Orange SA (ORAN) 2012 Q4 法說會逐字稿

(Interpreted) Good morning, ladies and gentlemen, welcome. A couple of words, just to apologize for bringing forward this morning's session, we are meeting a little bit early perhaps for our UK friends but we had to bring the meeting forward a little bit because I got to leave Paris early -- earlier than planned late in the morning, to meet the French President in Auvergne down the country today. He is going down to Auvergne about the very high broadband issues and I will be meeting with him at a fiber facility that is being deployed by the Group currently and also in one of our subsidiaries in the healthcare sector. So for that reason, I got to leave Paris late morning, sorry about that.

In February of 2012, we give a commitment to the markets about EUR8b worth of operating cash flow being achieved by us as a Group and we knew then that 2012 as a year, would be a formidable year because macroeconomically speaking, the context was very depressed in Europe, we had a downturn, there was competitive landscape that was really aggravated everywhere and we knew that 2012 was essentially a stacking up of decisions that we have never seen the like of before and also on the market, we had the advent of a new player.

So this succession of shockwaves, we preempted of course, but at the start of 2012, a lot of those events were ones that were unforeseen in detail at least, there was a certain amount of uncertainty hanging over what would happen in any respect.

So this morning, however, I can say I'm proud, proud to present results that we will be showing you, the Group results. Because these results, I believe show our exceptional resilience as a group and also they show how nimble we are, how well we can adapt to a changing situation. The first testimonial to our resilience, I think, is the fact that we had scrupulously adhered to this commitment to generate EUR8b worth of operating cash flow.

It is just about the level we achieved at the end of the year and when you look at all of the issues we had to contend with throughout the year, I think this is an effort we should all salute. It is an effort which leads us to pay tribute to all of our people in the Group, the 170,000 employees belonging to the Group around the world. Everybody in their own business line was mobilized around this objective and we achieved this objective, this financial objective without compromising on any of our priorities especially the priority regarding capital expenditure to invest for the future, that is, which we committed to doing.

We did not sacrifice our investments, our capital expenditure so as to achieve our financial objective and it is thanks to actions taken and successes won in many areas that I will run through in a short while that we managed to achieve this -- to achieve this financial results. But it was done, of course, with the capital expenditure I mentioned. The total capital expenditure in 2012 was up compared with 2011.

So we managed to bring about this feat, this performance, because all of our geographies fed into the progress and -- to the process and I would like to go into that in more detail. The international market, but first of all, let us look at Europe.

A few facts and figures that we should bear in mind in respect of our results in Europe. Firstly, our revenues going up overall in the European telecoms environment. That's quite a feat in itself, almost 20% excluding regulations in the whole of the area. These revenues, EUR11b worth, that's growth in our revenue figure but also growth in the EBITDA.

We've improved our profitability in other words, in five countries out of nine in the zone, that is Spain, Moldavia, Luxembourg, Armenia, the Dominican Republic also, which we attached to Europe in context which was particularly demanding and difficult and you will see that most of our competitors, in fact, have results going down in terms of EBITDA and in terms of revenues.

Once again, I would like to pay tribute to our people in Spain who put in a fine performance. We went up in our results in Spain and improved our profitability. Our EBITDA margin in Spain went up by 2.6 points last year, year on year. Also, we have returned to growth in revenues in Romania after a few difficult years, when we resume with our progress there.

Now our commercial results we should say, we have seen a great growth in our data revenue stream, almost 30% growth, additional revenues thanks to data of EUR300m bringing us up to EUR1.2b. This progression enables us to offset largely the inevitable drop in the voice and text message revenue stream.

Also another point I'd like to underscore had to do with the fast tracking of the move towards convergence these days. That is something we see all around Europe. The telecoms markets are going more and more towards convergence between fixed telephony and mobile telephony and we are preempting that in the countries where we are also the fixed line operators like in Spain, we have seen a tripling of the number of our convergence customers in Spain. In Poland also, we rolled out our quadruple play offering at the end of 2012 and it'll be one of the challenges for 2013 to move into convergence in countries where we are only a mobile player, a mobile carrier via commercial agreements and offerings like that.

So we have sped up the deployment of very high broadband for mobile, [HSPA+] and we've started deploying 4G in four European countries, Belgium, Spain, Moldavia, Luxembourg. And also, I should mention Romania and the Dominican Republic too. And in the UK, you will have seen this morning, we have good news concerning the allocation of spectra, which will be necessary for us to roll out 4G there.

So we also should note the speeding up of the site sharing program in Poland with T-Mobile, we got 2,700 additional sites that we're sharing now.

Europe is also a place where we've innovated a lot in the way we have preempted certain moves that will take place shortly in France, the launching of Joyn -- the new communication service using mobile telephones that I presented at the innovation session a short while ago.

Joyn was rolled out at the end of the fourth quarter in Spain. These new services, one of the main weapons, are one of the main weapons that enable us to ward off the competition of the over-the-top players including in telephony, for example, for messaging systems.

Also, I would like to touch on the availability in Europe of a very innovative TV -- television solution; we got a television platform, an over-the-top platform in Europe that enables us now to offer TV programs to all of our customers who use mobile handsets. These are tablets and smartphones and PCs of course, mobile devices, nomad devices, it's called ITV. It's very innovative, we rolled it out in Slovakia in the last quarter of 2012.

On the human resources side, in terms of corporate social responsibility too, we have improved -- consolidated our employer image in the European continent with, in particular, the label for being the best employer that we obtained in four countries in this region including Poland in spite of the context that you know is rather difficult in that country.

On the side of Africa and the Mid East, that part of the world overall put in a good performance overall, they brought in what we expected of them; good topline growth, 5% of growth in the region, revenues a bit more than EUR4b with some fine stories written there. In the Ivory Coast, in Cote d'Ivoire in particular, revenues going up by 23% after a year 201 which you will recall was difficult for us in that country. Return to growth also in Egypt, little growth just 1.5% but growth nonetheless in a country, which is still as you know, in a very difficult situation in terms of political stability and also macroeconomically speaking and also symbolically, Sonatel in Senegal whose revenues last year went through the EUR1b mark with growth of more than 4%.

In terms of our commercial performance, our business performance, I would like to underscore and thank our people for the mobile payment solutions, Orange Money we've got many, many transactions using Orange Money these days and for 2013, we have stretched goals in that respect. It is so convenient for people using it. Also, for us, as a company, it has enabled us to build customer loyalty in a very effective manner. In 2012, we saw multiplication by three of the number of transactions engaged in; even a multiplication by 10 of the payments of different bills thanks to Orange Money.

Africa and the Middle East, for us is also part of the world where we are pursuing our trading-up strategy to upgrade the quality of our networks with the rolling out of 3G, present now in 15 countries in that zone. We have increased the number of 3G site by 21% in 2012 with a total of more of about 10,000 sites right now, and also, we put in lots of efforts so as to be the best in terms of quality of service.

Africa and the Mid East are a part of the world where the differentiator is the quality of the network and that will remain the case -- it's the case in Europe too, of course -- but is particularly true in Africa and the Middle East. That's your key differentiator, the quality of your network and there's 15 of the 18 Orange networks in that area which are number one in terms of quality of service, ahead of all of the competition.

In terms of innovation then, we also had a whole gamut of reasons to be satisfied, the international acknowledgement we felt regarding our innovation in Africa thanks to the five awards we received at the last Africa Comm Awards.

When it comes to human resources and corporate social responsibility, there are a lot of things being done in Africa. It's a continent where the actual foundations is key and I will just quote an example, which I think is touching, is the creation of a service in Senegal which enables the local authorities or the boroughs, the small urban districts in Senegal to declare the birth or births of children via a telephone that is connected to the internet. It's a fine project for which we were given an award.

So our Enterprise activities were resilient too in 2012 and quite remarkably so, resilient in terms of our conventional business lines, our mature businesses but also, what is important for the future is that there was a fine growth in the emerging countries because we recorded 10% of growth of our B2B business in the emerging countries. We saw a speeding up of the transformation of the mix of our businesses in the area of services in particular, and we have seen the increase of our cloud-related revenues, 33% of an increase, and also fine performance in e-health and also smart city that is the whole set of services -- smart services for cities.

Fine commercial purposes also for OBS, with a number of new contracts or contract renewals, more than EUR3b for the year. Many major accounts were consolidated in 2012 in a context of great competition. We have a global contract with Societe Generale, also with Publicis.

Also, the successful deployment of Cloud Pro family of services or offering of services for SMEs based on the cloud. The launch of these offer three months ago already 76,000 customers.

As far as the network is concerned, and operations, we signed a major agreement for outsourcing in the US which enables us to reduce considerably our cost but also to provide enhanced service for our clients.

Now as far as innovation is concerned, there are lots of things to say but I will just take two examples. The agreement signed with Air France to deploy Wi-Fi onboard planes so you will soon, for those of you who travel a lot, will be able to have Wi-Fi services, only for tablets. Otherwise, I think it would be maybe a little bit complex to organize more on board a plane but we are going to have first phase, a pilot service -- a pilot program. And then we signed a major agreement with Renault and the ambition is to connect 4.6m cars by 2016, that is to say to install SIM cards in cars manufactured by the Company.

As far as CSR is concerned in the Enterprise division, I'd talk about the Almerys activities, subsidiary that will be visited by the President of the Republic and that has been able to take a major market share for the processing of the social security reimbursements for health.

Now, France, the situation in France, well, 2012 has been dominated by a new operator in mobile telephony. And the first thing that we have to say about this is that we can say today that we are the incumbent operator that resisted bet this certain new operator because we have a mobile client base which has remained stable -- exactly stable compared to the end of 2011 with an excellent performance in the second half of the year. A number of customers, we will absorb the arrival of the fourth operator without losing any customers.

We will -- now, if we succeeded in achieving this, it's just because we were able to use two major levers that were both extremely relevant; it's the family of low-cost offers around the Sosh brand, 800,000 customers in 2012 and the second is the converging of Open and we've gone beyond 3m customers which enables us to lever -- have a leverage on our customer base of residential homes using -- by using the development of fiber, and also on the mobile client base.

Now, fiber, 2012 will be really the taking off -- take off for fiber, 87m clients beginning 2012 but this has been relatively good performance and we hope to achieve much more in 2013. What we have to understand with fiber is that it is a wonderful tool and for conquest in many areas for example, Iles de France, for the first time in 10 years, we have stopped the decline of the growth of the very high broadband, and the first time in 10 years, we are growing thanks to fiber.

So fiber works, there is an appetite for it and feel for it, the customers, consumers, for the very high broadband services and this really bodes well for business in the future.

Now, among the other success stories, results that I would like to put forward, there is one that I would particularly like to mention concerns content and the strategy that we are deploying in terms of content.

After having explained this two or three years ago, there's often been comments that were more or less positive but I would like to say personally, I am very pleased to note the success we had. Three years ago, we had a number of pay-TV channels in sports, cinema, and series, TV series which gave [runs] to recurring losses but what we can say after 2012, we stopped this hemorrhage in the sport sector. And as far as the other family channels are concerned, by entirely changing the model, not distributing exclusively to only ADSL customers, but by opening access to all the access providers, we were able to double the number of subscribers to the channel. And we rebaptized then the service, and this enables us today, to have achieved or will achieve 2013 breakeven point. So we've managed to make a major change. These activities will no longer weigh on the accounts.

I could also mention the success of the partnership strategy for content with Dailymotion, for instance, which in 2012, registered a growth of 35% of its activity.

Now, this in all areas has been supported by the performance in the networks and in this we have to see a sign of really reaping the strategy that we deployed and consolidating the leadership in networks. Our mobile network has been ranked best mobile network at France with a difference in terms of data because, on average, when it comes to the quality of downloading, twice as good as the operator behind us and this in spite an increase of 90% of traffic on the network and in spite also the fact that we also have a new operator in roaming.

Now the acceleration with the fiber deployment, I have already talked about, also 4G. Now, the deployment of 4G with four cities, Marseilles, Lyon, Lille and Nantes, in 2012, more towns in 2013 and we are going to have two times more sites than our main competitor in this area. That is communicating a lot about 4G.

Now, when it comes to innovation, we can say that 2012 was also a year of change because we have decided to change the way we work when it comes to innovation and this has started to yield the benefits. We have also started with show -- the Hello Show in November last which was successful because more than a third of French population that were exposed to this and this was very much seen on the Dailymotion for the people older than 15 years of age.

Now, when it comes to the Hello Show, there are a number of things that are becoming a reality for our customers. Now, first of all, the cloud service that I mentioned last year. These services were launched just a few weeks ago, we already have 2m clients on our Orange Cloud, 400,000 active customers, it's an initial result which is extremely encouraging with the development of these services.

Now, the new two boxes, the Livebox Play which was launched in February last, we already got 100,000 customers and we can say that this is an extremely successful launch. Now as far as HR and CSR is concerned, for France, there is one figure that I would like to present here because I am extremely proud of this is the feeling of being proud to belong to Orange from the staff in France. When I arrived in 2009, 39% of staff said they were proud of working for Orange. Now the figure is 81% so I believe this is the best proof and illustration of the efforts that have been deployed by the management, myself and the whole team, during the last three years so as to ensure a good social climate and ensure that all on the staff are engaged and committed in a situation of great competition today.

There are lots of figures that I could mention today but one that I would like to mention is a reduction in absenteeism, minor absenteeism, and this shows that there's improvement of the atmosphere at work but it shows that this policy really reaps its benefits because we have gained 35,000 days -- working days in three years.

So all of this yields performance -- performance in mobile, where we have been able to gain 533,000 customers and it compensates the losses that we had in the first half, good performance in M2M we have a growth 50% of the base, a share of mobile over 37.3% since the third quarter 2012, a network that has been well developed thanks to the roaming agreement with the fourth operator. Our Orange mobile network has gained 1.5 points market share at the national level. And as far as ARPU is concerned, because of the price war in France, this ARPU has declined by 10%, exactly in line with what we had announced at the beginning of 2012.

Now, performance also is in residential, that's very important because talk a lot about mobile and not enough about the fixed lines. Now, for the residential then, some positive and interesting items of information that are promising. First of all, is global growth in revenue for broadband due to the growth in the customer base but also thanks to the improvement in ARPU that progressed by 2% in the fourth quarter of 2012.

I talked about fiber, this is extremely important for us and it enables us to differentiate ourselves on the market because we are practically the only to be active in terms of fiber. We have 4,000 new customers per week thanks to fiber.

And finally, we must not forget this, we are deploying also a great deal of energy to reduce the drop in PSTN and we have a means of doing this and we achieved good results in 2012 because we limited the decline to 11% which means that by associating the broadband growth in ADSL and fiber, and the efficiency of the actions to reduce the decline in PSTN, we are able to compensate this difference between the negative impact of PSTN and the positive impact of the rest of the broadband. We are able to limit this substantially and 2012 was really a year of great progress in this area.

So that is what I wanted to say in the introduction, I'm going to ask Gervais to give details of the financial results and I will be back later on.

Could I have the first slide please?

Some elements on the business performance in 2012, and mainly making a comparison between what happened in first half and what has happened in second half of the year. As with regards commercial activity as Stephane just stated it a moment ago, we had clearly a much better commercial performance in the second half of the year than what we had in the first half, especially on the French market where we have been able to contain the erosion of the mobile market share with just 0.2% loss in market share in the second half of the year.

As regards revenues, however, situation has been tougher in the second half compared to the first half. Our revenue trend deteriorated in the second half of the year as a result of increasing impact of the repricing effect on the French base with now 51% of our contract base on new repriced tariff at the end of the year, a stronger pressure on mobile revenues in Spain, especially with a tough macroeconomic environment of Spain and also, and this has been stated by our Polish colleagues when they published the results last week, with an impact with the strong price decrease on the business market, low-end business market in Poland with disruptive tariff which have impacted the revenue level in Poland compared to what was initially expected still at mid-year..

Despite this deteriorating revenue trend, we recorded an evolution of EBITDA in the second half quite comparable to what we had in the first half with minus 1.6 point erosion in terms of percentage of revenues which means that we have been able to further mobilize our cost structure in order to face to the revenue pressure in the second half of the year.

Regarding CapEx, we are completely in line with our investment plans with increasing investments for very high broadband as 4G or FTTH about EUR300m for the French market an as Stephaen mentioned, LTE deployed in six countries in Europe.

To look a little more deeper into the revenues, just to mention that in the second half of the year, the slowdown of Group revenues minus 1.1% decrease before regulation after nearly stabilized revenues in the first half. This is again, increased penetration of repriced offer and the slowdown of mobile growth and I would say, at the same time, continued growth in Africa and Middle East with 4.4% growth in second half compared to 6.2% in first half. The differential between the two semesters is mainly linked with the slowdown of growth in Egypt.

On Enterprise, revenue evolution was almost the same in the first half and second half.

If you look at Group EBITDA, gross revenue was down by 7.4% year over year. This decline is mainly coming from the rising pressure on the revenues. However, on top of the pressure on the revenues, we have the regulatory effect combined with two decisions, the one already known at the beginning of the year regarding the French civil servant retirement with a decision of the European Commission which have cost us EUR122m and an additional, let's say, social cost decision for the French market with the increase of forfait social which is a cost of about EUR40m.

Regulatory prices, retirements of the civil servant, plus forfait social is a total cost of nearly EUR500m on the deterioration of EBITDA of EUR1.1b.

On direct costs, we have continued to deliver important savings, a decrease of EUR424m especially in commercial expense and content cost in France and Spain. Our direct cost base has been down by 4%.

On indirect costs, our cost base has been nearly stabilized if we exclude the increase of labor, I will come back on that. At Group level on labor costs, they were up by EUR309m but restated from the European Commission decision and the forfait social, labor costs have increased by 1.7%. Other costs were stabilized thanks to G&A savings and especially in France offsetting the increase of property costs and of energy.

This control on cost has really been strongly supported by our Chrysalid program and this program which was launched in 2011 is well on track with now a 2015 objective of gross savings of EUR3b whereas the initial objective was EUR2.5b. This year, we have achieved more than EUR700m of savings out of which EUR655m on the OpEx. This is a total amount of savings of EUR1.2b since the beginning of the program and this represent 40% of our 2015 ambition.

Savings mainly come from networks thanks to the mutalization project on mobile infrastructure and improving intervention process for customers; from marketing, including the varibiliazation of content cost; and from customer care, call rate drop, launch of self-care initiative and [EB link].

The Chrysalid program is helping to mitigate adverse factors impacting our industry, increasing usage, increasing traffic and a more demanding customer mix with contract, TV mobile data which is complexifying the systems and the quality of service we have to deliver to our customers and on top of that, we have the pressure from inflation especially on energy costs and from real estate, and also from the [satellites].

Those ongoing initiatives within the Chrysalid program have brought net OpEx down by EUR250m this year if we take out the forfait social and the pension for civil servants. Almost most of our regions have contributed to the achievement except Africa and Middle East operations where costs are slightly increasing with the increase of revenues.

As regards labor OpEx, their increase was limited to 1.7% for the year if you exclude two exceptional items I just mentioned a minute ago. This control on labor OpEx is the result of a favorable volume effect including in France and also some continued price increase. We have well managed our work force across the group, the number of average fulltime equivalent dropped by 1,456 people, minus 0.9%, including 577 people in France partly explained by the success of the senior part-time plan and outside of France, there has been 879 jobs -- full-time equivalent decrease.

However, the price effect has offset the favorable volume effect by EUR243m. This is explained by the average 2.5% salary increase in France and 3.1% outside of France.

If we focus on the senior part-time plan, 7,654 people have already signed in and this is a real success as this has helped us to avoid EUR174m of labor cost in 2012 and this will increase in the future.

Regarding the French operations figures, the top line has continued to decrease and this has been already explained, mainly linked with the strong price pressure on mobile but also with the decline of PSTN figures, regulation representing EUR615m within the EUR1.1b of revenue decline. Regulation, this is mainly MTR decrease, which have been cut from EUR0.02 to EUR0.015 in January 2012 and from EUR0.015 to EUR0.01 in July 2012 to go down to EUR0.008 next July. And also the new European ruling -- roaming regulation.

Mobile service revenues have been decreasing by 0.9% excluding regulation. This includes the benefits of the roaming agreement with Iliad, partly offsetting the decrease of retail revenues.

Regarding the home revenues, the fixed revenues, they have been declining by 2.6% in the second half which is slightly less than what we had in the first half thanks to higher increase in broadband, EUR198m increase and the slowdown in PSTN line losses.

The margin has been effectively managed by strong decrease of commercial spending, minus EUR110m compared to last year, still allowing to gain value customers. At the same time, indirect cost in France have been stabilized, there is a slight increase of EUR17m thanks to the Chrysalid program I already mentioned.

Regarding some of the mobile business indicators, our retail market share has been mostly stabilized in second half, minus 0.2 percent decrease in market share after the strong drain of H1. Our network market share has increased as mentioned already, partly fueled by the roaming agreement.

Our segmented strategy has allowed us to have a strong upswing of contract net adds already mentioned with Open and Sosh being the strong driver of client acquisition in the second half of the year.

So churn has come back to a more normalized level as you see on this slide on the right hand part with a churn which is I would say, normalized now compared to what it was at the beginning of the year.

Regarding the fixed business, the picture already described by Stephane is very positive for FTTH, and it's true that, now, we have doubled the number of FTTH customers and in addition, this has accelerated in the last quarter of the year with the trend which is continuing in 2013.

On the DSL side, the share of net adds was far below in Q4 -- was far below the level of previous quarter. This is also due to the fact that our customers have been now, waiting for the new Livebox and we think that we will have a strong recovery in Q1 2013 compared to the figures of Q4 2012.

So share of broadband net adds has reached 20.4% in Q4 and 24% for the total year 2012. This result is obviously not what we have expected but again, we have strong ambitions for 2013 in terms of the net share of conquest recovery on the fixed business.

Broadband ARPU is still growing on a year-on-year basis, plus 2.2% year over year, thanks to an improved access mix and a positive contribution of our additional businesses especially TV, Pay TV, and Video on Demand.

Fixed operations have also shown some improvement in PSTN trends, line loss being down 11% year over year thanks to the marketing penetration strategy we have developed for PSTN.

For Spain, Orange Spain has further increased its profitability while capturing more value in a highly competitive market impacted by tough economic conditions. By the way, this is the first year we are paying income tax in Spain since we have acquired the business. So to a certain extent, it's a good news because it means this is the first time we are posting positive net result for the Spanish operations.

Revenue increased by 0.9% in 2012 and if we take out the termination rate cuts and the international roaming impact, revenues have increased by 3.6% driven by both businesses, personal and fixed business. Personal revenues have increased by 2.4% before regulation with a strong contract net adds growth. For the first year ever, Orange Spain has been the leading operator in terms of mobile profitability for the whole year.

We achieved to multiply by 1.7 times the mobile data users supported by the smartphone penetration and I would say, a kind of decisive subsidy policy, we have not decided to stop our subsidy policy because we think that we have adjusted it but we think it is the driver for data revenue growth on this business.

Home revenue have increased by 8.8% driven by the customer base growth with full ULL penetration improved by 68% of the customer base increasing our profitability. 50% of the new DSL customers are now selecting a convergent offer in Spain. We are more or less on the same trend than what we had in France.

EBITDA margin was up by 2.6 points of revenue to reach 23.6% thanks to the improved EBITDA both on mobile and fixed line.

Poland, intensity of competition has increased especially in the second half of the year and especially on the business segment with disruptive tariff for the low end of the business segment. In this context, Orange Poland has been able to mitigate a part of the mobile ARPU decrease, minus 7% year over year with a positive commercial momentum. Mobile customer base increased in 2012, 237,000 additional customers.

We have also rebranded the fixed business with TP changing name to Orange in April 2012 and we have also launched convergent efforts on the Polish market. We think that convergence will be a strong reconquest tool for Poland in 2013.

Financial performance was in line with the last revised guidance. Unfortunately, the guidance was revised in October last year, so we are not that proud of that, but we think that now Poland will stick to the figures they have committed to the market. We should, however, notice that even if market opinion has been very tough on Poland results, EBITDA margin has decreased by 0.9% ] of revenues, and that Poland is still strongly managing their cost structure and that they will continue in the future.

For the other countries of the Group, the Rest of the World, which gathers other European countries, plus Africa and Middle East, have increased their revenues by 1.4%, mainly driven by Africa and Middle East, even if other European countries are posting positive revenue growth before regulation, which is also good news for us -- 1.3%. This is driven mainly by mobile data revenue.

There is also a limited EBITDA margin erosion of 0.7 points for all those geographies, and in Africa and Middle East region, we have a strong ambition to further develop our position, especially thanks to revenue growth.

We're focused on data revenues in those European countries. Data revenues on smartphone have improved by 26% across the European countries, except France, Spain and Poland. Data only is now representing 10% of the service revenue across Europe, and this, of course, was [fed] by smartphone penetration, which has been multiplied by two over the past two years. And we start to see some evidence, especially in Romania and Dominican Republic, where data revenue increase offset completely voice and SMS decline.

Unsurprise, revenue was down by 2.7% after a decrease of 1.6% in 2011. If we exclude equipment resale -- we know that some parts of revenue are linked with sale and deployment of Cisco equipment -- the revenue remained more or less comparable, minus 2.5% decrease in 2012, minus 2.4% in 2011.

Our core legacy network revenues continued to be impacted by the end of life of some data products and by the migration of voice legacy towards IP technologies. Concerning major networks, we observe continuous growth, driven by a good resilience of IPVPN solutions, customer base is increasing by 1.5% and some bandwidth upgrades.

Some difficult market conditions at the end of year have impacted the video conferencing revenues in France, which explained the slowdown of growing networks revenues, especially at the end of the year. However, our lever for growth remains intact in a challenging market, and we are quite happy with the revenue growth for cloud and the revenue growth within emerging markets for enterprise.

CapEx, so we have spent EUR5.8b, EUR100m more than a year ago. In France, we spent EUR257m on FTTH, plus EUR160m compared to a year ago. 4G investments were representing about EUR50m, with more than four cities covered, and we intend to spend EUR150m this year. We have also increased our mobile capacity equipment -- investment, sorry -- especially in France, and just to keep in mind that we are now allocating 55% of our CapEx to networks, and that this proportion has been steadily increasing year over year and will continue to increase, because we want to keep our leadership in network performance in the countries where we are present.

In Spain, we strongly focused on mobile capacity and network transformation, on renewal. In Poland, we have slowed down the pace of investment, because we have met our obligation vis-a-vis the Polish regulator in terms of new DSL line coverage. In Africa and Middle East, we have completed our investment in submarine cable, and we have also increased investments in switch.

Cash flow. Cash flow results are mainly linked with the pressure on operations, with a pressure on operating cash flow, which has been decreasing by EUR1.3b compared to a year ago. In this EUR1.3b decrease, I just remind you, there is about EUR200m of cash flow coming from Orange Switzerland and about EUR100m change in currency. If you want to compare things which are comparable, the real pressure on operation is about EUR1b in terms of cash flow decrease.

On top of that, we have spent EUR1.3b of spectrum in 2012, compared to EUR800m in 2011. And 2013 should be the last year of spectrum spending. You have seen the results of the UK auction this morning, and we are quite happy with the results achieved by Everything Everywhere, which has got much in that spectrum to continue to be the leader on the market at a rather reasonable price, compared to what has achieved by some of the other competitors on that market.

Regarding tax pressure, tax pressure has increased in terms of cash spending, mainly because of the change of tax laws in Belgium, in France and in Spain, where governments are trying to accelerate the cash in of their tax, and it's about EUR100m more than a year ago.

As regards to working capital, the negative change is mainly due to higher requirements in Poland to reduce payables. This was part of the issues we had on the cash flow forecast of Poland. And finally, the EUR969m of other operating items, they are covering mainly the DPTG litigation in Poland for EUR550m, the rest being the cash use of the first senior part-time plan for about EUR180m and also the consumption of the provision on the closing of Orange Sport in France.

Maintaining a strong balance sheet and going back to a net debt to EBITDA ratio close to 2 is still our objective at the end of 2014, and we have a dynamic financing policy to secure liquidity -- I will come back on that -- and very strict use of cash policy. As you see, we have been actively managing our portfolio with the sale of Orange Switzerland, EUR1.4b of cash in, whereas we have sold also Orange Austria and now Sonaecom in Portugal and having very small acquisitions this year.

Net income reported was EUR1.1b, compared to EUR2.9b in 2011 in comparable terms and EUR3.8b in published terms. The evolution included reported EBITDA decrease by EUR2.2b, out of which EUR1.2b of senior part-time program. This has been partially compensated by lower depreciation on assets, mainly with the end of Spanish customer base amortization, a positive impact of EUR160m, and a lower level of investment in Poland.

Again, our financial results are mainly explained by the gain on the repurchase of the shares within Mobinil, about EUR272m, and less corporate tax on the P&L. There are more corporate tax on the cash flow, less corporate tax on the P&L, with the recognition of additional deferred tax in Spain and the positive impact of the reserve on the senior part-time scheme for EUR409m.

We have faced additional goodwill impairment, mainly in Poland, EUR900m, Egypt, EUR400m, and Romania, about EUR400m, due to the deteriorating environments in those geographies. Restated from the exceptional items such as senior part-time and impairment, comparable net income amounts to EUR3.4b, to be compared to EUR3.8b a year ago.

And last, the situation of the debt. We have been able to maintain a high liquidity position, EUR15.6b, and we have managed to issue some new bonds with attractive conditions, with a record low coupon in September, 2.5% for 10.5 years. Our debt profile has enabled us to keep ensuring best-in-class average maturity. We are more or less 1.5 times higher maturity than our European peers at nine years, and you have no significant redemptions remaining for 2013.

(Interpreted) I'd like to talk now about 2013 and the prospects for that year. We're very clearheaded about the fact that this year is going to be a very challenging year. It's going to be a demanding year, and our activities and our margins will still be under very strong pressure.

This is really the situation which pertains in the mobile market in France overall. It's stabilizing out, but there will be new pressures on the ARPU in France. We're going to have a major year in terms of regulatory decisions which are upcoming from Brussels, with a reduction in the PSTN. There was a decision last year on roaming which came in.

We have a macroeconomic situation which is still going to be very difficult in Europe, and our ambition nevertheless remains to keep investment at high levels in order to manage our technical transition towards high-speed broadband. Given all that, we will be working on a certain number of inherent advantages and trump cards which we have within the Company, external ones as well.

First of all, the first advantage we have is our customer base. We have 231m customers in the world, 172m of these are mobile customers, and we have 58m fixed customers. In almost all the countries where we're based, we're either number one or we're number two on our market, and in this very strong competitive battle which is raging at the moment, this is very, very important. It's very important, indeed, for us to have this major commercial trump card in our hand.

Little by little, we have developed a strong leadership position on our different networks. Thanks particularly to our major investment in these networks, we also have a restored favorable social climate. This is essential, too, in order to face up to different challenges.

We have decided to recover our position as leaders in terms of innovation and, as I said, and as Gervais has just explained, we have a very sound balance sheet, which will enable us to look forward to the future with a certain degree of peace of mind.

Now, we have all these different advantages to play and to work on. We're also very determined, and the management is particularly focused on what has to be done in the future in order to adapt the Company to all these different countries and to all the new situations emerging on our markets. And since we have all this, I can tell you today that I am confirming our financial target for the year, which will be to produce an operating cash flow above EUR7b. This is a target which we communicated on back in October last year, and I'm repeating it very clearly to you this morning.

Now, why do we believe that we can achieve this target, and how are we going to get there? We're going to be focused on four major operating projects, and let me explain these to you in turn, now.

The first project is in France. There, we will be speeding up all the activities which we've been undertaking in any case to adapt the situation of the Company in France to the new market conditions, and of course, it's not just market conditions, but there are a certain number of regulatory decisions which have been taken which have changed things, as well, so we have to adapt to all this.

Let's be absolutely clear. France is going to be driven by managing the cost structures. This is our project basically for 2013. Let me give you a few figures. In 2012, we were able to record a cost base at the level of the cost down EUR255m. Now, this is basically linked to a reduction in direct costs, direct costs, which, mechanically, to a certain extent, result from the reduction in the volume of the subsidies to the RTC.

This is the positive side of things, if you like, in terms of the remodeling of the market with all the different changes I just indicated, but we also have an indirect cost base, which is far more difficult to deal with, and some cost factors are spontaneous -- the cost of energy, for example. But, overall, these contributed to the total indirect costs.

Now, our overall target for 2013 is to reduce the OpEx basis by EUR600m. That is to more than double the pace at which we'll be reducing our operating costs. Now, this EUR600m cost reduction will be very largely supported by what we're going to be doing in France.

In France, as I said, we are speeding up -- and I think this is going to be really quite a significant change for us this year. We are, as I said, wanting to work very heavily on changing our indirect costs, and we have to work for this on jobs -- the equation, the role of jobs in our costs.

If you look at the demographics of the Company, now, you know that we're a specific group here. We have a relatively aging population, 30,000 people will be leaving by 2020, and we had announced, and we're going to be implementing, a policy which is designed to use to the very maximum the adaptive policies which we are implementing vis-a-vis the people working for the Group within France.

Just a few figures to explain this -- over the next three years, 2013 to 2015, we announced a program recruiting 4,000 people. Opposite that, we estimate that roughly 11,000 people will be leaving the Group for early retirement, which means that just on that sole criterion, we will be replacing roughly one person departing in three, so two out of three people leaving the Group will not be replaced.

Let's not forget the new part-time senior program which we're bringing in, which has been signed up to by just about all the trade unions which are present within the Group, and if this plan is as successful as the last one, then I think we will definitely be able to speed up the number of [dodgers], going up to an extra 5,000 to 6,000.

So, over the next three years, as you can see, this really is a major effort, really unprecedented, I would say, in the Group, in France, in order to reduce these starting levels. This program will go hand in hand with a wage-moderation program, which will enable us to stabilize from this year onwards overall our staffing cost, and we'll be able to bring down staffing costs from 2014 onwards.

Over and above this information on staffing levels and staffing costs, we are going to be rolling out a certain number of measures to cut back on the indirect costs. Now, all these are contained basically in the Chrysalid program, which we'll be speeding up and developing, particularly in France, but throughout the Group as a whole.

I'm not going to go into all the details of this program, but let me just emphasize one or two of the salient points, particularly the fact that our organization is well able to adapt to situations in order to cut back on indirect costs, outsourcing costs, and we're also going to be basing our activities, our actions, on a certain number of physical flows.

For example, in the call centers, we've seen that, because of the fact that there are certain imbalances on the market and because of the work that we've done over the last few years to improve the quality of our offer, there are a certain number of calls, types of calls, which are going down significantly. And last year, we had 10m fewer calls coming into our call centers. So, with this in mind, we're going to be speeding up the adaptation of our means in this field.

In 2013, and this is the very first time that we'll be doing this, we're going to be seeing an absolute cost in indirect costs in France. 2013 will be the very first stage in the whole process, which we'll be speeding up in the following years through to 2014 and the years after that.

Over and above this very strong commitment and this very strong focus of the management on cutting back on the cost base, and particularly indirect costs, as I said, we're going to be pursuing our policy of striving to maintain the competitive edge. I'm not going to comment on things in too great detail, but what you should take away from this slide is the fact from 2013 onwards, now we have a full range of services which make us completely competitive on all sectors of the market.

With the arrival of the fourth competitor, this really broke the established lines on the market, a market which hitherto had been really characterized by offers with subsidized terminals, and the physical structure of market, well established, with very little Web-only, for example, SIM-only offers. The fourth operator really changed things. We had to adapt. We did adapt. We have adapted, and now, whether you look at just the local side of the market or whether you look at the very heart of our market, with subsidies to the terminal or with other services, we have very competitive offers at all ends of the market.

We work, for example, with Carrefour Mobile, M6 Mobile, and then there's the middle segment of the market, as well. You can see for Sosh the new price references which have been established at the bottom end of the market, roughly EUR10 for voice and unlimited SMS with data. Without data, EUR20 unlimited, SMS unlimited, and data. This is for SIM only, and we have very competitive offers here, very competitive with the new players and the established operators, and we are completely competitive on the top end of the range, as well.

However, that is not enough, not enough to be competitive in our offers, and if we want to be fully consistent with our position of defending our position on the market and developing market share, then we have to develop our economic model in depth. The economic models of the past, given the new segmentation on the market, is not going to work.

We have to adapt, profoundly adapt, the Company to these new conditions, and therefore, our ambition is very clearly to develop around these two major sides of the market -- you've got the low-cost, Web-only, SIM-only offers on the one hand. On the second side, you've got enriched content, with physical distribution, a whole series of added-value services.

On both segments of the market, we are going to profoundly, radically change the economic model so that they completely match these two segments of the market, which I just outlined. And we're going to really develop a low-cost model whereby we'll be able to get a sufficient level of profitability, which will contribute in turn to our investments, and at the same time, we want to work on our Orange network, which is a very, very good one.

We also want to work on the top end of the market and improve, in terms of quality of service and level of service to the customers, still, as I said, basing ourselves on the quality and speed of our network -- access to new technologies, as well. This is one of the big challenges of 4G.

So you can see it's not just a question of marketing here. It's also a question of doing things in depth, profoundly, radically changing things, working on customer, call-center structures, and so on. In 2013, we'll also be speeding up and redoubling our efforts, in fact, in order to consolidate our leadership position on the fixed market.

As I said, the global economy is far more favorable there -- is far more favorable than for the mobile market. We're going to be doing several things here. First of all, we are working to reduce the numbers of lines, PSTN lines. We have increased by 60% the number of Open customers -- sorry. That's our objective for the end of the year. Rolling out the fiber network, we'll be doubling our customer base by the end of the year.

We want to significantly increase our ARPU compared with the ADSL, and we believe that there is a real potential for increasing prices, starting to push prices upwards once again on fiber services, because we have a real technical revolution to offer customers here, 200 megabits per second in terms of flow-rate speed. And we believe that this can justify, this will justify, a premium price level on the fiber offerings. And then, as you know, because we explained to you a little earlier on this morning, we're very confident in the capacity of the new boxes which we're offering our customers. And we believe that, thanks to them, we'll be able to regain momentum on the broadband market.

Our aim is to get to 50% of gross adds thanks to these new boxes, and this service will bring in extra ARPU, of course. On the network side, our strategy is quite clearly to maximize the return on capital employed in our networks. We've put in a lot of efforts. We made lots of capital expenditures in these networks, and our strategy, clearly, to maximize the return on that investment.

So we have a wholesale policy which is still very aggressive. MVNOs, we will be working with. Also, roaming contracts, we'll have, which bring in what we expect. We provide a roaming service, which is a high-quality service, to our partners, and the roaming contracts also enable us to provide a substantial contribution to the return on capital employed in our networks. So beyond that MVNO and roaming contract dimension, we've got other things we want to do in terms of sharing.

We wish to share networks. As I said before, we're open in France to the idea of entering network-sharing deals with other carriers who might wish to do so, and we've already embarked on certain talks in that regard.

There will be also some other features on the landscape that should help us in this strategy to leverage the possibilities of our networks. I am thinking in particular of a breakthrough, historical breakthrough, which we hope will happen. For the first time in 15 years, we'll have a hike in the unbundling price. It will be EUR8.9. It's not the little amount that will get into the P&L that will count here. It's the reverse of the trend.

The unbundled local loop rate is now going to change, and carriers have been putting pressure about this -- been putting on the pressure for the last 15 years. We can't be asked to take part in rolling out fiber and that the same time nibble away our resources, so that's good news.

In Poland, quite clearly, this year, we will be taking charge of all of our operations and getting a good handle over the situation through several action plans being rolled out so as to reestablish the profitability of our operations in Poland, once again, underpinned by different action items. I won't detail them out here, but there's a whole set of actions concerning the leveraging of our networks with an increase of 25% of the numbers of shared sites in the agreement that we have with Deutsche Telekom T-Mobile.

Also, in-depth action on physical distribution in Poland -- we have too many points of sale and we've got to revamp, modernize our physical distribution efforts, as well. We've got to work on our indirect costs, with 1,700 full-time equivalents leaving. Additionally, compared to what was planned, that is, other optimization of efficiency measures in terms of property, real estate and also lightening some other costs that we carry.

So I also said a while ago that we're going to continue setting up the new functioning of our innovation chain. That's starting to bear fruit already -- our innovation value chain. And a min objective for 2013 is to deliver what we announced, what we promised.

Let us start off with Joyn, the new generation of services on mobile telephones that will enable us to do some catching up regarding the total networks in terms of that means of communication. We'll also be able to fight against certain over-the-top services. Joyn was already rolled out in Spain, and it will be launched in France in June next and in many of the countries in our footprint.

I'm sorry. I don't know if that was what we wanted to show you. Sorry for the problem with the slides.

So on the side of cloud computing, we've already made the launch of our cloud offerings, and they're a resounding success. We also wish to roll out, and have seen (inaudible) communications technologies, and we've engaged in some decisive agreements on that that we've talked about already. And we'll be talking about further ones in the coming few weeks.

So the network had to do with 4G, of course, for mobile, 4G in Europe, fourth generation around Europe. I mentioned 15 cities already in France. We wish to deploy 4G on the frequency that was sold at a high cost by the government to the carriers to develop 4G, with the aim being 30% of coverage by the end of 2013. And I talked about the Liveboxes already.

At the beginning of the year, like this, we're accustomed to giving you some guidance, some financial objectives regarding our operating cash flow, regarding other financial criteria metrics. We will do that, of course. I mentioned the EUR7b of operating cash flow already, and I'll go back to that in a minute, too.

This year, we wish to further build on what we usually give you. It's, in fact, our duty to our investors and to the markets to give you this kind of information. So we wish to provide you a set of objectives, more operational guidance, let's say, facts and figures, numerical objectives that our teams have set for themselves for 2013 that we wish to disclose to you today. What are these objectives?

Well, firstly, at Group level, the first objective, the prime objective, is to stabilize our indirect costs. In certain countries, we might go beyond just stabilization. We might perhaps start to bring down indirect cost, and I've talked a bit about that, quite a lot, in fact, already.

Another Group objective is to do with the growth of our revenues coming from mobile data traffic. As you know, for us that's a major challenge, because it's the growth in mobile data revenues that will enable us to offset the drop in income from voice traffic and text message traffic. So with the transition we were talking about here, we were dominated by voice traffic in the past. In the future, it will be more data traffic, of course, and we've got to make a smooth transition. We hope to grow at Group level by more than 10% our total revenues coming from the data stream.

In France, we've got to make a net decrease of our indirect costs. Also, we hope to increase our mobile market share by more than 5% for fiber to the home, multiply the customers by two and 50% of broadband growth adds with Livebox and 30% at least of 4G coverage by the end of 2013. That's our stated objective for France. They are, sorry, our stated objectives for France.

At the European level, we wish to provide convergent offers in seven out of nine countries. In Belgium, for example, in other countries in Europe, there will be quite a lot of interesting work to be done. We wish to speed up our internal Group sharing programs, pooling programs. ITV I mentioned a while ago, and our overarching objective is to improve our NPS, our net promoter score, in all countries in Europe.

In Africa and the Mideast, we wish to substantially increase the number of users using Orange Money and go up to 8m Orange Money customers. We also wish, as you see on this screen, to make progress in terms of our churn rate, bring it down, and have 12m active mobile data handsets. That would be up by 70%.

Enterprise, well, we have a stretch goal here, too -- 30% is our aim to increase the cloud revenue year on year in emerging countries, double-digit growth, and again, maintain and improve customer satisfaction in the phase. So that's our management scorecard, of a sort, for 2013 going forward, and it tallies totally with the financial objectives that we've stated, that we would perhaps just recall once again.

The financial objective guidance for 2013, firstly, to produce operating cash flow which will be above EUR7b, also, maintain a balance sheet structure that will be strong and that will secure for us access, in all conditions, I would say, to the debt market. So that means, in clear terms, that we maintain our objective of a ratio around 2 between the net debt and the EBITDA.

By the end of 2014, regarding the dividend, this was confirmed by the Board yesterday afternoon, and I can confirm the EUR0.80 dividend payout for 2012 that will be made via the payment of the balance of EUR0.20 in June. And I reassert to you here today our commitment to provide a dividend of EUR0.80 to our shareholders for 2013 and the EUR0.30 interim dividend to be paid in December.

As you know, we try to make an interim dividend of about 40% each time. That, again, will be done in December. There is no issue about the dividend. There is no change in our dividend payout policy here in this Group.

Regarding our M&A policy, people well know that this is not a priority right now. It's not the main focus. For the moment, we've got so much work to get on with, so to speed up the implementation of our business model, restore profitability of our Group, offset all of the challenges, the goals that we've got to pick up in our different markets -- so the priority for the moment is not to go out and look for external growth just now.

More than ever, I would say, we will be highly selective in that area. In particular, we wish to strictly adhere to our financial leverage ratios.

So that winds up this part of our presentation, and Gervais, myself and the rest of the management team will be very happy to take questions in Paris and in London, and I think our friends here in Paris won't mind if we start off on the English side, if you don't mind.

(Interpreted) Can our English friends hear us -- British friends hear us?

Can we take maybe two?

(technical difficulty)

Gervais?

Thirty should represent more or less one-fourth of the total decrease, so we have given a figure for France operations about EUR500m, so you take 25% of that. This is what you expect for 2013.

Regarding top line in 2014, and I will leave the answer on gross adds to Delphine. Top line 2014, we still continue to think that, especially in France -- I just remind you, we still have some reprice of mobile and still have some pressure on PSTN, which means that we don't expect revenue growth in France in 2014.

Delphine, maybe?

Yes. On gross adds, the average reprice is about 19%, but I want to point out the fact that we repriced also through Open, which is a quadruple-play offer, which is also really a very efficient tool to regain market share. More than 60% of Open gross adds are new customers on mobile or on broadband or both, in some cases.

Thanks. Next question from London, maybe?

Hi. This is Frederick Boulan at Nomura. Two questions, please. Firstly, at the Group level, on the leverage side, can you tell us how strict your deleveraging target is? If net debt to EBITDA doesn't improve in the next 12 months, what is the option? Do you plan to cut the dividend to delever, or, on the other hand, do you plan to move away from your deleveraging target? At the end of the day, you still have very good access to credit markets at 2.2 or 2.3 times.

And, secondly, on France, just to come back on some comments from Gervais this morning about the mobile price environment, we've continued seeing -- we've seen very big cuts from SFR in January that have been followed particularly by yourselves with new promotions in the beginning of February. So what's the view on the rest of the year? Do you think ARPU could actually deteriorate further versus the minus 10 decline that you experienced in 2012? Thank you very much.

Regarding the leverage constraints, we have said around two, meaning that we are today at 2.17. We expect this ratio, which is perfectly coherent with the rest of the guidance, to remain around 2.2, and definitely we will not put under pressure the commitment that we have taken in terms of return to shareholders and dividend in order to respect our leverage.

We have still, if it was necessary, other means to respect the guidance in terms of ratio, but certainly not reducing for that reason the dividend policy. I want to be very clear about that. We consider the commitment in terms of dividend as a real commitment.

Then, in terms of ARPU, it is true that in the beginning of 2012, I had talked about a decrease in the range of 20% of the French ARPU. We have stated 10% in 2012, and we expect at least 10% more decrease in 2013. Taking into account the recent price moves coming from the competition, especially SFR, so maybe we'll be a little above 10%, around 12%, but this is now part of our forecast.

Maybe one more question in London, and then I will be back to Paris.

Thanks very much. It's Nick Lyall from UBS. Can I ask three as well, please? First, on your performances in Poland, Belgium and with Everything Everywhere, what did you assume when you originally gave the guidance in Q3, please, for those three numbers, for the incomes from those three businesses? And how have you managed to compensate for the poor performance in Q4 and for 2013 from each of those, please?

Then, secondly, in Spain, it seems like your options are restricted on fiber with Telefonica. What's your view, and what do you do about incorporating fiber into your bundles over the next couple of years, please?

And the final one, a bit like Fred's question, what should we expect for commercial costs in France given SFR's aggression? Can you maintain current commercial cost levels? Thanks very much.

May I suggest that Benoit will give you answer to your questions regarding Poland, Belgium and Spain? Please, Benoit?

Yes, good morning. So we have, in Belgium and Poland, we have faced a, I would say, dramatic change of the market in some respect with the acceleration of convergence in Belgium on one side and also more aggressivity from some of our competitors in the market. We have seen also a new law being put in place as of early October, on which we reacted quite fast because we have lost a bit of portability customers in the first half of Q4 but we recuperated that quite well and quite fast in the second half of the fourth quarter. And we expect also that for 2013 we will be much more able to compete against the offers that we have seen on the market. Keeping in mind that most of the customers that have been ported out to the cable operator, on which we have -- with whom we have an unveiled agreement, is somehow also one way for us to recuperate part of the value that some of these customers have ported.

For Poland, as explained also earlier today, we have seen an acceleration of unlimited offers on the market on B2C, B2B, but also in prepaid market. We suffered somehow in the first, I would say, in the first half of the second semester on the B2B segment, but we have now put new offers on the market to recuperate somehow the value that we have lost. And we are very confident that with the new plan that we have established for 2013, mostly based on convergence, that we will be able to catch up some of the customers that we have lost, because we have unique sets in Poland that some of our competitors do not have, which is the combination of our fixed and mobile assets, which is something that we have done quite nicely in many countries, especially in France. And this is something that gives us very strong confidence that we will be able to fight against our competitors in 2013 with a very strong differentiator. So, Poland is also something on which we are actively working.

So maybe to close down on Spain, you have seen that throughout the year in 2012, we have been very successful in winning customers versus our competitors. We have won the largest amounts of customers ported to our network. We have kept a very sound balance in our commercial cost activities to keep also the subsidiaries of devices as one tool to attract new customers to our network. We plan to continue that strategy because it's a winning strategy. You have seen that we have grown the top line in 2012 and we think that the current strategy that we have is also the winning one for 2013. So we'll continue to have a sound balance on that level, but making sure that also we win new customers, not only on the mobile aspect but also on a fixed market. You have seen that we are gaining a lot of fixed customers through DSL. We continue to invest also on FTTH in Spain, making it a very successful strategy, also bringing convergence to our customer base in Spain. So you'll hear and heard that convergence is one of the ways for us to differentiate ourselves in many of our countries, and this is what will make us winning in 2013.

Thank you, Benoit. Delphine maybe on the direct cost evolution in France.

So our key objective is to reduce commercial costs on two items. The first one is SAC and [SSC], of course. Half of the reduction is quite mechanical because the [CMoney] offers are increasing. But the other half is a clear policy, our policy to really very strongly manage the SAC and SSC. We did so in 2012; we are going to continue in 2013.

And the second reduction is on the other part of commercial costs, distribution costs. As we're doing in our call centers, we are also going to focus on our own shops, optimizing our own networks, and reducing the external commission, the external distribution.

So, thank you. Maybe back to Paris, in French or in English, as you like.

(Interpreted). Yes. Nicolas Cote-Colisson from HSBC. I'd like to pick up on a few questions on the leverage. Net debt to EBITDA being times 2, and relating to dividend payments, are you still thinking that absolute terms EBITDA will be the same in 2014?

And in terms of reaching this target, do you think will be adding more value to Everything Everywhere in the UK? Will you be selling off assets, for example?

And can you give us some information about the taxes to be paid in 2013 and 2014 in cash? It would seem that in Spain and Belgium, things are picking up there on that front.

(Interpreted). It's true that our working hypothesis has not changed. We're still basing ourselves on stabilizing EBITDA of the Group, that is to say France in particular, and that is the basis for getting back to a ratio close to 2. To be more precise, this figure being close to 2, if it's between 2 and 2.1, then we will consider that more close to 2. However, the debate relates to the previous question. In fact, the direction of the slope as appreciated by rating agencies with a few hundredths of a point being in question here. If we are heading towards stabilization of EBITDA or not is really the fundamental question to be asked and answered; all the rest, it's decorative, if you like. But the question really is, can we stabilize our EBITDA? And this is what we're working on.

If we had to sell off a small part of Everything Everywhere, getting more value out of assets in Austria and Portugal, now these are things which can contribute well. The contribution to EBITDA is nil at the moment, but they could contribute to improving our chances of achieving this target.

On the point of taxes, EUR900m of cash effect in 2013, so the same thing, actually a little bit less compared to 2012. 2013, we still have deficits to carry over, slightly less in 2014, but we've got reductions in sales, which means that our taxes are lower as well.

Let me say that we are extremely determined and very confident in the capacity of the Group to stabilize our EBITDA levels in 2014 by working essentially on two major levers, first of all, speeding up the growth drivers and the added value drivers on the new markets, thinking particularly about very high broadband for fixed and fiber, and then this 4G coming in of course, don't forget that. And then as you've seen, and I hope you've appreciated this, we're strengthening our activities to cut back on costs, particularly [IREC] costs.

So, all this will really speed up in 2014, so, bringing together all these major priorities should allow us, whatever might be happening elsewhere in terms of market conditions and given in particular the situation of the mobile market in France where there's a real price war waging, nevertheless, we should be able to achieve this target of stabilizing EBITDA in 2014.

(Interpreted). Let me just complete what Stephane has been saying, I don't want to give any dates, but we'll maybe see a stabilization of sales from fixed in France before we see stabilization of sales coming from the mobile sector.

(Interpreted). Hello. Antoine Pradayrol, Exane BNP Paribas. Just a couple of questions. The first one on income from the fixed side, could we suppose that the reductions in the first quarter of 2012 are going to continue in 2013 or will there be a difference in trend? And are you considering an increase in subscription for the year at any point?

And secondly, potential acquisitions, you're talking about e-market consolidation. Could you just talk about the opportunities in Spain on that please?

(Interpreted). All right, Delphine, could you answer the first question please?

(Interpreted). First of all, our big challenge is to offset the reduction on the fixed legacy market, a great asset of course, but it's still going down, offset that by the increase in revenues coming from broadband. Last year, 2011, figures for 2011, we had a gap of over EUR500m. We started to reduce this, we're down to EUR360m, EUR350m, EUR370m, and the aim is to get the gap down to zero. So we're notching our actions up for 2013.

(Interpreted). On the next question, are we considering increasing our subscription? Yes, we are. Well, we are considering that the public authorities may reflect on this question very seriously.

As for Spain, there is a sales process which is still underway. We go the fourth operator on the market and we are part and parcel of this process. We've already talked about this. We consider this process is continually being postponed. We're two months late on the timeline, which was originally set. I don't know how one can interpret these constant postponements of dates. There are certainly difficulties outstanding in the telecommunications market here in Europe and some of the consolidation operations are definitely not easy, and particularly there's the fact that some of the assets now are valued at levels which are not particularly favorable for the sellers. So what I can say for the moment is we're still involved in the process but nobody can say with any certainty that this process will go through to the bitter end as it were. It's still an open subject in Spain for us.

Maybe we can go back to London, Benoit and Vivek? Yes.

Yes, good morning. This is Emmet Kelly from Bank of America-Merrill Lynch. I just have one question please. Could you just comment on the latest trends that you're seeing with your free mobile roaming contract? What do you see your current medium-term target there for revenues from that contract? And has there been any change to traffic patterns now that Free has turned on their 900 megahertz spectrum recently? Thank you.

Well, maybe a few quick comments. As you know, everything which is related to the roaming agreement with Free is very confidential because it's part of an agreement that we have with Free, and we are committed not to unveil any kind of technical details about this contract. What I can tell you is that this roaming agreement is working well, I think well in terms of technical quality for what we are providing Free with. It's working well also in terms of financials. And we expect this to be still the case in 2013. I will not give you any more amounts, but I am rather confident, let's say, in the sustainability of this agreement at least in the two or three coming years.

Sorry not to be more detailed about that.

One more question?

Hello. Dimitri Kallianiotis from Citi. I had two questions. The first one is just regarding the OpEx reduction in France, the EUR500m that you talked about today, and the difficulty that obviously you are putting some very big provisions, and so some of this reduction will be just I guess done through provision reversal. I just want to ask you, when I look at slide 36, the FT, if you exclude the senior plan, doesn't really come down a lot. So I wanted to ask you if you can give us any guidance on the cash cost for labor in France. Do you expect it to go down or should it be relatively flat because FT doesn't seem to go down much and I guess there will still probably be some salary increase this year. So, any guidance there would be great.

And my second question is on fiber in France, which is picking up a lot. I mean you've talked about doubling the rate in terms of 4,000 new fiber subscribers per week instead of 2,000. I want to get your view on, if you -- what sort of run rate do you expect to go to by the end of this year. Do you think it's still possible to even double that rate? And if you see much more -- much competition from the operators like SFR or Free. Thank you.

Regarding the OpEx reduction in France, the amounts that have been given have nothing to do with provision management. It's real OpEx reduction. And a big part of this, regarding labor costs, I have mentioned this, is due to the expected stabilization of our labor costs in 2013, which is a step towards a decrease, which is expected in 2014. This is mainly due to the attrition and the reduction of, globally, of our workforce. I have mentioned some I think figures, precise figures, regarding the reduction of the workforce in France in the next three years.

May I just remind you, 4,000 recruitments in front of 11,000 departures, and in top of that, the TPS impact which will probably add 5,000 to 6,000 more departures. So you can easily see that the base -- the basis of our workforce in France is going to decrease quite significantly by more than 10% in the next three years.

This will be combined with a policy of wage increase which will clearly take into account the economic constraints. We will open our negotiations in France in a few weeks.

Delphine, maybe on the second question?

On fiber, our target is to double the number of homes passed and double the number of customers, which means keep up with our actual pace which is quite cautious. And our commercial objective is to regain not only customers but also market share in very dense areas like Paris, for instance, this year.

(Interpreted). Is there a question from the room here in Paris? Yes.

(technical difficulty) trend in your EBITDA for fixed broadband in your domestic market, which is going down quite sharply this year. I would like to know what's driving that, if there are any marketing costs associated with that. And do you expect that trend to remain next year?

Gervais maybe?

First, the fixed business, both PSTN plus DSL, is probably, within the Group, the business with the biggest fixed cost base. Mobile has more variable cost because most of the commercial expense which are variable are associated to the mobile business, so, which means that when you decrease or renew on the fixed business as a whole, you are facing a strong fixed cost base, which is more difficult to decrease.

You have another impact which is the fact that the enterprise business is buying its network from the fixed business in France, and there we decrease in order to keep some competitiveness to our enterprise business, we decreased the total price provided by the fixed line operations to enterprise. So these are those two impacts.

However, most of the indirect cost reduction that we are speaking about, most of also of the impact coming from manpower decrease will have a positive impact on the fixed line business. So what's a handicap, let's say, in the past will be what will be attacked first in terms of cost structure change in the future.

(Interpreted). Yes, another question here in Paris. Gentleman at the back of the room.

(Interpreted). Yes. Stefan Borscheid is my name. I have a couple of questions. I want to talk about Spain a little bit. Would it be possible please from the strategic and commercial standpoint to not join the [REN] agreement between Telefonica and Jazztel? Is there not a possibility outside of that for Orange?

And secondly, the 4G launch, in terms of net adds in the UK, what are the first lessons to be learned in terms of people's appetite for 4G? Are they going for it? What lessons can you learn from the launch on the UK market please?

(Interpreted). I'll ask Benoit who's in London, in French or in English, as he likes, to kindly answer your two questions, sir. Benoit, can you hear us? Would you like to answer the questions from this gentleman?

(technical difficulty) because I'm not sure that we have the live translation here in this room. With regard to the -- first of all, I would like to remind you that we have very strong deployment currently of ADSL in the countries, so we will certainly continue that strategy of increasing the fixed broadband activities through ADSL.

Now, next to that, commercial activity on which we're using the wholesale agreement that we have with Telefonica, we also have a deployment of FTTH, as you know, and we have started that deployment in 2012. We are currently at good, I would say, pace of that deployment. And we start to see -- or we would like to see how we can accelerate that. Indeed there are some potential discussions or potential agreement that we could have with Telefonica and Jazztel on that point, but I would say that this is not the only option that we have. There are other options out there that we could use. And you will see maybe in the coming months or the coming months what are the options we can finalize. But this is not the only one. So we think that indeed we can go ahead with an FTTH deployment in different scenarios and we are currently actively working on that one.

On the 4G launch in the UK, Benoit maybe or -- do you have any -- or Gervais maybe.

We have decided not to communicate the figures yet, just to -- this is a common decision we have taken with our German colleagues. We will communicate after first quarter what are the results, because the deployment was just -- I just remind you that it was launched in November.

What I can just say is that if you compare the figures to the launch of Verizon in the US, we are quite happy with the launch. But we'll communicate at the end of the first quarter.

(Interpreted). Perhaps one last question here from the room in Paris. And we'll leave it at that. Yes, please.

Two questions here. Yes, Michel Koester from CMC. You did an experiment on VDSL, it seems to me, in the second half of last year. What are the conclusions you can draw from that experimentation for this?

(Interpreted). On VDSL, we're ready. Our strategy is firstly fiber in very dense built-up areas. However, some of our competitors might roll out VDSL. So as a defensive strategy in dense -- not very dense areas, we might do that, and also as a complement, to provide very high broadband in more rural areas where fiber won't arrive overnight. So we're ready on VDSL. We're waiting for the ARCEP regulatory authority to communicate the possibility of doing it. So in very dense areas, we would be on the defensive if we do that. And then in less dense areas, it would be where providing very high broadband at lesser cost compared to fiber.

(Interpreted). Perhaps a very last question then from Paris, and then we'll return to London.

(Interpreted). Very quickly, on the CapEx for 2013, could you give us more precise guidance at Group level? Will that be stable, slightly up, slightly down?

(Interpreted). (inaudible) should remain stable.

In London, any further questions? There may be some other questions. Please go ahead.

Yes. Vincent Maulay from Oddo. One question on 4G and one on quad-play. On 4G, with the first feedback you have from France and UK, what kind of items could limit the pricing premium? Is it more the limited coverage of the country, the tough macroeconomic context of -- or the lack of awareness on 4G with already decent throughput on H+?

And on the quad-play, you have now 20% for the mobile biz, 25% of the broadband customers. What could be the normative level in 2014-2015 with already plus 60% in 2013?

Delphine?

On the quadruple play, we have 3m open customers. We expect 5m customers in 2015. So I don't know the share of the overall contract base will have, but it's a huge growth because we see the eagerness for only one operator around the six markets is increasing. It's more than 50% of our customers who are eager to put all their access to only one operator. So we think we have a bright future with open.

On 4G, it's true that at the beginning of the deployment, we see that SFR did so. We may have specific tariffs to just help people to have access to 4G, and well, explain what the 4G is. But we really believe that 4G is a key element to stir up more value from the mobile because it's a real usage edge because it's 10 times speedier than 3G. H+, it's very important, H+, but it's three times more efficient than 3G. So I think we'll have the same revolution we had -- we're going to have with 4G that we had with 3G. So I think we intend to give value to 4G in this year and next year of course.

Just to [confirm] the answer, in the UK, even if we don't communicate the total figure, what we can say, that the experience and the launch have been slightly different in the sense that, first H+ and 3G were not as good in the UK as it is in France, which means that the difference perceived by the customer with the launch of 4G has been bigger, with bigger deployment, as you see at the end of the year it has reached about 30% population coverage. And based on this, the first survey we have, which is just a survey, is that in average there is an ARPU uplift between GBP5 and GBP10 for the customers moving from their current 3G plan to a 4G plan.

Okay. Maybe one last, last question from London, and we'll say goodbye.

No question?

Jakob Bluestone here from Credit Suisse. Two very quick ones actually. Firstly, are you able to comment on what you've seen in terms of subscriber trends since the change in the SFR tariffs and since you introduced your promotions as well in French mobile? I realize it's obviously fairly recent.

And then secondly, would you consider doing buybacks instead of dividends given where the shares are? Thank you.

Delphine, regarding the commercial trends after SFR price moves?

It's a little too soon to give a trend for Orange because we introduced our promotion on February 7, so it's quite -- it's a little early to have a real trend.

Okay. Regarding share buyback, as you know, it's something which is not very easy in our case given our shareholdership. So it's clearly not in the agenda in the short term and clearly what we want to do is to consolidate and reassure our shareholders and investors about our return to remuneration policy around the dividend. So this is clearly the main tool that we have in mind in order to give some good return to our shareholders. The share buyback is not a priority for us because it's quite complicated to execute in our case.

Okay. So, thank you very much for your time, attention. And have a good rest of the day.

Portions of this transcript that are noted "interpreted" were interpreted on the conference call by an Interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.