Orange SA (ORAN) 2013 Q4 法說會逐字稿

(Interpreted). Morning, welcome to the presentation for the 2013 highlights, the financial business performance, and the outlook and conclusion. And I'll be delivering this presentation with Gervais Pellissier, as usual.

I shall first speak about the 2013 highlights. 2013 has been eventful and Gervais will give you the financials and, of course, we'll have ample time for Q&A. And with me for the Q&A there will be the Executive Committee members. We have people from our team in London, who will also be able to take part in the exchanges.

Allow me to begin with a brief overview of the 2013 numbers. First off, I think it's fair to say that the numbers show the robustness of Orange. As all other European operators, Orange is faced with bare-knuckled and changing competition, but nevertheless, in 2013 Orange displayed its responsiveness, as well as its robustness.

So this morning we are in a position to tell you that we have met all our financial objectives, whether they are strictly financial or importantly, encouragingly, whether they have to do with the rebound in terms of the sales of buoyancy because we took in more than satisfactory business results in all key countries, including France.

2013 was also the year when we truly started digging deep into our cost structure, and the numbers we've achieved have also demonstrated that, indeed, we have done our homework. And that is going to -- that bodes well for the future and, of course, we are going to continue those efforts in the coming months.

All this has been possible because labor relations and collective engagement have been good, and have made this possible. Therefore, we do have a leadership at Orange; we are in a leadership position on competitive markets where there is quite a lot of instability, of course.

But Orange, with its strengths, with its assets, with its values, has really performed quite well.

Now let's take a look at the key numbers for 2013. It appears that our sales amounted to EUR41b, down 2.6% excluding regulations. EBITDA amounted to EUR12.6b and, therefore, the EBITDA margin was down one single point and a mere half a point for France in fiscal 2013.

In 2012 the drop in EBITDA margin was 1.6 points, therefore you see that things were tapering off and we are in the landing phase. And in fiscal 2014, as is our objective, we should be able to stabilize the EBITDA rate.

Operating cash flow, well, we announced EUR7b. Actually it's slightly above EUR7b and, interestingly, we achieved this without encroaching upon our investments, because our investments were flat in absolute terms. In other words they amount to 13.7% of sales, i.e. a greater share of our sales versus 13.3% in [2013], 11.9% in 2012.

Net income Group share, although we think of that regarding how representative it is, well anyway, doubled between -- well, from 2012.

In 2013 all the financial commitments we made to you, right here, have been met; operating cash flow;, net debt/EBITDA -- come back to that later on, dividend and our selective portfolio policy.

Operating cash flow first. Well, operating cash flow amounted to EUR7.02b, slightly above the objective we guided you to. Regarding balance sheet, well, we are closing fiscal 2013 with the net debt/EBITDA near 2.2, very near what it was at the end of fiscal 2012. In other words, as the number does not include the impact of the EUR2b we have in tax litigation that we had to pay in fiscal 2013. In other words, we were able to absorb the EUR2b in tax litigation during the course of 2013, because the debt in absolute terms did not change from the end of 2012 to the end of fiscal 2013.

And I think that that is quite a performance. We were able to stomach that impact rather comfortably, and let me remind you that the tax litigation is far from over because, of course, we filed an appeal. And we are rather hopeful as to the likelihood of winning.

So anyway, the results enable us to confirm that we shall be paying EUR0.8 in dividend, as planned, and we are very happy that the results allow us to do this. And the Board approved the proposal I made yesterday, to submit this dividend to the AGM. We already paid an interim dividend of EUR0.3 in December of 2013, therefore the balance, the EUR0.50 remaining, therefore, will be paid out on June 5.

Regarding portfolio management now, well, in 2013 there were no major transformational transactions, which is pretty good in this -- in these uncertain times. But nevertheless, we actively managed our positions, because we did carry out half a dozen transactions. Most of them are disposals, by the way, essentially non-strategic assets, such as our minority stakes in Austria or Portugal, for example, or non-strategic businesses in some of our subsidiaries, and a major transaction, which was well-accomplished by the Group, as you know, the disposal of Orange Dominicana.

The bottom line of all this is that in 2013 the proceeds of the active portfolio management, roughly EUR1b, will enable us to recover some flexibility regarding cash management and regarding our balance sheet position. So it will help us, of course, achieve further balance sheet robustness, which is an ongoing objective.

So we've been in a position to deliver these results in 2013 on the strength of four key levers that we needed to actuate. Let me tell you what those levers are. As a matter of fact, we actually cast management's efforts on these four areas.

First marketing, the way in which we preempt market developments. More than ever in 2013 on all its key markets, the Group demonstrated its ability to anticipate, leap ahead of demand, segmentation and always come up with the right propositions at the right time, regardless of the policies pursued by our competitors.

The second lever is the deep-seated modernization of the Group, and the Group and the efforts we have cast on cutting costs, both direct and indirect. I'll come back to that in a moment.

Our approach is a medium-term approach and our aim is to achieve digitization with respect to our customers, but also inside the Company, because digitization is synonymous with modernity. And of course it has to do with our customers' demands, but it's also one way of cutting costs.

So all this was achieved with a sustained level of investments, in particular in very high broadband, both fixed-line and mobile. That, of course, is critical, because it's the preparation of revenue sources in market and differentiation moving ahead. And this was possible because we all cast major efforts on sustaining the labor-relations commitments we made and our social commitments. So we always pay close attention to strong employee engagement.

Now, let's take a look at these four areas in greater detail. Let me begin with marketing, the market, basically. Competition. 2013 was a critical year for us because we recorded remarkable sales results, despite bare-fisted competition; we have never seen such competition on our main markets thus far.

First of all let's take a look at mobile. Let me begin with our main market, the French market. Well, in 2013 we achieved our best performance since 2009, with 700,000 net adds, 300,000 of which in the last quarter of 2013. So this vitality is quite encouraging because, of course, it shall reverberate into 2014.

But these sales results were achieved while improving our value market share. I believe that we are the only well-established operator whose value market share increased in 2013 from 2012, a 0.8 point increase in market share, which shows the quality of our value differentiation strategy.

You see we look at content, service, customer support. This is a strategy that pays off and it helps us reach out and sell our products and services. Regarding 4G, well, we've doubled the investments that -- well, with regard to last year, 50% coverage at the end of the year and we recruited a little over 1m 4G clients. That was our objective and we met it. So you see that the -- it's the announcements made here and there, by operators who tend to slash prices.

In the fourth quarter we showed that there is room for customers who want a different service; who want a better product; who want more abundance, more flexibility, more comfort, more user-friendliness and better conductivity, better network performance; who want appealing rates, better roaming rates and so on and so forth.

In Spain -- a word about Spain. The market is particularly competitive. Well, we performed well but in Spain there was a radical shift that took place in a few months time. Because it was -- used to be a rather conventional market with the major chunk occupied by subsidized models. And following Telefonica's moves, we decided -- there was a decision to move away from subsidization and now it's SIM only, basically.

But this does not mean that sales do not include a terminal component, in fact. Although access sales are exclusively SIM-only based, there is still some strong demand to access terminals. It's not done through subsidies, but through other channels, as it were.

At any rate, the competition has changed faces and, in spite of that, we were very agile. We responded to the new deal because we did increase our market share by 1.4 points, and we are number one -- we were number one in 4G at the end of the year, with a little over 0.5m customers on 30% coverage.

In Poland now, 2013 was a year of recovery and rebound. Net adds reached 170,000. SIM -- our SIM-only -- web-only brand called nju.mobile did very well. We recruited 350,000 clients at the end of 2013.

In the UK, as you know, we operate through EE, our joint venture with Deutsche Telekom, a fine year there, with a major success for 4G, over 2m 4G customers. You know that EE decided to be the leader in 4G and to really stay ahead of the pack.

As a matter of fact the UK is an interesting country in that regard, because it has the 4G migration rate, which is the highest in the world. And I believe that what's going on in the UK, and the effectiveness of EE strategy, should lead us to learn the lessons that applied into other markets, notably France. Because the appetency for 4G is genuine, so much so that people are willing to pay a little bit more. And 4G does offer more usage than 3G, and this is one of the factors that should help us bolster our sales this year. So the UK example is rather edifying in that regard.

In the UK we also continue to improve profitability, because EBITDA in H2 was over 25% in the UK. Let me remind you that this spells a 5-point improvement in EBITDA margin, a 5-point improvement in the past 4 years, which demonstrates that in spite of the multiple challenges we have to take up in this competitive industry, we are nevertheless able to adopt strategies that improve the profitability of our operations.

In Africa/Middle East the year was very good, because our mobile customer base increased 7.2%. We -- if you take all countries where we operate and countries where we have subsidiaries, we are still in a minority position and we will soon have more controlling position, well, we have over 100m clients in the region, a self-explanatory number. We've become one of the leading continental operators in Africa/Middle East, and this is a region which is growing, demographically- and economically-speaking, with the highest growth rates in the world, moving ahead.

So this is a major competitive edge we have. In Africa/Middle East, the success of mobile banking, Orange Money, is still bearing out, 9m customers. It's very good to tie our customers in and it is definitely a growth relay now. It's fair to say that transaction value tripled from 2012, to EUR2b.

Fixed-line operations, well, results were good and successes were there too. First in France, our convergent offers now account for one-third of our customer base in fixed broadband. At the end of 2013 we had 3.4m Open customers, a [43%] increase from 2012. We also had great performance with fiber; we nearly doubled the number of Orange fiber customers from 2012, with 320,000 customers. A little over 2.5m households connected to Orange fiber today.

And on the whole, these two engines, say convergence on the one hand, and only in France by the way, so a very powerful engine in -- on the fixed market, and very high broadband, the fiber technology. These two engines have allowed us to maintain a very good conquest rate in broadband, and a very high share in very high fixed broadband because if we take a look at what Orange accounted for in sales in over 100 megabit connections, fiber and cable, well, our conquest rate is around 40%.

In Spain now, we also performed well in fixed-line sales. In 2013, in ADSL, we recorded net sales -- or a very high record in Q4, with 100,000 net adds. Our conquest rate is around 40% in Spain, against a very competitive backdrop and where we are a challenger. All this was achieved on the strength of our convergent propositions, which now account for two-thirds of our fixed high -- broadband customer base, so double the proportion.

A word about Poland, in Poland we also introduced some convergent propositions which have met with shining success, because in a few weeks time we recruited 300,000 customers with these Open offers. And in Poland we are also tracking PST and traditional lines, which are declining of course, but the downward trend is not as sharp. We lost 600,000 in 2012 and we only lost 340,000 such lines in 2013, which demonstrates that we can indeed better manage the transition from the PST and business model, to the broadband and very high broadband business model.

Now let me move on to the structure cost -- cost structure, excuse me -- and the 2013 performance is quite good. And it bodes well, looking forward, because in 2013 as you know our objective was to cut costs by EUR600m. And we recorded a drop in indirect costs and we are closing 2013 at minus EUR929m, well below or much better than the initial target. And with these EUR929m saved, well, indirect costs are down for the first time, with a vengeance, amounting to EUR350m.

This of course results from all the efforts made in every nook and cranny, especially in France, because France accounts for a major portion of this accomplishment. And at this point I need to commend all our people, of course management, but first and foremost, all our employees across France, who really engaged in casting these efforts on our costs. Processes, ways of working -- so as I say, every nook and cranny to cut costs in a lasting way.

In 2012 what we did in cost reduction helped us to offset 10% of lost sales, but this time around, with our cost-reduction efforts, we offset half of lost sales. And the -- you see there's pressure on sales, of course, but that's unavoidable, because of course that's the market, that's the way it is and it's due to the competition that we are facing. But, in spite of that, we've clearly decided to aim at covering the decline in sales as much as possible. And in 2014 we are looking at 70%.

So I won't delve into too much detail. We can entertain your questions. Particularly Gervais can tell you more about this. But as you know we are involved in a group program called Chrysalid and it covers more areas than one. And let me just say a word about it.

I spoke about digitization earlier. Digitization also has to do with cost reduction, enhancing efficiency, and it does involve quite a lot of training. And a few days ago we launched a program called the Digital Academy. Actually it was an inauguration. It's a global training effort; all our employees will be concerned by 2014. The idea is to raise awareness, train them, make them more familiar with digital tools inside the organization.

Moving on to investments, in 2013 we sustained high levels of investment. And our choice has been rather hard-nosed; it shows up in the numbers. We've been focusing on fixed very high broadband and mobile, because when you take a look at these two areas LTE 4G, excluding Spectrum, or fiber, well, the amounts we invested doubled from 2012, which means that we re-deployed our budgets, our resources. We rationalized other areas, of course, but we really maximized our efforts on fixed very high broadband.

In France investments are up, 4.5% in absolute terms. In France we amounted over EUR0.5b in very high broadband. That is to say roughly one-third of network investments made in France. We cover 50% of the population of 4G service and our aim is to cover over 70% of the population at the end of fiscal 2014. At that point in time I believe that our leadership will be quite stark, both in coverage and in 4G quality, on the French territory.

In FTTH, as mentioned, we have 2.6m homes that are connectible, and the pace of the deployment is still going on as we speak.

In Spain we deployed 4G in 18 key cities, we cover 30% of the population and we have initiated the fiber-deployment program in Spain, in keeping with the agreement we have with Vodafone. As you know, its purpose is to serve 6m homes in Spain.

In Poland we are at the end of a rather exceptional investment cycle that resulted from the agreement that we had reached with the regulating authority a few years ago. But nevertheless, in -- now we have a relay that's been taken up by VDSL and the fiber-deployment program that is going to start up in 2014.

Furthermore, in Poland we have a network-sharing scheme. Well, of course we do that in a number of countries, but Poland is one. And our network sharing is quite substantial, 8,200 sites, no less. We do this with T-Mobile, Deutsche Telekom, that is. And these 8,200 sites include 900 4G sites, because in Poland we also started up the deployment of 4G.

Finally, in Africa/Middle East we deployed 3G in 17 out of 21 countries, and we launched 4G in two countries, Uganda and Mauritius.

All these results, in particular the cost reduction and efficiency efforts, were possible because collective and individual engagement was strong. And this engagement, this subscription of employees can be achieved, but it is absolutely capital for the -- for future success and we are constantly working on engagement.

We need to explain, we have to give meaning to what we do and we also have to pay close attention to any form of tension, to the quality of labor relations. And we are quite proud because, with this engagement and with all these efforts, we are reaching a situation where the percentage of our employees who consider that the quality of the work at Orange is at least as good as in other French companies, is 92% -- 92% at the end of 2013.

And at the end of fiscal 2013, to crown this effort -- this ongoing effort of ours, we were awarded a few prizes as an employer in quite a few countries, including France.

There you go. So I hand over to Gervais, who is going to give you some financial numbers.

Merci, Stephane. So I focus on a few more details, in terms of economic performance for the Group and Stephane has come on the main figures, but if I start with the main KPIs for the Company.

Just to come back on what happened in Q4, we have, and that's still one of the issues, suffered some increased revenue contraction in Q4, mainly due to the back-book repricing in the European countries, especially France, the fact that customers are moving to new prices and new offers. And also to the sharp fall in market prices and business-model shift towards SIM-only, especially in Spain, which is also creating some price differential with the traditional subsidized model.

One of the good news of this last quarter is regulation, where regulation impact is much lower in Q4 than what it was for the full year. In the full year, regulation cuts have represented more than 40% of our revenue drop. In Q4 regulatory impact is limited to 28% of the revenue drop, and this is clearly a slowdown that we observe mainly in termination rates. And what we can say is that in 2014 we'll still have a few termination-rate cuts in Eastern European countries, in terms of global impact. A small country looking at -- well Luxembourg, but Luxembourg doesn't play a big role in our figures. But most of the impact is in Eastern countries, plus the European roaming decisions that could still impact our revenues.

Cost reduction has accelerated so that, despite the revenue pressure, we keep our ability to maintain the margin decrease at less than one point, in spite of the stronger revenue pressure.

In parallel to our efforts on OpEx, we have maintained our level of CapEx. Maybe just to mention that Q4 looks slightly down compared to Q4 2012, because we have tried to do a little more CapEx at the beginning of the year, the first three quarters especially, to ensure that we will accelerate in terms of LTE deployment, for instance.

In terms of revenues, the -- as I mentioned -- on the next page the revenue contraction is mainly related to what happened on the mobile front, with the repricing, the change of -- or the move of customers to new tariffs, and the penetration of convergent offer. Convergence is value-creating for the future, because it is decreasing the churn. It is increasing the overall perception in terms of quality of service for the customer, but it has an immediate impact, which is a discount on the straight price as it is given to the customers.

In France, mobile services are down by 12%, driven by the ongoing drop on ARPU following the repricing in the second quarter of the year. And also on the stronger penetration of the convergent offers Open, which entails a slight repricing but, as I said, increase customer loyalty. On the fixed side the trend is more or less steady, with a 3.4% drop in Q4.

In Spain the fourth-quarter slowdown reflects the substantial reduction in market prices; the ongoing change of the business model towards SIM-only, I think in the last quarter of the year, 80% of the gross adds having made SIM-only offers; and an increasing level of handset sales, mostly offsetting the drop in service revenues. Service business grew at a healthy rate of 8%, driven by a strong customer growth, especially for convergent offers.

Poland has already published its figures and Stephane has commented it. But what we can say is that the trends in the fourth quarter are good, with a more or less stable situation compared to Q4 2012.

In other geographies, strong performance in emerging markets, especially driven also by good performance in Egypt in the last quarter of the year. In Europe, strong performance in Romania, but not enough to offset the strong drop of revenue in Belgium.

For Orange Business Services, a stronger performance in Q4 compared to what we had in Q3, which is also mitigating some of the negative trends we have been observing in the year.

For Group EBITDA, on next page you can see the reduction of both direct and indirect costs already commented, but now we offset 50% of the revenue decline with our cost decrease. And restated EBITDA was down by EUR1b, which is just over a quarter, was related to regulatory changes. EBITDA margin is down by 1 point, at 30.9%, whereas we dropped by 1.6 points in 2012.

Direct costs, we have already commented, down by 5% in spite of a solid commercial performance, especially in the last quarter of the year; more [sales act] for less money. Indirect costs were down by EUR350m.

EBITDA for the different Group segments, the contribution of the different segments. In France the trend is almost stable. We should underline the achievement of French operations, with just a drop of 0.5 points in terms of EBITDA rate. In Spain, Poland and the rest of the world the EBITDA improved in H2, compared to H1. And in the enterprise segment, the trend was more or less flat, in spite of the strong pressure in terms of price in the B2B connections.

Regarding costs, Chrysalid is continuing to drive the modernization of the Company processes, and we have tried to give you two examples of what we are doing within Chrysalid. Chrysalid is a real structural program, where we try to really change the processes of the Company for the long term, not just to have a cost cut in the year that we would not be able to reproduce the year after.

The program is targeting now EUR3b of community gross savings by 2015, and to date, at the end of 2013, we have already delivered EUR2b compared to an objective of EUR1.8b.

In the customer-management area, this is the first -- the top part of the slide. You can see it is happening in two countries with constructing -- contrasting, sorry, commercial dynamics. In France, a country where the mobile customer base has been under strong pressure over the first half of 2013, unitary mobile customer-management costs are down by almost 9% year on year.

In Spain, where the customer base is growing, the unitary mobile customer-management costs were down by an even more impressive 15% year on year. So in those two countries, with different dynamics, we reduced the unitary cost to provide the service to our customers.

Regarding network -- network costs, radio site sharing is already being used at 42% of the Group radio sites, already exceeding our original target of -- for 2015 of 35% of sharing.

We have almost stabilized the network costs for the Group for the first time, whereas we are facing a strong increase of the traffic and an increase of the number of sites, which is 5%. 3,700 additional sites have been built in 2013 compared to 2012.

And I would like to highlight the exceptional performance of Orange Poland, where shared radio-access network sites increased from 2,700 at the end of 2012, to 8,200 at the end of 2013. After completing the program with an additional 1,800 sites this year, we'll save around 30% of average network OpEx per site, while improving quality.

Regarding other indirect costs, they have been reduced more or less across all lines. In terms of general expense, we have been able to use levers, such as e-billing and video conferencing, as well as cutting back on our use of consultants, to reduce our level of general expense by around 7%.

In advertising and promotion we can now lever the use of our Animals offer through Europe, segmentations through Europe and, in a similar manner, we are now using pan-African campaigns to promote our offers through emerging-market operations.

Regarding labor cost, this is the first year we are reducing our labor expense, thanks to the strongly favorable volume effects, both in French and international operations. So instead of last year's reported increase of EUR150m, and even EUR310m after the European Commission decision on the French - employees, we now show a decrease of EUR107m. Strong favorable volume effect, the impact of the French Credit d'impot pour la competitivite et l'emploi, is EUR79m.

We expect our labor expenses to continue to show an improvement in 2014, in line with the plans we had announced when we have been posting the senior part-time plan two years ago.

Group headcount, shown here in terms of active employees at the end of 2013, was down by 3%; just over 5,000 employees for the Group.

I will not comment the CapEx charts, but Stephane has already given some detail. But you see here what are the main programs, which have been increased, and those where we have been changing and reducing. I think the management of CapEx is also to put more emphasis on how to generate growth in the future, but also to be able to rationalize and improve what we do in other areas.

To come now to the net income page, at close to EUR1.9b, net income is more than doubled compared to 2012. Where are the main differences coming from? Not from the operational performance, which is more or less at par, which is more or less even compared to a year ago if we include the restructuring costs, but mainly in terms of depreciation and impairments. The value of our assets outside of France has been as stable, or slightly decreasing, compared to strong drop a year ago, which explains the main difference.

Our financial results are fairly stable year on year, even if the cost of our debt is decreasing. In 2012 we had a positive one-off, which was the capital gain on the Egyptian shares we had exchanged with the former owner, Mr. Sawiris.

In terms of cash flow and starting at the level of our guided operating cash flow, just over EUR7m, you can see that Group net debt increased just by under EUR200m over 2013, following a EUR350m decrease in 2012.

After a significant spend in 2012, cash-outs for license and Spectrum was back to a more reasonable level of EUR450m in 2013. Net interest paid were up due to a lower level of dividend received from Everything Everywhere, but the stable underlying level reflects the stability of our debt.

The next line shows our sore point in 2013, with tax cash-out almost three times the 2012 level due to the tax litigation of EUR2.1b, which has been paid to the French State at the end of July 2013.

Working capital requirement were slightly more negative in 2013, due largely to the changing business model in Spain, with the move from subsidized offer to SIM-only plus installment sales of terminals. You can also see the lower level of cash-out from dividend payments, with the EUR1.3b paid, corresponding to a payment of EUR0.50 per share in 2013 in terms of cash-out.

The end result is a net debt at EUR30.7b, and a net debt/EBITDA ratio of 2.37. Excluding the effects of the tax litigation this ratio would be at 2.2 times EBITDA.

The next slide shows the evolution of the net debt in terms of main dynamics but I think I will not comment it further.

The debt itself, the structure of our balance sheet remains very sound. We have tried and we are succeeding to keeping a strong liquidity and a smooth repayment profile for the coming years. Our end of 2013 liquidity position is at EUR6b of cash and EUR6.3b from backup credit facilities. Our 2014 redemptions are now already covered by the recent issues, equivalent of EUR2.8b of hybrid bonds in January and $1.6b bonds. The average annual for the subsequent four years is at about EUR3b and no year after is above [EUR]3b.

The average weighted cost of our debt in bonds dropped from 5.25% in 2012 to 4.83% in 2013.

Finally, the average maturity level of our debt excluding the issues in early 2014 is at 8.8 years, which is best in class in terms of European telcos.

Now a few comments on our different operations. To start with France, a large part of the revenue decline was offset by a substantial cost decrease. Evolution of our mobile service revenues, which decreased by 12% in Q4 reflect, as I said, the additional offer, the repricing of the mobile base. More than 70% of our customers were positioned on the 2013 offer at the end of the year, and 85% of on the post-2011 offer, which means that now 85% of the French mobile contract base is with an offer, which is priced after the launch of the fourth operator.

Fixed revenue decrease was limited to less than 3% after a 3.6% decrease in 2012. PSTN revenue decline slowed down, as Stephane mentioned, in line with the customer base evolution but also with slight increase in subscription fees we realized in June 2013. The French broadband market grew in volume in 2013. And this growth benefited our retail and wholesale business. On the retail side, revenues were steady. The increase in customer base by 2.2% was compensated by the slight discount introduced with the convergent offer Open. Excluding the commercial discounts ARPU are roughly stable on the broadband market.

France EBITDA margin decreased by only 0.5 points at 35.6%, whilst the drop amounted to 2 points in 2012. More than 50% of the revenue decline has been compensated by cost decrease, whereas France compensated only 23% of the revenue decline with cost decrease in 2012. And the total cost reduction for France is EUR800m.

For the first time, Orange France decreased its indirect cost by a significant amount of EUR320m. Direct costs have also decreased significantly. We have internalized more commercial acts towards our own shops and call centers while intensifying the digitalization of the relationship with customers, especially those choosing SIM-only offers.

Investments have been increased by EUR120m compared to 2012, reflecting the focus on very high speed networks. FTTH more than EUR300m investment, plus 30% year on- ear. And since 2010 we have invested EUR800m into FTTH on the French market. And we plan to continue to accelerate in 2014/2015. For IT, CapEx have amounted to EUR200m, four times more than in 2012.

In Spain, revenues have grown by 4.4% excluding regulation. The erosion in mobile service revenue was driven by a 13% year-on-year reduction in ARPU related to the sharp fall in market price and to the move to SIM-only, which means without the inclusion into the price of the terminal. These effects have been partly offset by Orange Spain's strong commercial performance in mobile but also in fixed. Overall Orange Spain managed to increase its share of mobile contract subscribers, growing 1.8 percentage points in terms of market share, up to 23.3%. This is also thanks to its leadership in 4G rollout and customer base.

Plus 12.5% yearly pro forma growth in fixed revenues is mostly driven by a 21% growth in broadband customer base. Convergent offers now cover 67% of the fixed broadband base with 30 additional percentage points year on year due to the solid commercial performance -- commercial success of our Kangaroo offer, the equivalent of not exactly easy to remember -- the equivalent of Open in Spain.

As a result, Orange Spain has increased its share of fixed broadband subscriber by 1.3 percentage points becoming number two on this market at the end of the third quarter 2013. Meanwhile this has brought a significant improvement in EBITDA, plus 9% and in EBITDA margin by 2 points.

Poland -- over the last 12 months we have implemented a very strong turnaround in our operations, and it is now clearly visible in the new-found commercial momentum. Revenue decreased by 3.9% over 2013. Lower fixed revenues, down 6%, but as Stephane mentioned, slowing down in terms of decline, lower mobile revenues which were down by 2.6%, but this continues to reflect some price pressure in spite of our recovery in terms of market share, especially in the high end.

Growth in mobile customers has accelerated to plus 3% in Q4. It was our highest quarterly growth in number of customers, as Stephane mentioned. So convergent offers now represent nearly 300,000 customers, nine times more than what we had at the end of 2012. And in terms of cost, costs are continuing to be reduced including labor expense with voluntary departure plan in our Polish operations.

For other geographies, moving to Europe and Africa, Middle East. In European countries, you have seen the numbers of Mobistar, where a significant market repricing and our lack of margin of maneuver to be a convergent operator today makes the situation more difficult than some of our geographies. In the fourth quarter we had strong performance in other countries, especially Romania. And in other -- 2013 five of the seven European countries have delivered positive revenue growth with debtor revenue up by 16% year on year.

In Africa and Middle East, strong performance in Q4 plus 6.1% revenue growth, driven by Guinea, plus 45%, Mali, plus 13%, Ivory Coast, plus 11%. The region's mobile customer base was up by 7% year on year and now we have more than 100m customers in this area. Orange Money customer base has continued to grow, representing 21% of the mobile customer base in the countries where the service has been launched.

And now to close with the operations, enterprise. Pressure on price still drives the revenue contraction, especially on the traditional connection business, but also not only the legacy connection but also now the VPN or what is Internet connections. Migration to IP continued in 2013, plus 1.7% growth of the IPVN customer base, but the pressure coming from contract renegotiations penalized the top line.

For IT services like cloud, security, video conferencing we have a solid performance. And these are the growth engine for this segment, with generally double-digit growth in those different segments, compensating partly today the decrease of the mature technologies. Moreover, we have positioned ourselves a little stronger in [this area] with the acquisition in France of Atheos to strengthen our security business and this will help to continue to grow in this area. The revenue shortfall was significantly offset by our efforts of modernization and cost-cutting, especially in international operations, we compensate by cost reduction 40% of the revenue decline. Thank you.

(Interpreted) I'm going to take the floor now to speak about 2014. Allow me to tell you our vision of the key trends on primary markets in 2014. And I'll speak about the commitments that we are making regarding our performance for fiscal 2014.

First, let me begin with a few remarks regarding the key trends in the industry moving into 2014. Allow me to begin with markets and marketing. I would like to underscore two key trends which are of consequential merit and which seem irreversible.

The first trend is SIM-only. As you know, SIM-only has extended across Europe. And the emergence of SIM-only propositions has two somewhat contradictory impacts on our business models. First of all, there's a negative impact because it pushes prices down. But it is also positive because it somewhat offsets the first negative effect which has to do with the change in the model and the resources put into terminal subsidies go down. The share of SIM-only in our sales as jumped from 10% to 50% in France in the course of one year, from zero to 30% Poland and from zero to virtually 100% in Spain. The market as I mentioned earlier shifted to SIM only very quickly indeed.

What you need to understand is that SIM-only does not rhyme with low cost. The SIM-only model of course meets wide customer demand. But I think you'd be mistaken to believe that SIM-only is -- to consider SIM-only as just a price war. There is no direct connection between SIM-only and low cost. Some SIM-only propositions are value propositions, that is to say, value for money, with of course strong focus on price, but there's some SIM-only transactions that are mid-market, or upscale even, with more abundance, more service. And that is the value strategy within SIM-only that we shall pursue in 2014.

This also means that we shall be present in all countries where the SIM-only has taken place, where -- and where terminal subsidies are a different shading element on the market. Take Spain, for instance, 100% SIM only, but 87% of our sales involve access to a terminal, to a handset.

The second key trend is convergence. Convergent propositions appeal to more and more European consumers. I think we can ascribe this to the straightforwardness there is in having a single operator for all, whatever you do in the family. It's straightforward, it's financially worthwhile and it also has to do with technology and usage changes. Tablet users, for instance, use up most of their connectivity at home on a fixed network with Wi-Fi, but they also want something fluid between the fixed line and the mobile network. And all this of course advocates having a single connectivity operator, whether you need mobile or fixed line service.

Therefore, in Europe, we find it is fundamental to provide people with convergence access. Take France, Spain, Poland, in those there are few situations where we have to improve things. Take Belgium, for instance, or Romania. But as we see it, convergence has become an overarching priority. We have to offer convergence, because we are convinced that everywhere, all over the world, not only in Europe and developed countries -- take the American market or British market, which have not yet shifted to convergence. Well, in those markets we can offer convergence.

The second key trend has to do with the further increase in usages. And users want better customer experience. They want return, richer content. They want to download information. They want to work interactively using any kind of terminals, whether at home or on the move. And all this will lead to great demand for broadband, very high broadband, to access richer and richer content.

If you take 4G, for instance, well, our aim is 2.5m 4G customers at the end of the year, 1.5m in Spain, and -- or 2.5m in France, 1.5m in Spain -- and up until now 4G usage has increased -- shows a 50% increase from 3G usage. So it's quite clear that 4G doesn't just have to do with the price of the offer, of the flat fee. It has to do with usage and consumption, the consumption generated by our consumers and their demand. But we have of course stuck to our vision. We have a slight price differential in 4G because, as you may have seen, when we changed our mobile prices at the end of January we maintained a EUR3 premium on our 4G offers in spite of the announcements made left, right and center by other operators. But we still have this 4G/3G mix with a difference.

Regarding fixed rate high broadband here so very high broadband and speed, so fiber, in other words. Bear in mind that two-thirds of French people who shift to fiber choose Orange. We are capturing two-thirds of new fiber customers. And the market still has operators who are slashing prices and they offer prices that seem ludicrous. But in spite of that, we have still managed to be successful with our quality and value strategy on the strength of the intensity of our deployment.

And as far as fixed lines operations are concerned, well, for the ARPU is better and the churn is lower. So you see that our quality strategy is indeed rewording our aim as 1m fiber customers at the end of -- at the beginning of 2015, excuse me. And naturally in order to accomplish that we shall continue to deploy. We'll be at 3.7 connectible homes at the end of 2014 of 1m roughly, and we shall accelerate our deployment in Spain with Vodafone. Our aim as you know is to connect 6m homes 50/50 with Vodafone by 2017.

To answer one of your questions, I'm sure, regarding Bouygues Telecom's announcements on fixed prices in France, let me say that we believe that the fixed market is driven by convergence; it shows up in the numbers. And when it comes to convergence our propositions are very relevant and competitive. And when you take a look at the fixed line component of our convergent propositions, the numbers are very similar with those announced as being breakthrough by Bouygues Telecom. So we believe that within our convergent propositions, especially since we launched a quadruple play with the Sosh brand, our proposition is competitive for those people interested in that product and service.

Now, some people want better connectivity quality, that's why they choose fiber. Some people want more content and richer service. So that's the way it is.

Regarding roaming, this also made a buzz. We decided to use roaming to appeal to clients and to offer our European customers roaming access, conditions set are attractive. We launched Go Europe, which was very successful, because now we have 1.5m customers who have gone for Go Europe and usage has been growing, because regarding data roaming in -- over the -- in the course of one year, we doubled data roaming consumption across Europe.

So you see that elasticity between price and consumption does exist. There is such a thing, and by increasing usage you can offset price declines. So we've chosen to preempt European Parliament decision confirmations with the first package that was announced. We've decided to use this to stand out from competition, to attract customers. And since February we've been accelerating that.

We've included roaming from and to over 30 countries in our premium offers. All our premium offers have a significant roaming component with unlimited communications from 7 to 60 days, depending on people's needs, and data volume, which can reach up to 14 gigabytes per year in the case of the top end service or products.

The third trend for 2014 is the need for digitization, and need for work-based relations. This of course is based on demand for innovative services. There are plenty of players including operators who have a lot to offer. And we have to identify and cherry-pick the services where we, operator, can stand out in this global competition based on our technology, based on the guarantees that we can provide in terms of safeguarding people's personal data, and of course meeting people's demands, as people -- more and more people have smartphones, the remote of life, as they say.

So our customers use digital channels more and more when interacting with Orange, whether it be purchases, customer service, assistance contacts, by chat, by email. And increasingly in community systems between users and fora which we are of course heavily involved in. We have people who do that day in, day out. For example, Web-based activity from a fixed line or mobile device amounted to 100m in 2013, and digital contacts now account for 20% of total Orange France contacts versus 15% in 2012. So you see that it's a very sharp increase there and we're looking at an acceleration in Web-based contacts.

So it's a challenge for us. We have to offer a cross-channel experience that our customers enjoy when they call a call center, when they use the Web service and so on. So we have to be there, and we have to make better use of customer data. And last year we set up a big data program within Orange France. And the aim has not been to make money with the data, but just to use the oceans of data we have to offer better service to our customers, more tailored service to better meet their needs and demands.

As I said, digitization and customer relations are an opportunity for us to shrink our cost structure while improving, enhancing, modernizing the service we provide our customers with.

Regarding services, well, I won't elaborate too much on this because we are pressed for time. But let me just say that the Group is moving to open innovation with resolve. Open innovation is somewhat of a cultural breakthrough as far as we're concerned. We've decided to fully open up our innovation chain to the outside world, to the world of developers, first with a very active policy with start-ups, with students, with entrepreneurs, with developers in this huge community out there, and by focusing on our own systems in order to make them more readily open to the outside world. This is what we call APIs, as you know.

This is where developers and innovators plug into to access our own systems. And of course it's a benefit to our clients. There are plenty of service areas where things are speeding up at Orange, and because these are the future choice of revenue for the Group. There's the cloud, now we have 2.4 cloud users, 2.4m cloud users, these are private individuals. And this of course is very good to tie customers in.

In enterprise we made 22% inroad in cloud revenue, and this growth relay is indeed at play in mobile-based payment and financial services. Based on the success we reaped in success we're addressing the European market now. And we introduced a new service in France called Orange Cash in two cities, Strasbourg and Caen. We did that this month, and we're going to extend this across the French territories. The service was designed with a partner called Visa. And it's very user-friendly, very simple, easy to use, and any person who has a smartphone can pay and shop using a smartphone. So it's NFC contactless, totally secure. Authentication is SIM-chip-based and you can also purchase online.

Then there's entertainment and content. We constantly seek more content abundance in music, video, and we developed synergies with Dailymotion, our subsidiary, and gaming. And that is constantly changing, of course. And in that area we aggregate and sell. And actually our aim is to offer profligate services and innovation to as many people as possible. And then there are connected objects. As you know, this is a very fast-growing area in more areas than one, of course.

We are particularly focusing on two areas, wellbeing, health -- healthcare. We've been a long-standing player in the healthcare area. Now we want to extend our reach in wellbeing in connection with the relevant -- of connected objects. And then there's security, notably home security, the smart home which has to do with home automation, of course. So we're developing integrated solutions and we have a -- we'll be launching a [disrupt] proposition in France next summer when it comes to home security.

The fourth key trend is market consolidation here. Of course, it's quite topical as we speak. We believe that consolidation industry, consolidation is going to pick up pace in Europe. You're all familiar with our view of the European industry. And we believe that it's unavoidable to see some consolidation in mobile industry. There are too many players in mobile today. This splintering, this fragmentation, does not make it possible to meet the investment needs to provide very high broadband in terms of spectrum and in terms of technological deployment across Europe.

And this is one of the reasons for Europe's delay against America and Asia. Industry consolidation in mobile will not be easy. It's not -- it's going to be uphill because there's plenty of reluctance from the competition authorities and they consider that for the past 15 years they've had this steadfast approach. And maybe now they've come to the realization that they should change their judgment.

Anyway, we believe that there will be interesting tests that will be run. Of course there's some real life cases that will take place, say in Europe or in Germany, or any -- somewhere else, maybe in France, who knows? And there will be fixed mobile consolidation. This is how the industry is responding to convergence. And some key European players who do not really believe in convergence up until now, now realize that they must, and they're looking at cable assets.

I've heard it on the grapevine that consolidation could not be good for consumers because it could mean that there will be price increases. If you take a look at Austria, for instance, Austria is the counterexample. Some people say, well, look at Austria, you see, prices increase. Well, I can tell you that that's not true, it's not the case. There's a great survey by HSBC that was published a few days ago. Yes, Charles. Thank you for your contribution, by the way. No, it wasn't Charles, excuse me, my apologies.

Anyway, a great HSBC survey that has shown that there was no price increase in Austria, contrary to popular belief. If you take a look at the content of the propositions and the diversity of the offers on the market after the reduction of the number of players, well, it appears that current prices are still below what they were prior to the consolidation. So you really have to pay attention to what you hear and read. With this consolidation there's not necessarily a rise in prices. But it can provide some stability, some more sense on markets. And we are all for that, of course. Then there's the minimal version of consolidation, which is network sharing. I mentioned that in several European countries we were involved in network sharing agreements and there too we shall see whether opportunities could arise.

In the meantime in 2014, above and beyond tapping into these trends to spike revenue generation, because there still -- there will still be pressure on revenue in 2014. We shall further the efforts we shall cast on cost reduction. I said our aim was to cover the shortfall in revenue by reducing costs. And all this leads us to set an objective which is particularly challenging -- stabilize the Group's EBITDA margin in 2014, and this would be quite a turn, given the past three years we've been through. The aim is critical for us. It's a keystone. It --

Now moving on to the Group's guidance 2014. It translates into this number, the bracket you have for 2014 for EBITDA from EUR12.1b to EUR12.6b. The lower point, EUR12.1b, spells the stabilization of EBITDA, given the sales outlook that we're contemplating for fiscal 2014. The upper point, EUR12.6b, would mean stabilization of EBITDA in absolute terms, such is the situation for this indicator. And we do think that it's fair, because that is value creation and the main business indicator that helps measure the Group's performance. So that's the first objective, stabilize the Group's EBITDA in fiscal 2014 as has been announced for a few months now.

The second objective has to do with the balance sheet. We shall maintain the guidance regarding net debt over EBITDA. We want to near to -- we were 2.2 in 2013 excluding the tax litigation. We want to get closer to 2, and we're confirming this in the medium term, around 2 in the medium term.

Regarding M&A, unsurprisingly, we shall remain very selective and cautious. Naturally if there are opportunities to partake in consolidation in a way that's beneficial for us and the industry, well, we shall be involved. But we shall cherry-pick, of course, because financial maneuvering is rather tricky.

Yesterday, at the Board of Directors' meeting, I submitted that we adjust our dividend for 2014. There will be interim payment at the end of this year and the balance next year. The 2014 dividend should be EUR0.60. EUR0.60 seems to be the good balance between the Group's cash generation we're looking at for 2014, the uncertainty we're faced with, and we have to maintain some flexibility in our resources and in managing our balance sheet.

Nevertheless, I and the Group have this will to offer attractive compensation to our shareholders. At EUR0.60 a share, the yield of the share will be one of the most attractive in the industry and in -- and on the French stock exchange.

There we are. So much for the presentation. And now, here in Paris and in London we'd be delighted to entertain your questions. Thank you very much for your kind attention. You may raise your questions in French or in English.

(Interpreted) Vincent Maulay from Oddo. I have two questions, first of all on 4G. Could you tell us how people have received this price hike? Is there some friction? And you mentioned a mere 50% rise. Can we deduce, I mean, infer that most 4G customers are below 3 gigabytes? Or do you think that you'll be able to upsell and with a bunch of early adopters going above 3 gigabytes soon?

My second question has to do with sales costs. Taking a look at the drop in sales costs, with rising prices in terminal sales, what would the -- how can you learn lessons from Spain, where you sell 87% terminals with a SIM-only business model?

(Interpreted) Well, thank you. Delphine may respond to these questions that have to do with the French market.

(Interpreted) Regarding 4G, well, yes, indeed we did raise prices. But there has been no negative impact, quite the contrary, a very good trend, similar to what we experienced in Q4, in very good buoyant business in mobile in early 2014 even in spite of the price increase.

Regarding the consumption of 4G customers, it's difficult to give you clear-cut answers because average consumption is on the rise. We're at the beginning of the 4G wave, so to speak, so it's early days. Of course, it's fair to believe there are some clients out there who are reaching the threshold. And average consumption will rise. In the past six months it has risen quite sharply. So there will be strong 4G usage moving forward.

Regarding commercial costs, sales costs, regarding the results that were presented and the way in which we achieved net adds in 2013, let me remind you that 63% of gross sales were achieved with premium -- Open and Origami, based on the traditional model with subsidized offers. And it is that performance which has enabled us to increase the value market share we have on the mobile market. So of course there may be some adjustments to be made in terminal subsidies between the low end and high end of the market.

But the results we reaped in 2013 and those that we're experiencing in early 2014 show that there is a subsidized market in France, and it's quite buoyant, so much so that people need to renew terminals because of 4G. So shifting from a subsidy-free model to something else would be very, very risky because we're a leader in the top end market, and it does account for two-thirds of our gross sales in Q4 2013.

(Interpreted) Thank you, Delphine. Do we have any other questions?

(Interpreted) I have two questions, if I may, one on fiber. Could you come back to your conquest rate, the impact of fiber on your mobile net adds and value creation for the Group in France?

And secondly, in terms of M&A, are there any assets which you may want to shed, because they may lack some value creation? And would there be market consolidation opportunities that could lead you to consider pushing your dividend down?

(Interpreted) Delphine, regarding fiber?

(Interpreted) Well, fiber has three virtues. First, it makes us more competitive on the retail market, because in the Paris region, for instance, the most competitive market in fixed line operations we're not the leading operator, we're not even second. But with fiber, however, we're increasing our installed base and market share on the fixed line market. So we are indeed taking customers away from competition.

Then there's ARPU, EUR3 ARPU more with fiber, so there's a retail impact on fiber. Also, as you may know, we've run a technical test in Palaiseau where we covered this city in one shot with fiber. I won't give you the figures, we don't want the regulator to hear this, but the impact on Orange's market share has been huge, it's very, very positive, to put it mildly. And so there's a lot to be done. We have to consider covering neighborhoods or areas to have real sales effect on it. So as far as retail is concerned, we still have quite a lot of potential regarding fiber.

Another benefit of fiber is wholesale, because some revenue is more difficult to explain than copper revenue. With copper, it's leasing on a monthly basis. With fiber there's co-funding then recurring revenue and so on. But the benefit is that it's paid ahead, unlike for the copper networks. So we're looking at wholesale sales.

And finally, with fiber in the medium term, you can switch from the copper to the fiber network, hence the Palaiseau test, that's why we did it. Inter alia how we shift from copper to fiber with huge network operation gains. And fiber of course is a passive facility. It's far more stable, far more effective and efficient than copper for very high broadband, and with the outlook we have in improving our indirect costs and so on. Here we have huge operational efficiency potential.

So those are the three factors. Retail is already bearing out. Wholesale is active, it's in progress, and eventually we shall be able to slash our fixed line operating costs.

(Interpreted) Regarding the second part of your questions, are there any assets we'd like to shed. The answer is no, the short answer is no. I wish to maintain a dynamic vision of our asset portfolio. It is my belief that we have to constantly or at least regularly consider the efficiency of our operations in terms of portfolio management wherever we are, notably in Africa/Middle East. We operate in roughly 20 countries in that region, and we wish to extend, of course.

And for market-related or historical reasons we may here and there find that our investment may not be as profitable as initially expected. So I'm not saying that the scope will remain unchanged. What I'm saying is that after all -- in the wake of all the transactions done in the past two years, notably Switzerland, the Dominican Republic, there's not much to be expecting in terms of asset disposal.

Now, your question on dividend. How should I put it? Off the cuff, the short answer is no. Payout and shareholder compensation is crucial, it's capital, the trust, the relationship of trust we have with the community of shareholders and investors. This is part and parcel of the industry.

If there are any consolidation moves, we shall be the beneficiaries one way or another, even if we're not directly involved. And even if we were involved in a consolidation move on a European market, there are plenty of financial ways that would allow us to involve to -- and that would enable us to maintain payout.

So you see, there's no direct connection, as I see it, between our involvement in consolidation, if any, and dividend payout. Once again, it is my belief that dividend payout must be sustained in striking the balance between the involvement of -- the engagement of the stakeholders in the Group. And we need that engagement in order to move forward.

And then because we have questions in London, so may I ask our colleagues in London to take the micro and ask questions.

Okay. It's Frederic Boulan here from Nomura. Thanks for taking the question. A couple of points. Firstly, on France, we saw worsening Q4 trends in service revenues. Can you talk about your previous comments on ARPU for 2014? You were talking about 8% pressure before. Is this still on track or do you see some pressures with that number?

Second point, if you could comment a bit more on your EBITDA guidance range for 2014 and specifically the assumptions you have for France in terms of revenue and EBITDA?

And lastly, some clarifications on the leverage. If I take about 2.1 times the mid-range of your EBITDA target, I get about EUR26b of debt for the end of the year, which is about EUR4.5b lower than the full year 2013 number. So can you just tell us the assumptions you don't hear in terms of hybrids? And then the split between organic free cash flow generation or other external moves. Thank you very much.

Okay, about the ARPU trends and maybe the comments on the fourth quarter results revenue that are a little lower maybe than expected. Delphine?

So I -- okay. We definitely have a very proactive policy in terms of repositioning our customers on our new base, our new tariffs. 85% of our base is repositioned with post-Free-launch offers and 70% on 2013 offers. That's why we have -- we were very proactive in repricing our customers with one very, very important benefit which is the churn, which is really under control and very, very low compared to where it was one year ago. That's why the reprice was still quite high in Q4, and besides the increase of the roaming, national roaming agreement was a little bit lower than it used to be in Q3 and Q2, that was -- that's why the mobile revenue decreased.

For 2014 we are very cautious because we know the market will still be very agitated. But still our good commercial performance in Q4 and still good performance nowadays make us very confident in our ability to continue to increase our value market share in 2014.

On the EBITDA guidance, I take the point and I let Gervais answer on the leverage.

On the EBITDA guidance for 2014, which is, as you have understood, a key point in the guidance that we give to the market, the point is that as we are in a very uncertain environment, and that everyone can see the pressure on prices, the pressure on revenues, we think that the -- that once again the best economic parameter that we can really work on, and around which we have to monitor the business is the EBITDA generation and the EBITDA rate. So clearly I confirm that our main guidance is to stabilize EBITDA rate as I described a few minutes ago.

Now what does this imply for France? It implies for France that we will have an EBITDA rate slightly increasing in 2014, around 1 point. Once again, in an environment in terms of price policies and market which is still relatively uncertain, so it means that we will have to work mainly on the cost basis, and this is what we are doing. We have no specific or accurate forecast in terms of revenue that we won't provide to the market. But in terms of EBITDA what is consistent with the overall objective of stabilizing EBITDA rate for the Group is a slight increase of EBITDA rate in France.

Regarding leverage and debt, it is true that we could on a change of net debt in the range you have described, above EUR4b, which is due, I would say, for huge part to the issuance of hybrid debt, so EUR2.8b of hybrid debt changed the relationship between equity and debt into our IFRS figures.

On top of that, a few things. One is the disposal of Orange Dominicana which would bring an additional EUR1b of cash on top of the personal performance, plus a few additional items, a slight decrease of the cash out of the dividend. The cash in of the credit d'impot pour la competitivite et l'emploi which is cashed in one year later than it is accounted for into the P&L. So a few items like that explain why you come to the EUR4b more or less net debt decrease year on year between 2014 and 2013.

Stephane Richard (Interpreted) Thank you, Gervais. Back to Paris.

(Interpreted) Antoine Pradayrol from Exane BNP Paribas. I have two quick additional questions on your guidance, please. First of all, regarding CapEx, could you give us more flavor regarding CapEx? Will it rise or remain flat in 2014?

And regarding cost-cutting, if I correctly understand your EBITDA guidance and the comments you made on EUR12.1b, so that would be a stable EBITDA rate. In other words, you may envision that you're looking at a sales shortfall of 3% to 4% from crunching the numbers correctly. Does this mean that cost cutting OpEx declines will be greater in absolute terms in 2014 from 2013? We're looking at EUR1b in cost-cutting in 2014. Have I crunched the numbers correctly?

(Interpreted) Regarding CapEx -- this is Gervais Pellissier speaking -- so we could have been more specific. Let me put it this way. Our rationale is stability or a slight increase in CapEx. We believe that our plan leads to roughly stable CapEx. Of course, we could increase that CapEx in order to maintain our leadership or to accelerate coverage, as was the case this year as well. Stable positive, put it that way.

Now regarding EBITDA and cost, there are two kinds of cost. Indirect costs, where we're really going to move them down, the difference between the EUR350m achieved in 2013 and the EUR250m we're aiming at in 2014, a major portion of that difference is the -- well, there is less of an impact of the CICE, the French scheme. So you see that, of course, has played a -- that tax measure has played a significant role.

And regarding direct cost, now we're cautious, we're walking on eggshells here, because it has -- it's pegged to sales, because either -- as Delphine said -- either offers are subsidized, in which case our sales cost will be higher, and will less be able to reduce them, but ARPU and sales will be higher. Or will be driven to a SIM-only model more and more with fewer sales costs and lower sales.

So we have to be cautious here, because we can't control those trends. Some trends are shifting towards subsidization in France, as Delphine said. But as Stephane said, there was a quick shift towards SIM-only as in Spain, for instance. So as I say, we're walking on eggshells. So we're keeping our options open. We're adjusting our distribution costs, our retail costs, to significant commercial cost reductions, that a quick reduction in indirect distribution in France and in other European countries such as Belgium we're going to reduce indirect distribution costs. So we're not going to be as dependent on third parties. The only country where it remains rather extravagant, that's what all operators say, is the UK.

(Interpreted) Yes, regarding commercial costs, does this mean that you haven't yet decided to move to staggered sales in France? Or that you've made the decision and it's half and half, you don't know what the volume is and so on?

(Interpreted) Delphine, over to you.

(Interpreted) Let me remind you that France is somewhat specific in that you cannot stagger more than EUR200. There's a French Act, I forget the date. Anyway, there's a law in France, so there's nothing we can do. We're considering models like that. But at any rate, for an iPhone or a Samsung Galaxy, it would be difficult to fully spread out the price for the terminal. But with the one-shot payment and merely EUR200, it gets involved, it's convoluted, the rental model. So Free has this model. It's not really flying.

So that's a French constraint. That's the way it is. We can't allow customers to pay for their terminal over time too much.

London? Yes.

Yes, good morning. It's Jerry Dellis from Jefferies. I've got two questions, please. Firstly, in terms of your M&A policy, when you talk of a selective M&A policy, are you mindful of the risk of perhaps being left behind in Spain if others consolidate around you? And if that were to happen, how might we expect Orange to respond?

And then the second question related to the Group, should we anticipate cash flow actually stabilizing in 2014? And if that isn't the case, then are there implications for the level of dividend payout beyond the 2014 year? Thank you.

I try to answer it on the Spanish situation, and I let Gervais answer on the cash flow statement. Regarding the situation in Spain, the first thing I would like to emphasize is that in this country we are relatively competitive, both in terms of mobile and fixed market, because as you know, we have a competitive offer on -- including fixed access.

We have today a market share in the broadband market which is around 15%. We are in fact the second player in this market. So we do not suffer in Spain of a substantial lack of access to a fixed component of a bundle, meaning that we are on the convergent market. And it's precisely because we are, and we are strong in the convergent market that we have been able to fulfill our commitments and targets in terms of commercial success.

Now of course we pay a lot of attention to the Spanish situation. We know that there are some rumors or interest around especially cable players. We will see in a very opportunistic way what's going on. Everyone knows that there could be some combination in this market making sense in terms of going faster and forward to the convergence between Orange and a player in the fixed market. But there is nothing in the agenda, even though clearly for us Spain is apart France probably the key market in Europe where we will try to really focus our resources to play the consolidation.

Regarding the cash flow prospect, first if you detect from my own subsidy question on CapEx, and with the guidance on EBITDA, you see that it gives more or less an EBITDA minus CapEx figure, which is as stable or slightly decreasing over 2013, if we are with stable CapEx and with EUR12.1b EBITDA. We have taken that into account in our revised dividend figures, the one which has been proposed by Stephane to the Board. And we are also checking that in terms of payout on the free cash flow, we are remaining at reasonable levels, because the free cash flow evolution in 2013 should be -- and 2014 should be slightly better. We have, as I said, a few items I've just mentioned before in terms of below EBITDA items that should be in a better direction in 2014.

Another question in London? No? Paris? Okay. So thank you very much. Thanks.

Editor:  Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call.  The interpreter was provided by the Company sponsoring this Event.