenging environment. I will only mention a few aspects of this environment in 2011. We have faced a very competitive environment everywhere, but especially in our main domestic market in France, and this before the arrival of the fourth player.

Just remember that we had a VAT increase in the beginning of 2011 that created a very high volatility in the market. And despite this, we have been able to maintain, to preserve our market share in the mobile market and despite the aggressiveness, also, coming from the MVNOs.

We have had a very heavy burden coming from regulation and tax decisions with an impact on our revenues of EUR750 million and on EBITDA of EUR227 million. And we have been living through political troubles, turmoil, including revolutions or violence in some countries where we are a big player, like Egypt and Ivory Coast, which those situations clearly had a significant impact also on our revenues and EBITDA.

A few words about the situation in France. Just to maybe say very simply and briefly that I think that we can say today that we are back to normal and that the crisis that we have known two years ago is over. It doesn't mean, of course, that everything is okay and that we have still quite a lot of work ahead of us. But today, all the indicators show that we are -- we have change of era and that today the social dialogue between people in France, the perception of our employees in terms of quality of their working environment is much, much better.

And also, we can stress the success of our part-time senior plan. You can see that almost 5% of our French employees have chosen this part-time senior plan. It is a very successful mechanism. And this has enabled us to manage properly the level of our headcounts and also the labor cost in France, as we will show in a few minutes.

But, this social management and ambition is not limited to France. We have started, also, the deployment of some initiatives and tools outside France.

Excuse me, I need --. Sorry.

Outside France, we have launched recently the Orange People Charter, which is a global frame available for everybody working for the Group in the world. And we have also launched a social inquiry based on what we have done in France in other countries.

If we have been able to achieve this performance in 2011, it's because we have worked on the four main levels of our strategic plan, those levels that we explained and described to you a few months ago when we organized our Investor Day.

Those four levers are looking for growth everywhere where we can find some growth in our core business, but also in preparing the next generation of network and of services; looking for better efficiency and strive for it, operational efficiency; keep on investing on our core assets, and especially in our networks; and implement a dynamic management of our portfolio of assets.

A few figures and details about those four levers. Looking for growth starts with a commercial strategy, which is daily focused on segmentation and loyalty. Those two topics, issues, are definitely our top priorities in terms of a commercial approach and this is the reality everywhere in the world.

I think that this group has today among the best marketing teams in terms of managing the segmentation of those mass markets that we operate. A few examples of this, what we have put in the market in terms of fixed line offers with the Livebox, with the new Livebox offers in France; the launch of Sosh, the web-only tariff plan, which has been very relevant to react promptly to free launch in January; and the very impressive success of our Quadplay bundles. As I mentioned earlier, Open has today more than 1 million customers in France.

Loyalty is the second priority of our marketing strategy. And we try to work on loyalty through quite a lot of tools, of course, by offering to our customers a universe of services based also on the partnerships that we built with companies like Deezer or Dailymotion that, as you know, we are also a significant shareholder. But also, what we do in terms of distribution. We have today nearly 7,000 shops, Orange shops in the world and this presence, very close to our customers, is a big asset in the competition we face. And what we do in terms of devices. We buy, more or less, 30 billion devices every year and we have a very long-term and fruitful relationship, not partnership, with the main device manufactures in the world, which gives us definitely a big advantage also in the competition.

The results of those actions can be seen in our 2011 figures. The DSL net adds share, I mentioned it; 30% average in 2011 and more than 38% in the fourth quarter. The customer base in Africa and in the Middle East have increased by 16 million customers. And despite the problems that we faced in some countries of that region, you can see that it is still a very powerful engine for growth.

We have recorded in Spain once again a very good performance in portability. You can see the figures here. Very impressive. And Orange is in Spain the winning brand in telephone -- in mobile phone. And in Poland a nice progress in the broadband market with 60,000 new customers in 2011.

Smartphones. I already mentioned this. Of course, the result of this penetration is also the growth in the revenue coming from data, 11%. And the incredible success of Orange Money in Africa. You can see that in 2011 we have multiplied by 4 the number of transactions, by 7 the monthly amount of those transactions. Our subscribers in Orange Money services are doing more and more things through Orange Money. And it is also a very powerful tool for loyalty. As you can see, our Orange subscribers in Africa churn, half the average in the market.

The second lever is investment. Investments have been still important because we need them to sustain our growth and to prepare the future and also, of course, to improve steadily the customer satisfaction.

The first priority in terms of investment are networks. And we think that in the competition as it is today in our markets, the quality of the network and the capacity of the operators to be ahead of the competition in the next generation networks is going to be a key differentiator in the race. And we have definitely decided to focus on this topic because we think that we have the technical skills, but also, of course, the will, the strategic will and the financial resources to be best in class in terms of quality, of the quality of the networks.

We are one of the largest wholesale players in Europe, especially with a leadership position in France and Spain. And I think that we are very experienced also now to manage the wholesale market. I think we have shown it through the roaming agreement with Iliad.

We have deployed 3G networks in Africa, also, and especially in four new countries in 2011. And in some of those countries we are the first, and today the only ones, to provide our customers with 3G networks which gives them access to Internet. And we are keeping on investing in submarine cables. It is a very important piece of -- also of the landscape. We need those high-speed infrastructures in our networks to sustain the explosion of Internet traffic and to ensure that we have the capacity to respond to our customers in those countries.

4G auctions in France. It is, I think indisputably, a success for the Company and you can see this on those two series of figures. You can see that among all the operators in France, we are the one with the largest part of the spectrum available on any technology. We have more than SFR, more than Bouygues and, of course, much more than Free.

And on top of that, we have been able to get the spectrum at the best conditions. You can see that we have paid for the 4G auction only 18% above the reserve price, while our friends from SFR and Bouygues paid more than 60% above the reserve price. So, we have the best quality spectrum for the best price bid.

In terms of fibre rollout, I think that we can say that 2011 has been really the first year of fibre takeoff, if I may say so. We have been able in 2011 to accelerate the pace of our investments. We have invested more than EUR150 million in fibre networks in 2011, more than twice what we had done in 2010, and we are going to double again in 2012.

We have been very pragmatic and we have played the game according to the rules that have been set by the regulator and it's led us to sign national agreements with the other players, Iliad, SFR and Bouygues. We have now a little above 100,000 customers to fibre services and we are not far from a million connectable folks.

The portfolio management process that I had announced to you and to our investors a few months ago has been quickly and well executed. This has led us to targeted acquisitions, one in Democratic Republic of Congo and one in Iraq, two very large markets with very high potential; I think in good conditions in terms of value.

It has led us also to renegotiate our shareholder agreements in Egypt. Gervais will provide you with more explanation and details about this in a few minutes.

It has led also us to sell our Swiss operations, as I mentioned, very quickly and I think at a very competitive price for us. We have also been able to come to an agreement with our partners regarding Orange Austria. I just also want to remind that a little earlier in the year our Polish friends have been able to dispose one of their subsidiaries, Emitel, with a little above EUR400 million of cash.

In the same time, we have executed the new strategy in terms of contents, building partnerships with a few big names of the Internet. Dailymotion for video services. We have reached an agreement with Canal+ regarding the Orange Cinema Series set of pay TV channels. This agreement is now effective since it has been approved by the European Commission.

And we have not applied for the soccer rights auction earlier in the year, in this year, and this will provide us with EUR200 million of cash savings in the future. No drama, thanks to our Qatari friends. Now, the last thing that we have to do is to put an end to the Orange sport project, and this will be done in respect of our subscribers and in respect of our people. We are talking about a little less than 30 people.

A few information about what is new in the French market for a few weeks, which is the fourth entrant's arrival. What we can say, because this is fact, this is not comments, rumors or so-called information, is that the market has been very lively since the beginning of this year. And lively means that we recruited quite a lot of people. You can see 837,000 new customers. This is above what we had seen last year and the year before. I would say slightly above, but it's a high level of activity in the market.

In the same time, we have had a little more than 1 million churners, which is a high figure, clearly linked to the arrival of Free. We think that the proportion of those churners going to Free is around 35%, which is probably a little less than our market share in Mumbai market. It means that the net result of this activity is for us the loss of 201,000 customers, which must be compared to 27 million customers in France; a little less than 1%. This is just figures, facts about what happened since the beginning of this year.

Of course, after the 10th of January we have seen a wave with -- for two days, a peak in the number of people asking for the portability of their mobile number. Usually, this number is around 10,000 a day and it climbed up to 150,000 for two days and it is now back to, I would say, almost normal; a little above normal. But clearly, this wave is over and it is behind us. This is what I can say about what we have seen, what we have observed regarding, of course, Orange customers.

Now, just to remind you what is our strategy regarding the fourth entrant in France. I would like first to remind, because sometimes I just feel that some can forget this, that France is a little less than 50% of our business and the French mobile market is a little above half of our French business. So, we definitely have an exposure to the French market, but this exposure is in the range of 25% of our total business; quite a difference with other players.

We have a strategy which is based on clearly two principles, one on the retail market and one on the wholesale market. In the retail market we have anticipated Free's arrival by launching in 2010-2011 very powerful tools like Open, the quadplay offer of Sosh in 2011, that are relevant responses to Free's new offers. You can see that, for instance, Sosh has been able to attract 90,000 customers mid-February, to be compared with 28,000 at the end of 2011. So, Sosh is working quite well as an option, an alternative, for people that could be interested or attracted by Free to stay with us. And Open is still, as I mentioned, a very effective also marketing tool which offers simplicity, but also good value for money to a lot of customers.

Then, in the wholesale market, we have been very pragmatic by signing a roaming agreement with Free in last year. I know that this has provoked quite a lot of comments. Some of them are probably due to a strong imagination about what is inside this roaming agreement, because this roaming agreement is not public. It's a confidential agreement.

But, what I can say about it, and I think that the future would show it, is that it is based on market conditions, prices. This agreement doesn't give any kind of competitive advantage to Free in the market. To be frank with you, it would be quite foolish from our part to have given such a gift to our new competitor if we had done so.

So definitely, this contract is -- has been signed between two adult companies in market conditions and now our strategy is just to execute this contract. And definitely, of course, the revenues that we will draw from this contract will mitigate also the losses that we'll suffer in the retail market. We can say that, at least in 2012, the revenues coming from the roaming agreement with Free will be certainly substantially above what had been forecast in the beginning of this year.

Gervais?

Thank you. I shall go now into more detail into the performance of 2011.

As regards to the segment performance, we have just put one slide in the pack I will present among the three -- you have two or three pages per country, by geography, but I shall just present one, except for France where we have kept a total set, because even if France is just 50%, it's still 50% of Group.

So, to start with the main figures. So, Stephane has recapped what are our objectives, our guidance, our indication given the market. You have the absolute figures. And to look at these things in two different ways, one is the revenue and we'll come back on the revenue with three different profiles, the first half and second half, and also different from what we expected. For those we have been speaking with in the course of the year. I think we are more optimistic on second half 2011 and less optimistic on first half when we started the year and this has progressively reversed with the first half slightly stronger than expectations and the second half slightly lower than expectations if you compare to what we said a year ago.

(Inaudible) from regulatory impact our revenues are flat, it's minus 1.6% in total, to be compared to the minus 1.4% achieved in 2010.

As regards EBITDA erosion, as explained by Stephane, has been contained to 1.1 points and fiscally in line with what we told you at the beginning of the year, where we said we should have a deterioration around 1 point of EBITDA. And this is clearly something which has improved in the course of the year because the first half was a margin erosion of 1.5.

As regards CapEx, we are 12.7%. This is slightly below what we said at 13%. However, we are also, in terms of CapEx, with co-investing on the French FTTH market, so our gross investment above this level, but we are reimbursed by our competitors on those co-investments we do in the [less dense] areas.

Net debt at the end of the year includes in this published figure the cash out for the 800 megahertz spectrum in France and for the settlement of the dispute with DPTG. So, this is an additional EUR1.3 billion or EUR1.4 billion compared to the strike situation at the end of the year, but we'll come back on that.

Our revenues, to comment our revenues, I would like to emphasize that these are stable after regulatory effect. In spite of the VH issues in France. Other situation is some of the emerging markets. And if you look at the different geographies, we can see that we have -- we can in fact gather our geographies in three groups; some with improvement even if they are still negative; enterprise, where revenue decrease has been reduced by two-thirds; in Spain, where revenue before (inaudible) is at plus 7% in a country where economic pressure is strong and revenue, even including regulation impact, is at 4.5%.

Two main areas where revenues are stable -- or revenue evolution is stable, sorry, are European countries, except the big ones, so this where the revenue evolution is nearly 1% year over year. And Poland, where we are more or less at the same pace of decline than what we had a year ago. And in France we have some slowdown compared to 2010 and even Africa and Middle East, excluding Egypt and the Ivory Coast, where (inaudible) the overall economic situation as there is some slight pressure on the revenue, even if this region still continues to perform nearly 7% revenue growth.

If you look into monitors on the H2 situation, the slowdown, as I mentioned, has occurred in H2, plus 0.3% growth to a minus 0.3% in H2, mainly coming from France and, to some extent from some Africa and Middle East operations, even if some of our new operations are recovering, like Ivory Coast.

This slowdown has been well known and, let's say, explained since July and we have been managing our cost structure, we'll see that afterwards, to preserve our margins and to keep -- to stick to our initial objective to maintain the margin erosion around 1 point. So, this has represented, especially with all of the new pressure and additional effort on Group cost structure to stick with our initial objectives.

And this is what appears in the EBITDA figures on the next slide, where you see that we have been able to contain the margin erosion. And if I look (inaudible) into details in the different regions, we have two segments, our Orange business services enterprise division and Spain, where we have grown the EBITDA, both in terms of absolute value, but also in terms of points, and especially including the enterprise division with a declining revenue. And there other areas where there has been some margin pressure. As they are linked with the mix, this is the case of rest of the world where, let's say, the increase of revenue is at a lower margin rate, but with the pressure on the business in France and Poland.

In the last quarter of the year, as it appears on the next slide, the margin erosion has been limited, minus 0.3 points. And this is also due to the very strong mastering of the commercial expense, especially in France, but also in some other geographies. If you look at this slide, at the bottom of the slide you see that commercial expenses have been flat year over year in this last quarter of the year, and this without an impact on our market share. We have [sticked] to our market share objectives, especially on those two countries, France and Spain.

And this is what we try to explain on the next slide, where we compare on the high part of the slide the control of the commercial costs with what is resulting back in terms of commercial activity, measured in terms of smartphones, how do we push for smartphones, Smartphones including by definition a data plan. So, each time you transfer a customer which has -- who has not an iPhone or a smartphone with a -- to a customer who has a smartphone, you have generally an uplift still between EUR5 and EUR10 amounts and this is what has happened. Whereas, at the same time, we have continued to increase the commitment of the base by renewing the smartphone base or the handset base of the base which is now 79% of our customers under commitment in France and 84% in Spain And this is also a way to increase the loyalty and the commitment of the customer in preparation of the changes on the market as they are starting to occur.

Regarding our headcount. So, Stephane has explained what has happened in the social climate of the Company. This has not been achieved, I would say, at the expense or the cost of very, very strong salary increase. I must say there were no salary increases at all, but the salary policy of the Company has remained reasonable and clearly in line with the major French corporations, especially for the French market. We have not been above that.

And you see that even in France, despite the headcount increase, we have mastered the labor OpEx and this will shrink to the size of the valuable part in the labor cost of all the employees. And that's -- but maybe that's one of the specifics we don't mentioned enough. Let's say around 10% of the income of our employees in France are linked with the performance of the Company in terms of net income or the results and this by definition is getting some pressure on the performance of the Company is reduced. Just to give you once a year in average the annual pay of employees in France will be reduced by about half (inaudible). This is what will happen, linked with this valuable mechanism on the pay in France.

Regarding efficiency programs, just to add a few figures to what Stephane told you. This is just to say that Chrysalid is already underway; is already underway with some achievement this year, 18% of the 2015 objectives or EUR2.5 billion. So, this is already achieved in the period 2011. And those savings are mainly on network, but also on customer management, whereas we have now, but not impact yet on the 2011 figures, but we see the first impact on the CapEx, especially for Poland, of the buy-in JV implementation in first half 2012.

To conclude on our 2011 P&L, I conclude, as usually, we see net income. And again, a few differences between 2010 and 2011. However, I would just like to underline the fact that the net income of continuing activities is more comparable, EUR3.8 billion compared to $3.8 billion. A major difference regarding the total net income is linked with the fact that we took into account in 2010 the capital gain with the merger of Orange UK and T-Mobile UK, we generated a capital gain of about EUR1 billion into (inaudible) income accounts, which is to me the translation of the cautiousness with which we value our assets, especially our goodwill when we value our different subsidiaries.

As regards CapEx. So, the speed of CapEx isn't so -- when we look at it by geography, you see that we have continued to increase in most of the geographies our CapEx to reach a 3% increase as a rule for the Group. The only country where it does slightly reduce is Poland, but we have a strong push on the DSL network in 2010 in Poland, which explains this reduction in 2011. And France, 45% of the total Group CapEx with a significant increase in mobile network, customer premises equipment, mainly Livebox and, to certain extent, set-top box, as well as FTTH. FTTH investment has reached EUR151 million, plus EUR92 million compared to situation at the end of 2010.

In Spain the increase of investment is related to the network transformation program (inaudible) mobile backhaul refresh. And in Poland, which represents 11% of Group CapEx, there is still the building of DSL line where we have built 859 line, new DSL line between 2010-2011, to be compared to an objective of 853,000 line, which was agreed with the regulator.

In the enterprise business CapEx are increasing, but maybe linked with our investment into cloud computing.

If you look at the CapEx by nature on the next page, the network, a light increase on network linked with the ramp up of FTTH, as well as RAN Renewal and the important quality of service on mobile network, mobile rollout in some emerging markets, like Kenya, Egypt and (inaudible) to support the growth and the launch of 3G in the emerging markets. In addition, we continue to increase slightly the CapEx on IT to improve our IT systems. And the strong push on customer premises equipment, both in France and Poland, plus 16% year over year, whereas we are slightly decreasing the investment on service platform. This is mainly through mutualization of service and cost structure, which have helped us to contract the investment in this area.

Last, to conclude on the 2011 performance for the Group, the situation of the debt and the cash flow. There, if you go through the cash flow statement as it is presented on this page, we have paid EUR767 million for spectrum and license, especially in Spain and France. This is what has been paid in 2011, as well as a few additions for Belgium and an extension of the 2G license in Slovakia, this for EUR60 million.

Net interest paid decreased, but this is mainly because this line includes the dividend received from Everything Everywhere. Interest on the gross debt has been decreased -- on gross debt has been decreasing. Total interest on net debt has slightly increased because we have reinforced our liquidity position. We have slightly more cash but, at the same time, a little more gross debt than we had a year ago.

Income tax cash out is mainly impacted by the change in the French income tax rules last September where we now cannot -- can no longer charge 100% of our taxless carry forward on the income tax of the year. We can only deduct 60% of the income taxes a year in terms of taxless carry forward. This has led us to pay -- excuse me, to pay 333 -- EUR332 million additional tax in French, which will be saved in 2014 and 2015. Just a timing difference in the payment of income tax. We still estimate that the level of French tax cash out will be between EUR400 million and EUR500 million for 2012.

The improvement of working capital is mainly due to better tax collection and inventory optimization in most of the geographies. Whereas, in the line "other," we measure the different change in non-monetary provisions, such as the provision we made on the TP fine with European Union and the senior partnering plan, as well as a few other items that we can explain in more details to those who will be interested outside of the meeting.

In 2011 we have also purchased for EUR275 million of shares for the free share plan for employees. And acquisitions and disposal include mainly the acquisition of Korek in Iraq, CCT in Congo, and disposal of Emitel this year. You see that it's a completely balanced item, acquisition and core disposal.

And the other -- the salient other line includes different monetary and nonmonetary variation on the net debt. And our pro forma debt level has increased by EUR491 million, if we include the settlement of DPTG and the spectrum in France of the 800 megahertz spectrum.

On the next slide we see the different movements on the debt, including how did we use the cash in terms of dividend, purchase of shares, etc. Just to mention that without those two exceptional items I mentioned, our net debt to EBITDA ratio is ticking at 2. The total net debt has been reduced by about EUR1 billion. If we include the EUR1.4 billion of exceptionals, which is the settlement of DPTG and the spectrum in France, we have a net debt at the end of the year at EUR32.3 billion and a net debt to EBITDA ratio as at 2.1.

Regarding debt management itself, we have continued to increase our liquidity position for the Company. And at the end of 2011 we have now EUR16.1 billion of liquidity, out of which EUR8.6 billion of cash. We continue to think that markets are volatile, uncertain, sometimes closed, and that having cash in excess is a very important protection for the time being. That, if you compare to some of our peers, we see we need to maintain a strong liquidity position to ensure the solidity of the Company over the long term. This is why we have continued to issue and to raise money, by the way, at attractive cost, our cost of funding for the funding we made for the whole year is 3.82%. 96% of our backup line of EUR6 billion has been renewed and extended until 2017. And on top of that, we are still non-depending on bank funding, with 88% of our funding made generically through the markets.

To conclude on the debt, just to say that we have continued to prepare the future by reinvesting into credit quality and through the extension of the average maturity now we have average maturity of 9 years, which has been doubled in 10 years. All what we raise this year is an average maturity of 11.7 years and we have three transactions for more than 30 or 40 years, out 30 or 40 years, for EUR1.3 billion with 4.75% interest rate.

Debt has been raised since -- so generated for 2011 at 11.7 years and, again, we stand as a best-in-class operator with a 9-year maturity. We keep our rating. We are with a stable outlook. This might change maybe in the course of this year, we don't know, but this is the situation today.

Now, I'll try to be very brief on the operations to leave some time for questions. So, on France I think I've already commented to the top line. Maybe just to say that, for the mobile revenue, it has been impacted both by regulation and VAT. And that, in the fourth quarter, if you're excluding the regulation, mobile revenues still increased by 3.3%. So, the French market is still growing, at least when we look at the retail business. Regulation is just (inaudible) and slightly the roaming for retail.

So, (inaudible) has been partly compensated by an increase of equipment revenue, iPhone 4S calendar effect, which is mainly on the fourth quarter of the year, whereas it was on the third quarter for iPhone 4 a year ago.

On the fixed side, we see some improvement on the broadband revenues this quarter with an increase of EUR29 million year over year on the third quarter and this is EUR100 million more broadband revenue on the full year, but it is far away from compensating the decrease of PSTN, mostly because of the decrease of number of lines, even if we start to see some slowdown in this decrease.

Finally, on the EBITDA side, the top line effect from the fixed business is driving down the decrease, along with the regulation and VAT impact. This trend is only partly compensated by the tight monitoring of commercial costs and this explains the pressure on total France EBITDA.

For the fixed business KPIs on the next slide, clearly our pride is really to come back to this level, nearly 40% net share of conquests at 38.4%. And to reach our total year objective we set ourselves an objective to be above 30% in net share of conquests and we have reached that.

As we indicated in July, after a decrease in the cost of 2010, we are increasing again the ARPU on broadband and this is also good news. And finally, the (inaudible) in PSTN loss continued to slightly improve, even if we see we continue to lose lines, because we have still 50% of our broadband base with the PSTN line. And we think that if we don't want those people to churn from those businesses, we have rather to accompany them to progressively churn from PSTN to keep it and move to the triple play.

For mobile indicators, we have been able to maintain the strong commercial momentum, even if we have also very tightly managed our commercial expense at the end of the year. We have kept our retail market share stable at 39.9 in Q4 versus 40% in Q3, at the end of Q3. And we have 197,000 net adds to our net contract customer base with vary high value customers. Is the highest level of smartphone adoption ever reached in a quarter. Two-thirds of the new customers have in contract -- under contract have got a smartphone. And we have sold in this quarter 335 -- sorry, 325,000 iPhone 4S in full to be compared to 280 iPhones a year ago.

For Spain, so I mentioned earlier the revenue performance. What I could say is that this performance comes from a very sustained performance in mobile, but also is a ramp up of the performance in DSL with an increase of the fixed customer base. 150,000 new broadband customers in 2011. Whereas we got also additional customers, plus 4% increase in mobile.

On the macroeconomic side, Orange Spain favorably de-correlates from the GDP evolution. We hope that this will last for the next couple of years. On top of the adverse macroeconomic environment, the Spanish market has changed and the competition has intensified. We have observed significant pricing moves from Telefonica enjoy growing October and November, but our Q4 and full-year financials prove that we remain very good in terms of performance. Q4 top line grew by 5% and the full-year EBITDA amounted to EUR839 million plus 10% year over year.

Poland has been already published, so I may not extent. I can just say that the performance for us is good because the decline, especially on fixed, which remains still a handicap for the income over there has been limited. And that, in terms of mobile, we have been able to recapture our leading position, both in terms of value and of our customers.

For other geographies, maybe two comments. This is all the rest and in all the rest the revenue -- and sorry for my colleagues who are managing all the rest. It's not the best wording, but this is very important for us, it's just a question of segmentation of Group performance. Just to say that revenue have resisted quite well. It's a mix of mature markets in Western Europe and in Asian markets, markets with political stability, markets with a lot of political instability. But, all this around is plus 0.09% growth year over year with an improvement in the last quarter of the year.

This segment has 100 million customers and with 25% in European countries, 75% outside of Europe. Operations in Africa and Middle East have been growing by 6%, as I mentioned, year over year if we exclude Egypt and Ivory coast. Whereas in Europe, fourth quarter revenue were flat, which is better than the full-year trend.

EBITDA margin is down by 1.9 points with EBITDA down by 6%. However, the drop is mainly linked with the situation in Egypt and Ivory Coast, which represent two-thirds of this drop.

As well, you focus on those two situations on the next page. In Ivory Coast since the civil war in Q2, the situation has really improved and you see that in terms of revenue on the right part of the slide, where revenue is just flat, down 3% compared to a year ago, whereas we lost 28% in Q2 at the peak of the crisis.

In Egypt, after riots and the instability of the first quarter, second quarter has been much more settled, but this has changed after the political involvement of our partner with the surveys in the Egyptian politics and with some of the bashing it got -- and unfortunately Mobinil got in return to its political engagement. And this has been weighing unfortunately very much on the customer base. In July/August -- between June and August, where we have lost between around 1.5 million customers. For 2012 the situation remains very uncertain, but the new management team will focus on operational efficiency.

And on top of that, as Stephane mentioned, we are about to agree, at least we have agreed (inaudible) but now we try to get the agreement from the Egyptian authorities on an accelerated timing for the economic withdrawal of Mr. Sawiris from Mobinil, himself remaining as a partner, but not owning the stake he owns today into the company. This will represent a savings -- this is the (inaudible) commentary I had with him, by about EUR200 million in terms of cost for France Telecom.

Last, but not least, Orange business services with as I said an improvement on EBITDA in spite of still some pressure on the revenues, especially on the legacy networks, minus 11% decrease. I would like to underline what's done in terms of growing networks and services, and especially some of the new businesses, including cloud, where we have done about EUR120 million revenues.

And last, this is a non-consolidated situation of Everything Everywhere, where we have put one slide. We have three slides on the pack. This has been published yesterday morning. Just to say that since the management change in September, we are really at peace with the improvement of performance of Everything Everywhere, especially in the second half of the year.

So as you can see, we are, I think, in very good health at the end of 2011 and the beginning of 2012. And it's good news because we will need it since we expect a tough 2012 year.

First, we have to face a deteriorated economic environment on most countries where we operate. Clearly, European economies are going to live through a slowdown, at least in 2012. And this will bring about some, of course, consequences in our businesses.

We are going to have a very heavy burden coming from regulation and tax policies with the accumulation of decisions, coming both from the national level in terms of terminal -- termination rate cuts or unbundling prices, but also from the European level with the roaming new rules set by the European Parliament.

All in all, we are going to lose about EUR1 billion of revenue in 2012 and about EUR350 million of EBITDA. That will make 2012 one of the worst years in the recent times in terms of rate regulation impact.

We will face, also, a very fierce competitive environment in quite a lot of countries but, of course, especially in our domestic market in France with the entry of a new player.

We will have to cope with a still uncertain tax environment because we are mainly in Europe where the budget deficit is one of the main concerns of all the governments, and it could lead them to envisage new taxes. We have seen this already in 2011 and there is still a risk in 2012.

As you know, we also had a very adverse decision coming from the European Commission about the unemployment insurance for our employees, our state employees. As you know, we are very strongly -- we very strongly disagree with this analysis coming from the European Commission and we definitely are going to apply, along with the French State, to try to obtain the cancellation of this decision but, in the meantime, we'll have to take this into account.

And regarding our activities in some countries, we -- even though we think that we will have in some countries a back to normal situation like in Ivory Coast, for instance, we still expect some troubles and economic and political troubled environments in some countries like Egypt.

This environment, challenging environment in 2012 is going to lead us to bring forth an acceleration, the implementation of our plan, or Adapt to Conquer plan. We are in the adapt phases. And for instance, we will have to accelerate once again on our segmentation strategy in the French market with using our tools like Sosh or Open. We will have to even more focus on value management, especially around loyalty and loyalty of our customers.

We will have to develop our cross-selling actions. As you know, since 2011 we are now authorized to cross-sell our customer bases. This is clearly very good news for us and we are going to accelerate our cross-selling actions in France.

And we will stress the -- as a differentiator in the competition, what we can provide in terms of quality of service. It's -- it is about, of course, networks, but also the shops; 1,200 shops in France, the quality of service in our call centers or field intervention because this is absolutely essential to justify a price premium on our core offers in the competition as it is today.

We will keep on monitoring very tightly our commercial costs. I think we have shown that we were able to improve quite substantially the management of those commercial costs last year and we will keep on managing very seriously, professionally, accurately our commercial costs in 2012 with this target to keep globally at the Group's level our commercial costs as -- at the same level as in 2011.

In the same time, we'll have to strive for operational efficiency, and we will clearly strengthen our actions in the optimization of our customer base management. We are going to accelerate an (inaudible) optimization program deployment across the board. Of course, it will be relevant for customer care processes in management. It will be relevant for network management and we are going to keep on the RAN-sharing processes in some countries. As you know, we have had so far, I think, a very positive experience in RAN sharing, especially in Poland and in Spain.

We are going to develop buy-in actions. Buy-in is now operational -- fully operational and we expect with this JV with Tosh Telecom good contributions in the savings in 2012.

We are going to work on our corporate structures, functions in France and in some other countries in Europe, because we think that, once again, we have some savings and some gains in efficiency, flexibility or so to get. And we are going to implement a moderate wage policy, especially here in France.

I have had in recent days and weeks a range of meetings with unions and our social partners where I explained that, given this context that we face, and especially the new state of the competition in France, we will have to be reasonable in terms of wage evolutions in France in 2012. Of course, the first impacts of this wage policy will be for the top management of the Company and we decided to keep stable the packages of the first 100 salaries of the Group in 2012.

We will have at the same time to keep on investing on what we see, what we consider as absolutely key in the future, especially the networks. As I mentioned, we are going to double our investment in the fibre-through-the-home deployment in France. We are going to now start with the deployment of 4G networks in some countries, especially, of course, in France.

And as far as the portfolio management is concerned, as I mentioned, we have been able, I think, to implement very quickly the decisions had been made in 2011. In 2012 we are going clearly to a slowdown in our M&A policy, generally speaking. So, no significant move to be expected in 2012. The priority will be for us to integrate the recent acquisitions like Iraq, Morocco or Congo, and no major move to expect in our portfolio management.

This leads us to give you a few indications regarding our financial performance for 2012. As you remember, we have been -- we have delivered an operational cash flow of EUR9.3 billion in 2011. We think that we will deliver close to EUR8 billion of operating cash flow in 2012.

The difference -- the decrease between 2011 and 2012 is around EUR1.3 billion. You have to take into account that EUR300 million is due to parameter and Forex impact. So in fact, the real economic reality is that we expect a decrease in the generation of operating cash flow in the range of EUR1 billion. It is a lot. But in the same time, the major part of this comes from the French operations and the consequences that we have to draw from the new state of the market and competition in France.

In terms of 2013, we will give some more indication, information about what we expect in 2012, probably this summer when we will talk about our first-half results. What I can say is that we stay quite confident in our vision, the vision that I explained a few months ago in our Investor Day here in Paris.

That is to say that we still see 2012 as the low point of a cycle in this Adapt to Conquer vision that was displayed, and that we are reasonably confident in our capacity to stabilize and probably to start to increase again our EBITDA generation in 2013 for a range of reasons, first being what we think as the most likely scenario regarding the price strategy coming from the fourth entrant in France.

We think that the very aggressive prices that it puts in the market a few weeks ago let's say make the -- our core scenario credible. I mean, the scenario being that they have not a lot of room to further decrease their prices. And we think that, because it's also part of their habits in the market, they have decided to strike very strongly in the very beginning of their presence in the market. And we do not expect that kind of price war in the mobile market in France given the first level of those prices, which means that the main -- the major impacts on the repricing of the French mobile market will be in 2012. Of course, there would be still some consequences of this in 2013. But, I would say it makes our vision I think more credible when we see 2012 as I'd say the year where the major impact of the fourth operator in France will be seen.

Then, all the actions that we are deploying in terms of cost efficiency by increasing it in a lot of things we'd provide much greater resource in 2013.

And third, the growth engines that we have or that we are going to have in terms of new countries and new markets, especially in the African and Middle East area, better so in terms of new businesses, like for instance Cloud services in the enterprise division or even for a residential market, are going to be more powerful.

So this, all in all, make us rather confident in our capacity to at least stabilize and probably doing better results in terms of EBITDA in 2013.

We have decided to adapt our shareholder policy, adapt to this new environment, I would say financial environment and the pressure coming from the financial crisis on a company like ours, economic environment, also competitive environment. But, we have decided to adapt it by preserving a very attractive return to shareholder policy.

First, on 2011. Given that the results are in line with expectations, we will pay the EUR1.4 dividend on 2011 results, meaning that the second part of this dividend will be paid in June of 2012.

And regarding 2012, what we want to do now is first to ensure the interim payment as it was in the previous years. EUR0.6 will be paid in September 2012. And for the rest of the dividends, we want to commit on a payout ratio on our operating cash flow a payout in the range of 40% to 45% of this operating cash flow, which is, I think, a decent level if you compare this with our comparables in the industry.

And of course, if we reach our target of close to EUR8 billon in operating cash flow, that will enable us to pay between EUR1.2 and EUR1.3 a share, which will still -- on the basis of the current valuation of our shares, will provide a very attractive yield. Too attractive, in my view, but this is another story.

This is the way we think we have to take into account the global environment of our business, by preserving, once again, a very attractive shareholder return policy. But also, by saying to everybody, our shareholders, but also our customers and our employees, that our first priority is to preserve the balance sheet of this company and to preserve its capacity to face any kind of events in a very uncertain world, financial world.

As you know, we have known in this company very difficult periods in recent past. And definitely, we will be very serious in the way we manage the liquidity and the debt position and this is, for us, the first priority.

A last word to say that -- because probably including in this kind of meeting we do not insist as we should do on the importance for us of the innovation and of innovation people in our company. We do think that in the future we will be able to win the race and to find the good differentiation tools if we have an innovation machine that is working properly, and if we put this innovation stream at the very heart of our strategy. And we have worked quite a lot in the recent month about this innovation production in the Group. What we have done is, first, to identify the big topics where we want now to focus, because it's around those topics that we see the future growth opportunities and where in the global digital world in competition a telco like France con Orange will be ahead of the race.

Some of them are related to our really core business, interpersonal communication. Communication services is a range of new services that will be absolutely critical in our capacity to be competitive with the new forms of communication, especially coming from the social networks. And very soon we'll be able to provide our customers with a range of new services that will reduce this gap that has been created between the social networks' world and usages and the -- let's say the most [desigual] traditional communication services. And we would do this in a fully interoperable environment, which is a big difference between the telcos and the other Internet players.

The second big topic for us is our capacity to monetize this fantastic explosion in data usages. As you know, the traffic in data is exploding every year and we must be much more efficient in the way we can transform this change, massive change in usages, in additional revenues, additional margins.

So, we have lots of interesting projects in that specific topic. And you will see in the coming weeks through very concrete, simple, easy to use and useful tools that we will put in our customer hands our capacity to better manage this phenomenon of the data explosion and better monetize also for us those new usages coming from our customers.

Cloud services is definitely a very promising and important new frontier in the B2B division, but also in the residential market. And once again, the telcos, we think, have a very decisive part to play in the Cloud markets, because the benefit from a very unique relationship with the final customer that can guarantee safety, security, privacy, also in the management of their personal data. And this will be also, we think, a differentiator in the competition.

Internet of things. We -- people estimate that in 10 years' time there could be up to 100 billion devices connected in the world. Everything would be connected. And definitely, of course, we want to be also one of the players of what's going to happen in Internet of things.

This will have to be within a more coherent, visible, perceptible universe of services. This is what we call Orange Universe. In this digital world, with a lot of brands, a lot of people, a lot of players, we have to be the simple and convergent point for our customers and we have to provide them with a unified experience and interface on every screen and every kind of communication consumption. And this will be possible only if we're able to deploy smart networks, first very high broadband networks, both wireless and in fixed; and this, of course, in mature European markets, but also in Africa and in the Middle East.

To be more effective, more efficient, more productive in innovation we have decided to reform very deeply the way we are working in innovation. This is the purpose of a big internal process that we have started in the Group. And this will lead us in the coming month to, I would say, a more -- a much more clear, much less bureaucratic, much more adapted to the market and much more linked to the operational reality in every market of all our people working for innovation. This is a kind of revolution that we are going to implement in the Group. And this is, in our view, once again one of the very, very key policy for the future to be able to differentiate in the competition.

This is the end of our presentation. We are now, along with the whole Executive Committee team, available to answer your questions. Thank you.

Thank you. Nicolas Cote-Colisson from HSBC. I have two questions, one on Switzerland and the other one on the UK. Regarding Switzerland, I'd like to know is the dealings now completely closed and if there is anything from the EUR1.6 billion we have to take off for the upcoming auctions in Switzerland? And for the UK, it sounds like Deutsche Telecom is not that committed to the joint venture and I would like you to share our views about what is the next option. Would you be happy to buy them out? Would you consider an IPO route or business combination in the UK?

Maybe regarding Switzerland I will let Gervais give you some --.

Yes, you will have news in the very near future. We still expect a closing on next week on February the 29th. This is a timing we have defined with the potential (inaudible). Officially, the auction is not closed so I cannot disclose the final figure, however they are more or less closed. Let's say that's where today. And we are making the (inaudible). Let's say we should be in a relatively favorable option for France Telecom-Orange.

Regarding Everything Everywhere, a few elements. First, we are happy with the way it's working. As you can see, I think they have showed very nice results and this shows that it was a good idea to create this JV. And it is very well managed now.

Second, I don't have any kind of information coming from our German partners that they could intend to exit from the UK. I know that this is a rumor, but there are so many rumors. So, I will be interested in the way they are going to react, probably tomorrow, since they are going to talk tomorrow about their results. But once again, I don't expect any form of confirmation of this coming from our German partners.

Third, if it (inaudible), we will see. The only thing that I can say today is that we are happy to be in the UK market and we have no intention to withdraw from this market.

Yes, (inaudible). I have two questions, if I may. First, could you give us some granularity on the EBITDA minus CapEx guidance to EUR1 billion drop, what kind of write-down you expect between CapEx and EBITDA? And secondly, on the French market you gave us some indications on the clients. Could you give us some indication on the -- of the impact of Free mobile on the ARPU if you had to keep clients with -- have you had to lower the ARPU to keep clients and keep the churn lower than it could have been?

So, Gervais, for the first and Delphine --.

Yes. On the operating cash flow evolution, so there is EUR300 million, which is linked with strikes and a change of [parameter], mainly Switzerland, as the sale of Switzerland is a decrease of the cash flow. As we got the rest, the (inaudible) is about -- for a little less than EUR200 million increase in CapEx and a little more than EUR800 million deterioration in EBITDA.

But along with this EUR800 million, it has been commented by Stephane there is more than one sale at about -- more than EUR300 million, which are linked with regulatory impact, which is a pressure of regulation. And this pressure of regulation is about EUR100 million more than what we had in 2011. This is mainly the acceleration of the termination rate cut in France and a few other geographies, especially acceleration against the initial schedule we could have in mind last year when we prepared the Investor Day. And also, the stronger pressure on the international roaming, which is also far bigger and you will see that in (inaudible) in our colleagues presentation. My feeling is that both Voda, Telefonica and Deutsche Telecom were on the same lines on this when they made their focus last year, and that the debates between European Parliament and the European Commission have pushed the prices down.

On the ARPU question, my first comment is on the fact that the market anticipated the Free arrival. So in fact, in our 2011 figures we have already a part of the other overall re-price due to Free entry. So, you can see that our ARPU is decreasing in Q3 and Q4. We don't expect the trend to be much different, maybe with an additional or small -- an additional decrease in Q1.

I won't make comment for the rest of the year because it's too soon. As we said previously, we have the first week effects of Free entrance. Now the market is cooling so we need to see how it's going to move in the next weeks and next months.

(Inaudible) from Oddo. Two quick questions. The first one, maybe if you could really give us some insight on how you are -- you expect justifying the price gap between the mother brand and the low cost. And the second question on the Quadplay, what was the contribution of (inaudible) in Q4 and the beginning of 2012? Does it explain the acceleration of burn and could we extrapolate in the next quarter the EUR300,000 resume in the base?

Yes, yes. So, to compare (inaudible) money offers to classic offers, you need to take into account the costs of the device, of course. So, I read a very interesting article this week written by a consumer organization. This was (inaudible). And they compared, in fact, our prices, Sosh prices, Origami prices to BNU prices and Free prices.

And for instance, if you take today prices, playing an iPhone you bought in an Apple shop, with the 99.9 Free offers, in one year it costs you EUR880. If you take the Sosh offers, around EUR45, which is just in a particular segment of the market, which Free didn't want to address. And also by Sosh, a new iPhone, it will cost you EUR780 for an entire year. So, it's EUR100 or less.

And if you take a subsidized offer, like for instance an offer in the Origami range with a subsidy, for instance Origami (inaudible) to be precise, it will cost you exactly EUR24 in one year more than the Free offer. So, it's EUR2 per month for a complete services shops, 102,000 shop from all across the country, call centers, technician intervention in the field if you need so. You can replace your mobile every two year with Orange and so and so.

So, it's -- the difference between our plain common offers, we (inaudible) offers is not that big today.

Yes? Excuse, you had a second question.

(Inaudible.)

Oh, yes, yes, yes, yes. Yes. So, the (inaudible) Open was launched at the end of 2011. So, in our today figures, which is 1.4 million Open customers, it's mainly access customers.

Thank you. (Inaudible.)

Thank you. Gadi Slade from Capital World Investors. Two questions. First, for Gervais. What should we expect for 2012 the average cost of debt as a percent of net debt? And the second question is on the buyback given the high yield and the low valuation of the shares, especially relative to the low cost of debt. Can you talk about why you decided not to do one?

Regarding the cost of debt itself, we expect a stable cost of debt between the two years. We are in total cost of debt slightly below 6 if I -- (inaudible) percent. Why? Because, in fact, even if you raise money still at a cheaper rate, the cost of some excess liquidity still is, let's say, an obstacle to raise -- or to push the total cost of debt slightly down. But, the impact is between 20 -- pardon me, is between 10 and 20 basis points. It is not more than that.

Regarding the buyback issue, as you know, I am personally open minded regarding the buybacks. But in fact, it's also a question of timing. And even though there are some aspects in the current situation, especially the stock price that could be in favor of a share buyback approach, there are other aspects in the environment that I would say are clearly not in favor of share buyback.

And it is difficult to explain at the same time that you put as a first priority the debt to EBITDA ratio and that you are going to manage your cash allocation, taking into account the uncertainty of the financial markets and, by the way, to revise your return to shareholder policy and, in the same time, to implement a share buyback.

So, we think that it is -- I mean, I think -- I hope, understandable, that in 2012 we will not give priority to share buyback but, in the same time, we are still open minded to contemplate some share buyback operations in the future. There will not be any in 2012 because, once again, our top priority is to monitor very carefully the debt and liquidity position of the Company, but we do not exclude after 2012 to reduce some share buyback.

And just to show you that myself and the team are committed and confident in the Company, and that they also consider that the current value of the share is very low, we have decided to invest a significant part of our bonuses in France Telecom shares.

Thank you. It's Andrew Lee from Goldman Sachs. You mentioned how you are preparing for the Iliad launch in the third and fourth quarter and we could see that come through in the ARPU declines. It's difficult for us to see the impact of your tariff cuts. I wonder -- because they're many different tariffs. In wonder if you could talk about the average tariff cut that you made across your non-Sosh brands in the second half of 2011? And then, maybe talk about the average tariff cuts you've made subsequent to Iliad's launch in the first quarter of this year just so we can get a gauge as to what proportion of the ARPU decline is from tariff cuts and what is from customer spend down.

And then, secondly, just a question on the proportion of customers that you lost, the million customers you've lost between January and February. What proportion of those are contract and what proportion are prepaid customers? Thank you.

On your first comment, I just want to add that the question, in fact, is the proportion of the SIM-only market within the overall market compared to the subsidized handset market. So, we expect it to be around 15%, 20% on the long run.

If you look at the United Kingdom, for instance, it's around 10%. Even if it's -- the growth sizes are increasing, the SIM-only growth sizes are increasing. And what is very interesting in the figures we disclosed today, our mid-February figures, is that, of course, the Free impact is quite important because it's 35%, 40% of the 1,000 terminations. But on the same hand, you can see that our gross adds, these normal markets, I may say, handset-subsidized market is still very vivid. So, it quite confirms the fact that there is a subsidized market and very -- the biggest part is the subsidized market, and part of the whole (inaudible) market, 15%, 20% is SIM-only market.

And on the ARPU, it's difficult to answer very briefly because, as we explained last year in our strategic plan, we have many levels to manage our base. The first one is through segments. And the impact of the segmentation is our ability to respond to competition with some offers, not touching the entire range of our offers. It's exactly what we did in January, responding Sosh and Open no response on our plain Origami range, first of all.

Second lever is our ability to convert mobile or internet customers into triple-play customers. And, of course you have an Open re-price, but it could be compensated, first of all, by the -- your base increase and also your ability to trade up. Of course, a re-price is trading down, but you also -- and we can -- we today can notice that, you also have a trade-up impact.

So, it's the combination our ability to have a very segmented approach, segmented response as well, as with our ability to conquer more customers thanks to our Open offers and also our cross-selling activity. As well, as our ability to really manage migration within our pack.

And on that perspective, I want to add that the fact that in France we have a very high share of owned distribution. It's a key element of quest for services for our customers, but it's also a key element to control migration within our base and to control, in fact, the overall price.

Hello. It's Dimitri Kallianiotis from Citi. Two questions for me on the roaming agreement that you have with Iliad, and you obviously touched upon it.

When you say that this roaming agreement is roughly -- there's nothing particularly advantageous to Iliad, (inaudible) for instance, one of your MVNO customers, let's say Virgin Mobile subscribers moves to Iliad, do you lose money out of that or do you still make the same sort of margins that you would make normally on a normal MVNO?

And my second question is regarding 4G. You obviously made a lot of investments, done very well during the -- acquiring some good spectrum. Will you be prepared, still, to offer a 4G roaming agreement to Iliad, sort of extend this roaming agreement, even if it means that you may have some more technical difficulties? And you've talked about that in the press, and also losing maybe one of your key differentiating factor against Iliad. Thank you.

I will ask Pierre to give you the answer, but just a word on the second point to -- just to let you to -- your attention on the fact that we are not obliged to do it. It's quite a difference between ourselves and the other players because the portion of spectrum that we bought in the 800 megahertz block let us a complete freedom in terms of opening and mutualizing it with other players.

Pierre?

Yes. On the first part of your question, if I understand, there are very few chances to see Virgin roaming on Iliad's network anyhow, the main reason being that Iliad has produced tariffs for that which are considered as very high. So, this -- it's -- it has been published, but it's very improbable that Virgin would in any situation go on this network.

But, I'm not sure I really understood your point, exactly.

(Inaudible.)

Okay. So, overall -- okay, okay. So, Stephane -- that's why he's the boss, you know? He gets the questions.

So, actually, if I try to answer your question -- no, it's -- it would benefit us in many ways. First of all, we have to remember that we have the largest share of the MVNO market today and we still have around 60% of the overall market today. And if a client that is roaming on our network with Virgin moves to Iliad, it will reduce to some point complementary revenues for us.

Is it the same (inaudible)?

Yes. I will not address -- I know where you're trying to get, but I will not address exactly the tariff comparison between Virgin, (inaudible). So, it's in the same area. What I can tell you is that we -- just one second. We haven't destroyed the balance of the tariffs, if you want, of the rates with the roaming agreement we have with Iliad.

It's a different contract, okay. MVNO is a kind of contract. And what we have with Iliad is a totally different frame. So, it's difficult to compare to things that are not comparable. The only thing that we can say, I think, about that is that the prices that are within, inside our contract with Iliad are coherent even though it's a different frame, different approach, are coherent with the pricing that we have in our MVNOs contract.

Maybe just one point to add. If a client is with Iliad, it's true that today, with the size of traffic and the congestion of the network there is very little difference, let's say it that way, for us in terms of net proceeds versus what you could get if you remained on Virgin.

However, this is not the objective of Iliad and not the objective of the contract. We should not measure the situation in February. We should measure the situation at the end of the year. And if Iliad meets is coverage obligation within 18 months from now, that we might have most of the traffic on the Orange networks. This is where the difference would come, half -- let's say in the medium term half of their production should come from their own network.

The point is that Iliad is not an MVNO, but are still a virtual network. So, it makes a problem.

Good afternoon. Antoine Pradayrol with Exane BNP Paribas. One question to follow-up on the mobile in France. Given what you showed regarding the losses of customers and then the stabilization of the (inaudible) after the big peak, would you say that you expect the stabilization of your customer base in mobile in France through the rest of the year? That's the first question. Or maybe a return to growth.

And the second question on Spain. You said that competition is getting tougher -- competition got tougher in Q4 in Spain. Can you -- I mean -- and revenues -- service revenues slowed to maybe 2% or 3% growth in Q4. So, do you expect this kind of growth to continue in 2012? Do you expect the reacceleration also down in Spain?

And the last question is for Gervais. On the slide 31 you showed EUR447 million of other elements between the EBITDA minus CapEx and the free cash flow. It was just like a senior part-time plan, the content provision utilization, this kind stuff. I mean, all of that together is EUR447 million. Can you give us an indication of how big this can be in 2012, roughly? Thank you.

Delphine. (Inaudible), this issue of Spain, then Gervais.

So, your question on the impact on our market share, in fact, we expect a slight decrease of our market share for Q1. We expect a minus 1 point of market share in Q1.

So, regarding the competitive situation in Spain, the repricing of our competitors (inaudible) early in 2011 and the move that we all mention regarded more specifically Telefonica's repricing. The evolution of the service revenues in Q4 has more to do with the macroeconomic environment than with the competitive repricing.

And regarding 2012, obviously the concern we have is more related to the macroeconomic environment and its impact on the consumption and ARPU of our customers and repricing from competition, which so far has not proved detrimental to our performance, neither in terms of revenue nor commercial momentum.

Gervais?

Regarding -- it's a little difficult to completely focus at launch. (Inaudible) means that it's not as easy to forecast. Just to mention that we will continue to have some cash out on that line, link with a content. That's probably half of what we had last year because some of the -- especially for sport, as Stephane mentioned, the sport part is half a year.

Secondly, there will (inaudible) senior part-time. And senior part-time will continue in 2012, 2013. This is a reserve we made end of 2010 and of 2009. And now we cash it out every year and this is what you have on both lines, at least in terms of negative item. I see more or less the same order of magnitude for the senior part-time. And now, for the rest, I cannot forecast. I don't see any extraordinary items like the DPTG provision or things like that that could impact either positively or negatively the line.

Okay. So, I think we have time for maybe one or two questions maximum. On the left maybe here.

Two questions, please. The first is could you just give us a rough indication of the pace of migrations to Open? So, sort of how many people are spinning down to cheaper tariffs within the fixed line base?

And then, also, could you explain the strategy of -- I think one of the charts said that subscriber acquisition costs were falling, commercial costs were falling in the second half of 2011. So, if you could sort of explain that in the context of new entrants.

(Inaudible.)

So, it's a rapid calculation because we have, at the end of 2011, 1.2 Open customers, so it's less than 10% migration.

We don't give those forecasts. What you can just say is that this is -- out of the 1.4 million Open customers, half are acquisitions, half are migrations. So, you see the pace. We will use it (inaudible) re-price is on the mobile part, not on the fixed part. This is where we -- this explains why there was some pressure on the mobile ARPU last year because we put -- we took all the re-price on the mobile portion of the Quadplay.

And could you kindly repeat your second question? I'm sorry, but I --.

The second question. I think there was a chart that showed that commercial costs year on year had fallen in the second half. And I suppose in the context of preparing for a new entrant, I guess cutting back. It seems odd.

Yes, I understand your question. In fact, it's not by chance, of course. It's a real plan we put in place in order to change completely the way we allocate (inaudible) to customers, especially [SSCs], in order to be really focused on, first of all, high risk for file customers. And also, taking into account rather the future value of the customer rather than the past value of the customers.

So, it's a real plan we are -- we set up previous years and we are now running. That explains how we -- we're able to manage the commercial costs in H2, even if, of course, the competition was very high.

Thank you. Maybe one more question in the left.

Thanks. It's Will Draper at Espirito Santo. A couple of -- I guess points of clarification on the portfolio, please. I guess you said today you've completed the review of your enterprise and rest of the world portfolios and you've decided that there will be no disposals of those assets. Am I right in thinking that? And if so, can I ask you what the criteria are that you used throughout that review?

Regarding the B2B division, there could be some specific activities in the subsidiaries that we are going to review, but nothing major. Okay? And we are not in our core business. And then, regarding the African and Middle East portfolio, just have in mind -- keep in mind, sorry, that this is for us the area where are looking for growth. So, it doesn't make sense, honestly, to contemplate big disposals coming from Africa and the Middle East.

Now, we are reviewing, especially our recent acquisitions, in order to see how we can maybe accelerate in some situations the recovery of those operations. And we will see. But once again, nothing significant and no major move to be expected coming from Africa and the Middle East.

Okay, thanks. And I just -- just one second one on the rest of the world. You said earlier you were looking to double revenues in that division I think by 2015. You've said also there are no major M&As expected in 2012. Should we therefore conclude that you're happy that you'll get to that doubled revenue with no more M&A in the rest of the world?

Marc, maybe to you to (inaudible).

We have two directions. First of all, we are -- we continue our internal growth in countries where we are. And second point, as Gervais explained it, to have some countries where -- that we do not consolidate today, such as Morocco, Iraq, and the third one Tunisia. And we expect to consolidate at the end of the period. So, when you add this to stream, you are not far from our target, even without significant new external growth.

And maybe, (inaudible) last, but not least, because it's a point of clarification. The move we intend to make on Egypt is already included into our balance sheet because in the previous agreement we had already accounted for the put option granted to Mr. Sawiris as a debt for the Company. And even it could reduce the amount of debt we have in the balance sheet if you go to this new transaction.

Okay. So, it is time, I think, to say goodbye. Sorry about that. Thank you very much to have been with us today and probably our next meeting, end of July. Thank you.