Orange SA (ORAN) 2021 Q4 法說會逐字稿

Good morning, and welcome to our full year 2021 earnings presentation. To begin, I will present the main highlights of the year, and then I will hand over to Ramon, who will give you more details about our financial results.

Let's start with our key messages for Q4 2021 on Slide 4. Our strategic choices are paying off as Orange remains the undisputed #1 FTTH and convergent player in Europe, a leadership position that has been confirmed by our excellent commercial performance in 2021. And that will be further strengthened by the recent acquisition of Telekom Romania and the ongoing process with Voo in Belgium. To better extract value from our first-class infrastructure assets, we have finalized during the fourth quarter the deconsolidation of Orange Concessions and the carve-out of TOTEM, which currently comprises Spanish and French mobile sites. Our objective for 2022 is to add other countries from our European footprint. Our 2021 financial results are paving the way for our 2023 ambitions, with excluding the allocation of the tax refunds and EBITDAaL up 0.8% over the year, eCapEx starting the decrease from H2 and the confirmation of the turnaround in organic cash flow.

At Orange, we believe that strong economic performance is not possible without social and environmental leadership. On Slide 5, we present the main measurable KPIs that we use to monitor our progress towards a more sustainable, inclusive and responsible world by 2025. In 2022, while pursuing our initiatives to foster digital inclusion, we were able to stabilize our level of carbon emissions on Scope 1 and 2 compared to last year, despite the increase in usage and the easing of sanitary restrictions. Power purchase agreements in Europe and our solar solutions in MEA will enable us to ramp up our supply of energy from renewable sources and the long-term fixed prices. The reduction in our carbon emissions is therefore set to accelerate to secure the achievements of our environmental commitments.

In terms of financial achievements, we posted revenues at EUR 42.5 billion, up 0.8% year-on-year, with plus 0.5% in Q4, driven by a still outstanding MEA, solid other European countries and positive Enterprise offsetting the decline both in Spain despite a trend improvement and in France due to cofinancing. The slight decrease in Q4 in the group's EBITDAaL resulted in a full year performance of minus 0.5%, in line with our guidance or plus 0.8%, excluding the employee shareholding plan. This result was driven by the double-digit growth in MEA and the good performance of other European countries.

EBITDAaL decline -- significant improved in H2 in Enterprise with the acceleration of our legacy decline and in France due to cofinancing. Group eCapEx decreased by 6.2% in Q4 to reach less than EUR 7.7 billion for the full year, also in line with our guidance. And finally, our organic cash flow 2021 reached EUR 2.4 billion, fully in line with our guidance of more than EUR 2.2 billion. Thanks to these solid results, we are in a position to propose a dividend of EUR 0.70 per share for the year 2021.

I will now hand over the floor to Ramon.

Thank you, Stephane. Let's start with group revenues, which increased by 0.8% over 2021 after growing by 0.5% in Q4. MEA was the main contributor to revenue growth with a double-digit increase of 10.6%, followed by Europe, excluding Spain at plus 2.6% and Enterprise at plus 0.5%. In France, revenues were flat, excluding the impact of cofinancing proceeds from the previous year. In terms of activity, retail services kept growing, supported by both convergent at plus 1.9% and mobile-only services. Fixed-only services declined by 2.8% as well as wholesale revenues down by 6.8%, mainly due to France. Lastly, IT and integration services continued to increase as well as equipment sales, which is almost coming back to its 2019 level.

Turning to EBITDAaL. We posted a slight decline at 0.7% in Q4, ending the year at 0.5%, down in line with our flat minus guidance. This includes the costs related to the employee shareholding plan for EUR 0.2 billion and the fact that roaming was still far below its pre-pandemic levels.

Looking behind the headline figures of each segment. In France, EBITDAaL grew by 1.5%, excluding cofinancing. Although Spain was down by 9% in H2, this nonetheless represents a significant plus 7.2 points sequential improvement, resulting in a full year decrease of minus 12.7%. As you can see, the other European countries segment posted a solid plus 6.6% growth, while MEA, again, delivered remarkable growth, which puts the full year increase at an outstanding plus 16.8%.

For sustained negative effects of the pandemic on corporate clients habits accelerated the decline of Enterprise legacy business, impacting its EBITDAaL at minus 8.3% over the full year. Finally, mobile financial services started its EBITDAaL recovery trend.

Let me now give you a brief update on our scale-up program. We are delivering our commitment to reach EUR 1 billion net cost savings by 2023 out of the indirect cost base of around EUR 14 billion in 2019. At the end of 2021, we delivered more than EUR 300 million accumulated net savings compared to 2019, and we signed a new intergenerational agreement in France for 2022-2024, a key milestone to pave the way of our transformation. Therefore, even in a challenging context of inflation and high energy cost pressure, we aim to reach cumulated net savings of around EUR 600 million by the end of '22 compared to 2019.

Our net income landed at EUR 0.8 billion, mainly as a result of the impairment that we booked on Spain goodwill in H1, the countereffect of the tax refund received in 2020 and the provision booked in H2 in the context of our new intergenerational agreement. These impacts were partially offset by the impact of the deconsolidation of Orange Concessions.

In 2021, organic cash flow reached EUR 2.4 billion, well in line with our guidance of more than EUR 2.2 billion. Before the allocation of a tax refund, mainly into eCapEx for EUR 300 million, we reached EUR 2.7 billion organic cash flow this year, thus pursuing the positive trend reversal initiated last year. At the end of 2021, our net debt reached EUR 24.3 billion. This increase of EUR 0.8 billion compared to last year, despite the disposal of a 50% stake in Orange Concessions, is mainly due to the allocation of the tax refund and the spectrum licenses paid. Overall, our net debt over EBITDAaL ratio at 1.91x remains well in line with our guidance. Finally, we kept a strong liquidity position and we continued to decrease the average cost of our debt. This strong balance sheet is a strong asset we can rely on.

Let's now turn to the business review of the fourth quarter with France, where we achieved an excellent commercial performance. Fiber remains a very strong acquisition tool with 351,000 net adds this quarter, enabling us to reach 1.4 million new fiber customers over the year, with more than 53% of new fiber customers being new customers for the group. At the beginning of 2022, we surpassed the mark of 6 million fiber customers. These figures illustrate the success of our copper to fiber transition strategy, which allows us to maintain our strong market share in both private and rural areas.

On the mobile side, we achieved strong net adds of 132,000 this quarter that were mainly driven by Orange high-end offers as a result of the successful revamping of our offers in October with the lowest level of churn for Q4 in 4 years. Despite a typically very competitive Q4, we improved all our ARPOs, thanks notably to Convergent, which now exceeds EUR 70 after a significant increase of EUR 1.5 year-on-year.

Through the year, we have consolidated our strengths with ARCEP acknowledging that we have the best mobile network for the 11th consecutive year. Moreover, we have extended our lead versus our competitors in terms of Net Promoter Score. Q4 financial results reflect this strong operational performance, with revenues stabilizing, excluding cofinancing, thanks to the continued acceleration of retail services revenues, which grew by 4% in Q4, excluding PSTN, a key element for the future. Full year EBITDAaL is decreasing by 2.9%, but is up 1.5%, excluding cofinancing and despite a negative impact of around EUR 100 million linked to the employee shareholding plan.

As a final point on Orange France, eCapEx has peaked and is now beginning to decline. Indeed, we have now achieved more than 80% of our 2023 objectives with 28.8 million FTTH connectable homes at the end of '21, including more than 16 million deployed on our own.

Let's now turn to Europe, where we increased our mobile contract customer base in Q4 by 58,000 net adds and our fixed broadband by 34,000 net adds, out of which 88,000 are related to FTTH. With this performance, we closed '21 growing the customer base in all segments: mobile contracts by 4%; fixed broadband by 15%; and convergence by 8%, including from the fourth quarter.

While total revenues in Q4 declined by 1.5%, impacted by Spain full year EBITDAaL at minus 2.9%, underlines the clear trend of improvement in H2 with Europe absorbing the negative effect from Spain to reach a flat performance compared to minus 5.9% in H1. Excluding Spain, revenues increased by 0.5% in Q4, delivering full year growth of 2.6%, while -- with EBITDAaL, growth closing the year at 6.6%, thanks to the great performance in Poland at plus 5.9% and in Belgium at plus 9%. In '21, we have been able to consolidate the 6 European countries as one of the group growth engines, which we are now reinforcing with the acquisition of TKR in Romania and the ongoing process with Voo in Belgium, paving the way for further developing our Convergence strategy.

Let's move to Spain. From a commercial point of view, despite slight negative net adds in Q4 for fixed broadband and Convergence, both FTTH and mobile contracts continued to post positive net adds. In '21, our segmented value proposition and focus on customer experience allowed us to reduce churn significantly and to achieve fixed broadband customer base stabilization and growth in convergence, mobile contract and FTTH in a highly competitive environment. In Q4, we were able to sharply reduce the decline in convergent ARPO, thanks to the price increase on the Orange brand as well as disciplined promotion policies.

In terms of our financial performance in Q4, total revenues at minus 4% reflect a gradual improvement of 2.6 points in retail service revenues. Wholesale revenues decreased but without impact on margins, while equipment revenue growth slowed down following the significant catch-up seen in the previous quarters of '21.

Full year EBITDAaL decreased at a similar rate as in 2020 due to past customer base losses and price repositioning. Nevertheless, there was a clear turnaround in the trend between H1, which was at minus 16%, and H2, minus 9% as well as on a quarterly basis. The initiatives carried out in '21, such as our brand portfolio simplification, which will deliver its full impact this year, and the ongoing focus on our transformation makes us confident in the improving trend expected for 2022, enabling growth in the organic cash flow and our ambition to return to EBITDAaL growth from 2023.

Let me now turn to the outstanding performance of Africa and Middle East, which delivered a plus 9% revenue growth this quarter. This performance was by double-digit growth in retail services, driven by, firstly, mobile data, thanks to a continued increase in our 4G customer base; and secondly, by the continued robust momentum of fixed broadband with more than 2 million customers.

Regarding Orange Money, we have adopted our commercial strategy to changing market conditions with a limited area of our footprint in a first step by repricing our offers. As a result of this move, Orange Money revenues decreased in Q4, but we managed to grow the active customer base as well as the volume of transactions in all our countries.

In terms of profitability, full year EBITDAaL grew by 17% and we increased the margin by 2 points driven by continued strict cost discipline. In the light of these strong results, I confirm all our MEA ambitions in the medium term, including double-digit EBITDAaL growth and even faster organic cash flow growth.

Let's now look at the enterprise segment. Revenues were up by 0.7% in Q4 and 0.5% for the full year, which is still impacted by the pandemic. This revenue stabilization was achieved thanks to the growth in IT & IS and in mobile, which offset the ongoing decline in fixed services. As we mentioned previously, the decrease is mainly explained by the change in usage of voice services, which accelerated during the pandemic.

The growth in our IT and integration businesses is still solid, despite being impacted by the ongoing chipset shortage, which delayed the completion of certain projects. EBITDAaL was at minus 8.3% in '21 as a result of a decline in our high-margin legacy business and also the impact of the employee shareholding plan. Overall, Enterprise is accelerating its revenue transition from a network to a digital services company. IT & IS revenues now represent more than 41% of OBS revenues, up 2 points compared to the previous year. The acceleration of this transition from high-margin legacy business to dynamic growth engines will delay our EBITDAaL turnaround, with 2022 still expected to be down low single-digit. The new OBS CEO roadmap will be to return to growth from 2023.

Let's now move to Mobile Financial Services, which, as a reminder, comprises both Orange Bank in Europe and Orange Bank in Africa but not Orange Money business, which is reported under the MEA segment as seen previously. The EBITDAaL recovery path to breakeven is now gathering pace with an improvement of EUR 34 million in '21. Growth in the net banking income, up plus 57% in 2021, was instrumental to this improvement. This achievement was notably driven by the growth both in volume and value of our customer base, 1.7 million in Europe and 0.7 million in Africa, which was launched only 18 months ago.

In France, nearly all our new customers enter through paid offers, which is a key differentiator of our strategy. We are also very proud that in France, Orange Bank has become one of the most well-known brands in the sector and has been recognized as offering the best banking app.

This concludes the business review of this fourth quarter. Let me now hand over to Stephane to conclude this presentation.

Thank you, Ramon. Let's now a look at our guidance. During the past years, we have paved the way to reach the ambitions of our strategic plan, Engage 2025. Therefore, 2022 would represent a significant move towards our 2023 goals as we aim at reaching the following targets: EBITDAaL will step up and grow between 2.5% and 3%; eCapEx will decrease and reach not more than EUR 7.4 billion, excluding the effect of the ongoing acquisition project in Belgium; organic cash flow will increase to at least EUR 2.9 billion; our target net debt-to-EBITDAaL ratio remains unchanged at around 2x in the medium term. Finally, regarding the 2022 dividend, we will propose to maintain EUR 0.70, of which EUR 0.30 as interim dividend in December 2022.

Before opening the floor to questions, I'd like to reiterate all our guidance for 2023, including our organic cash flow target. Since 2019, we managed to grow our organic cash flow fully in line with our guidance. After another step-up in 2022, organic cash flow will reach between EUR 3.5 billion to EUR 4 billion in 2023, supported by both EBITDAaL increase, fueled by the EUR 1 billion cost savings program and eCapEx decrease initiated in H2 2021. Let me remind you that organic cash flow now accounts for 50% of the group's management's long-term incentive plan.

Let's now open the floor to questions.

(Operator Instructions)

And we will take our first question from Roshan Ranjit in Deutsche Bank.

Two for me, please. Firstly, in France, retail, another very strong performance. You had previously guided this CAGR range 2% to 4%. We're now expats. So we're now at the top end of the range, I think maybe a year earlier than anticipated. But where given the pricing environment now being so where we go, where do you think that could go to through 2022, please? And secondly, in Spain, you -- last year, you reinforced some of your wholesale agreements and you mentioned strengthening some of the break clauses. Is it possible to get some details around that as to any of the kind of potential step downs or any of the exit fees that may be incurred if there were a change in the wholesale environment there?

All right. So maybe regarding the price environment in France. First, you're right to underline the amazing performance of French Retail Services in '21. Thank you for that. And -- but regarding the prospects for 2022, I'll ask Fabienne to provide answers.

Yes. thank you. Everyone, can you hear me?

No. Okay.

Yes. Thank you for the question. So yes, you're right. We achieved a very, very strong performance in 2021, and we are really confident for 2022 because the bedrock we have are very solid. During the 2021 year, we decided different decisions. We make different decisions.

First of all, if you remember, we launched a few bank book repricing to sustain the acceleration of the revenue for back book repricing. In October, we launched mobile range redesign of -- and it was very successful both on volume and on value, as reflected on the ARPO. In 2022, we are very committed that fiber will be still very dynamic as in 2021. And the 5G will have a positive turn. In 2021, all customers themselves, 75% of the handset sales are 5G compatible. 25% of our customer base is on 5G offer and device. And we have a solid backlog, and we have some opportunity in 2022 to be very confident in our revenue guidance for '22.

Thank you, Fabienne. I'll ask Jean-François Fallacher, who is with us from Madrid to take the second question. Jean-François?

Yes. Hello, everyone. I'm (inaudible) on stage. There are two things that (inaudible) about the year 2021. First of all, we have been extremely focused and I would say rather tough running the relations with our wholesale partners, meaning no decrease in tariffs whatsoever. No new MVNOs have been awarded this year. Obviously, we want to make sure that the wholesale market is not shifting more towards more competition on the retail. That's the first wholesale posture that we have been having in 2021.

And if you remember well, there was indeed a very important topic concerning wholesale in 2021. As you remember well, Masmovil has been acquiring Euskaltel. And Masmovil and Euskaltel were our most important wholesale contracts. So obviously, we have in the second -- in the third and fourth quarter, renegotiated the Euskaltel wholesale contract with Masmovil. We finalized this negotiation at the end of last year. I think in a very balanced lessons for both parties, ourselves and Masmovil. And this renegotiation is actually allowing us to see, I would say, as concerned the wholesale business of Orange Spain, the future positively. And that renegotiation will allow us to stick the plan that we have committed towards the market.

Thank you, Jean-François. Next question?

Akhil Dattani in JPMorgan.

Can I start with the first one, just on your free cash flow outlook and obviously the reiteration of your 2023 targets? I guess, one of the things investors will be focused on is the fact that now, if we take your cash flow guidance and deduct all of below items, your dividend is now covered. And obviously, into next year, we'll be very well covered with some decent headroom. So I guess I'm just keen to understand how you think about balance sheet priorities going forward in terms of, I guess, the alternatives we might want to think about whether it's investing in the business more aggressively, whether it might be more generous shareholder return policy. So generally, what are your high-level thoughts around the prioritization of your clearly much improved cash flow headroom? That's the first question.

And then the second one is, if you could just give us an update on the progress on the tower side. And I guess, specifically, what I'm interested in is that as you're thinking about a potential industrial transaction in that space, to what extent does the volatility we've seen in markets on these highly rated stocks impact your decision-making? Clearly, European took to trade down quite hard recently. Does that make moving forward with any sort of deal much harder?

Thanks for your question. Maybe, Ramon, you can start with first question, I'll add some comments.

Okay, so thanks for the question. So on the cash flow, the first very important point, as you have seen, is that we are very well on track with our organic cash flow target. We are delivering in '21 slightly more than what we had promised, which was above EUR 2.2 billion, which generally is seen as EUR 2.3 billion, well, it's EUR 2.4 billion. And in '22, we have at least EUR 2.9 billion, which is very well on track with of the minimum EUR 3.5 billion organic cash flow target for 2023. And when you look at the different metrics, looking at the growth engines for EBITDAaL and the CapEx decrease, which is starting in 2022, we are very confident that we will be able to reach these targets. So I think this is probably the most important thing to note in a context where, I guess, some of you were not totally convinced we would be able to deliver this. So we will.

Now you should not forget that below organic cash flow, you have also to pay for your licenses spectrum when you look at the free cash flow. And 2022 will be a year where you will have a number of 5G auctions in a number of countries. So this will be, of course, taken into account. We have a very strong balance sheet. As you know, this ratio of 2 is here to stay, very, very solid. The liquidity position of the group is very strong. So we will keep within these metrics, and that's what I can say to your question, a very solid performance indeed.

If I can add a few words on that. Of course, I don't want to talk about what will be the future choices of the company regarding the allocation of its resources and cash resources. But obviously, I think we can say that we have now -- we are now at the peak of our eCapEx cycle. And you can see that we have started declining the -- globally, the eCapEx effort of the group because we have started fiber before anybody else in Europe. And we have done this stronger than anybody else in Europe. So I think this is really a major advantage in assets of this company, but it means that it clears the future in terms of, let's say, organic CapEx. So I don't expect to answer your question that we will have to allocate our additional cash resources into organic eCapEx because of that history.

I think that we will have some opportunities to strengthen our positions, especially in Europe, playing clearly the in-market consolidation opportunities when we have, like Spain today or maybe one day in another European country. And then obviously, I think that we have all the conditions gathered to prepare a better return to our shareholders. As you know, at Orange, the preferred tool to return value to our shareholders is dividend for many reasons. So yes, I think that -- what we are doing now and this organic cash flow performance in '21, in '22, in '23, will clearly fuel better returns to our shareholders. And the #1 tool to do that will be the dividend.

Regarding your second question, towers. I just want to remind first that it was very important for Orange, and I think it's now clear asset in the current game to create TOTEM. So now TOTEM is fully operational. TOTEM has been designed according to the best available standards. This is the interest of doing that maybe later than the others. I think we have really taking the best experience and the best design that we have found in the market. And so TOTEM is now a reality, an operational reality, is working very well. We are going to expand the footprint of TOTEM, as I mentioned earlier, by bringing sites from other European operations of Orange.

So now what are we going to do with TOTEM? First, TOTEM is -- has been created to extract value out of our -- those assets for us. We are now managing our mobile sites in those countries in a different way than in the past. And this will bring some additional value for the company and for its shareholders on a stand-alone basis. And then TOTEM is a card, is an additional card in our game. We can use TOTEM to create value out of expanding the footprint of TOTEM by maybe buying some assets, by combining with other TowerCos. There is, as you know, also a possible maybe an opportunity of creating a larger European telco if we join TOTEM with one of the other operators, TowerCos that now exist in Europe.

We have plenty of options, in fact, And this is the good news. And I think that TOTEM is really in the middle of this game because, in fact, if you look at the situation, you will see that all the possible combinations in Europe suppose that TOTEM is part of that. So I think that we are in a really nice and critical position. We have plenty of options. And then, of course, we'll have to choose according to opportunities. But I do think that TOTEM will be one of the major levers to create additional value for our shareholders in the future. Next question.

Our next question is from Thomas Coudry in Bryan Garnier.

Yes. I have a few, please. First one would be on the mobile money and banking services. As far as Orange Bank is concerned, you confirm us the future opening of new countries in Africa where you develop the bank and overall, you confirm that you still aim to reach EBITDA breakeven by 2024 or these new openings could weigh on this trajectory. And still on the mobile money questions, can you please update us on your -- let's say, on your plan to offset the impact of the wave in Africa.

We've seen that your mobile money revenues in Africa are down this quarter. Still, the revenues are good. I mean, the trend is good at the Africa level. What is your plan to offset this impact? And then my last question, please, would be more directly for you, Stephane Richard. We know that you're going to leave the floor to Christine in a few weeks from now. If you had maybe just two advises, I might say to give her one on something that you're very proud in your track record and you wish that she's careful in, let's say, not damaging, pursuing, what would it be? And the other advice of something that maybe you could have done better, and you would hope that you would do better than you and she needs to improve, what could it be?

Thanks. First question, Paul, please.

Thank you, Stephane. Thank you, Thomas. First question regarding Orange Bank. Just to avoid any misunderstanding, you have two Orange Banks. One Orange Bank is in Europe. Second one is Orange Bank Africa, which is in Africa, which means that, yes, we have some plans to open some new branches of Orange Bank Africa, which is so far only in Ivory Coast. There are some plants to open in Senegal, but still waiting for the agreement of the Central Bank. But these openings in Africa will have no impact on the breakeven that we should encourage in Europe as it is another company. So just to avoid any misunderstanding between the two. On second question was on the Orange Money.

Yes. But on the recovery path to...

On the recovery path of Orange Bank. Yes. So if I exclude the African part of your question of Orange Bank, yes, we are -- where we posted a nor a very positive result for Orange Bank in Europe as our net banking income is growing by 57% in '21 which allowed us to reduce our EBITDAaL losses by EUR 34 million, which is good news. Our customer base has reached 1.7 million customers in Europe, and now we're on a clear path to breakeven as planned, both by developing our revenues in -- due to payment fees and consumer lending. Just to give you a figure, last year, we originated more than EUR 1 billion of lending, mainly consumer lending, a little bit of mortgage, which is very (inaudible) for new banks.

Most new banks rely only on payment activities. We would like both some payment and consumer lending. And that's one first step to reach breakeven. The second one is we will still further reduce our cost base. Since 2018, we have reduced our cost base in France on Orange bank by EUR 50 million. And so is revenue development plan and cost base reduction make us confident to reach breakeven as planned.

Thank you, Paul. I move to Alioune for the Wave strategy, or let's say, the Orange Money strategy against Wave. Alioune?

Hi, everyone. Thank you, Stephane. Thank you. So first of all, I'd like to mention the Orange Money revenues represent 10% of the retail revenues, less than 10% of it. And as you mentioned, of course, we have been disrupted by Wave, this module that provides the basic services for free, namely the cash out revenue. So we have launched a very massive and rapid response to this disruption. As mentioned, the revenue dropped by minus 18% in Q4 after an increase of 20% in H1. But it's -- for the time being, Wave is operating in only 4 countries out of our 18 countries. And it represents roughly 60% of our revenues.

But in the other countries, Wave is not present or it's not operating. The revenues are growing by more than 35%. So this is to say that the potential is still here in the countries. And the response we have made to the disruption of Wave is based on mainly 3 axes. The first one is the repricing of our offers, let's say, to appropriate the same business model. The second one is to accelerate digitalization for our customers and for the digital business also. And then also let's say, we make a rebranding of Orange Money, of the brand, which seems to be important for the customers, at least in the 4 countries where we operate.

And the first result of this response are actually very positive because in December, we had a growth of the global transaction of plus 10%. That means that we are sacrificing some of the value, of course, because we need to align with the prices of Wave. But it means also that the volume of transactions have reached the highest level ever, which is EUR 4.9 billion in December. So that means that in the long-term run, the potential is here. We will sacrifice some value, but we will come back, I think, to maybe a higher EBITDAaL in the future after the price war, of course, with these players. The reason why EBITDAaL could be higher is that -- the more money you have -- with this new business for the moment are them, the more cash in you have, the more transaction you have, the less cash out you have.

So the cost of distribution will decrease in the coming years. So this is the response we have given to wave. And in the order hand, as I mentioned earlier, it represent only 10% of our revenue. And we have 80% of our revenues coming from retail services, from data and from fixed broadband and data -- mobile data is growing by 25%. Fixed broadband is growing by more than 30%. So this is more than what we need to offset the revenues we lose with Orange Money in Q4 and for the coming year. So thank you for your questions.

Thank you, Alioune. Well, regarding your -- the last part of your question, difficult to answer. But I would say first that I am sincerely happy to have Christel on board. I spent a lot of time with her, myself and the team in order to prepare her to take the job beginning of April in the best possible conditions. So this is my first message. I want you to know and to understand that we are working really in this transition -- transitional period very closely and very narrowly with her. And we associate her as soon as now in order really to make her in the best possible condition when she will take the job. Meaning also that you will not have a sort of in-between period. I think she will be really fully operational beginning of April.

Christel is -- I think, will be a very good CEO. And at the same time, and it's my way to answer your question, I do think that she's very lucky. She is very lucky because she's going to be the CEO of the best European telco today. This is really what I think, and I want to illustrate this very quickly with 6 points. My first point is that Orange is today in Europe the telco that has started to move towards fiber earlier and stronger than anybody else. And today, I think if you compare Orange with anybody else in Europe, we have an unbeatable advantage in the current state because we made this choice 10 years ago. And this is a very strong asset, of course, that Christel will have with her.

The second point is that I do think that we have the best brand, the best global brand with the largest footprint, and this is a very strong asset for us. The third point is I think we have the best balance sheet. And this is the result of a serious, disciplined management of our resources, of our balance sheet in the past 10 years. And of course, because we have the best balance sheet of the industry in Europe, it means that also we have the largest flexibility and margins to prepare the future.

My fourth point is that I think we have the best growth engines of the industry in Europe today. And I will simply mention 3 of them. The first is Africa and the Middle East, obviously. I think we still have long years of growth and of profitability and of value creation in Africa and the Middle East. My second illustration will be our financial -- mobile financial business with the bank and despite the current challenge that we have in Africa regarding mobile banking in Africa. And my third example will be cybersecurity. We have really created something from scratch 5 years ago. It's now a business unit, which is producing nearly EUR 1 billion revenues, look at also the valuation of this business. I think we have really a growth engine for the future, which is once again unbeatable if you look at the telco scene.

My #5 is that I do think that we are ready socially, and I would say, culturally, to accelerate our transformation in this group. And especially in our French operations, we have made, I think, a lot of change and a lot of transformation in the past 10 years. Never forget that the situation of this company, when I joined the company 12 years ago, was very difficult. It was very challenging. And any, I would say, transformation idea was not really any more possible. We had to really restore a collective mindset, a collective capacity of coping with the challenges of the future in this company. It took time. I think that now we have, from a social and once again, cultural point of view, we're in a situation where this transformation is now ready to be accelerated.

Number six, we are a critical player in a number of consolidation games. We have talked about towers. Can you imagine a significant combination now in Europe around towers without Orange. If you are thinking about Spain, you see that once again, in Spain, we are in a critical player in a game, an ongoing game, that will hopefully result in market consolidation.

And maybe my #7, more financial. I think that we are in the best timing over the past 12 years in terms of producing additional value for our shareholders, producing organic cash flow, meaning producing more resources. In the past 10 years, we had to cope with the arrival of 3 in France with a number of challenges. Big challenges with also the impact of the transition from copper to fiber, which is also in the future. But I do think that we are in a better state than ever, at least since I'm here, to see our financial prospects and our capacity to extract more value and more organic cash flow out of our operations, which is clearly a very good news for Christel, but it's also, I think, a very good news for our shareholders and for our employees.

I will end with two things. If I have maybe a major, I would say, regret in the past, well, 10 years, it's undoubtedly the French in-market consolidation that we missed. To be honest, I don't think that I am the main person responsible of this failure because really, I tried very hard to reach it. We were in 2016. I think the mines were ready to go into this market consolidation in France. This would have changed very much the visage of the company, including the financial aspect of the company. I think that would have been a different story also for our shareholders, but we missed it. So I hope that we will have a new opportunity, if not to participate into consolidation, but that is to benefit from an in-market consolidation in France, even though I am quite confident in our capacity to resist and to still perform in the 4-player market in France.

And maybe my last point in terms of, well, recommendation, I don't know, but just idea to keep in mind. I think that it is likely to see one day in the future, I don't know when, I don't know even if this will happen, but I think it is a likely event. We will see one day a change in the shareholdership structure of the company because the stake, the French stake, which is still our reference shareholder, cannot be seen as a long-term, I would say, eternal shareholder of the company. We all know that there will come a day when the state will sell partially, totally, I don't know.

And I think that one of the big goals of Christel will be to prepare the company in the best possible way to manage this day because this day will be a big change for us culturally, especially in France, but also clearly in -- that will open plenty of opportunities also of new opportunities the day it happens. So this is, in a nutshell, sorry to be a little long, what I can provide as answer to your question. And thank you for the question.

Next one.

Next question is from Mathieu Robilliard in Barclays.

Yes. And first, I wanted to thank you, Stephane, for your dialogue with the market over the years. I give me -- give you my best wishes for the future. I had two questions, please. First, on guidance. You're guiding for quite a turnaround in the EBITDA trajectory in 2022. And so it would be helpful if you could give some granularity on the tailwinds in 2022 versus 2021. And also, I want to confirm that this guidance is organic, but it excludes the changes in the perimeter, specifically the positive impact of Voo and the Romanian acquisition. So that's the first question.

And then the second question, we are all seeing a renewed desire to consolidate telecom markets in Europe. And Stephane, you've mentioned about a few times during this call, what is very unclear, at least for me, is whether the ECS changed its view on the topic because this year has been the key barrier to market structure improvement. So maybe if you could share your views on how many things have changed from a regulatory or authority point of view, that would be very helpful.

Ramon for the first.

Okay. Thank you, Mathieu. So on EBITDAaL, the 2.5% to 3% growth, some granularity here. If you look at the big blocks, you have Africa, Middle East, where growth was 17% of EBITDAaL in '21. And so we are not going to deliver 17% every year, of course, but we are aiming at a regular double-digit growth. So even if you take a very conservative approach of double digit, and you heard Alioune very optimistic, and we are all very positive about this. Even if it was only 10%, you are starting from EUR 2.3 billion EBITDAaL basis just with Africa. You are adding, as the minimum, around EUR 230 million, EUR 250 million, and it could be also slightly more if we're able to reproduce part of the very strong performance of '21. So this is one big block.

If you look at Europe as a whole, you will have still a significant growth of the so-called 6 European countries, and you saw 6.6% growth in '21 for these countries. So this is going to continue. And Spain is on a regular trend of improvement. And you've seen that H2 was roughly 2x better than H1. You can expect that '22 would be twice better, if I may say so, as '21. So the drag of Spain is going to be much less important. So overall, you can expect Europe to be, I would say, flat positive, let's say, flat positive.

OBS, we talked about it for '21. We had a minus 8%. It's going to be much less, slight decrease in '22. So the drag will be much less important. And you will have in France a strong resilience, there is still pressure. We all know from co-financing, et cetera. But if you exclude cofinancing, you can expect to be around 0. So overall, this is going to support the performance of EBITDAaL without forgetting that the intergenerational agreement that we signed in December and which is starting in 2022 is also going to contribute to labor cost reduction all in all, in 2022. And it will be going on for the next years. So this is supporting strongly at the minimum 2.5% increase because you just need to deliver around EUR 300 million growth in EBITDAaL to reach this bar. So this is the first part of your question.

In terms of is it organic or not, we said, and Stephane said in wrapping up for the guidance that this is -- the only caveat on the guidance is regarding CapEx, looking at the potential acquisition of Voo because obviously, since we give an absolute figure, if we deliver the Voo acquisition, you will have some CapEx coming with Voo. It's not a big figure at all. So for me, it's all included roughly. But of course, if you have acquisitions in new countries, when you say maximum EUR 7.4 billion, if you have a EUR 50 million or EUR 100 million of CapEx in Belgium, in Voo that you deliver, well, then, of course, you can have a minor mine move from this. But to me, it's really not significant.

So it's really, I would say, an all-included guidance you have is extremely solid. It's extremely solid, both on EBITDAaL growth. And I would repeat on the organic cash flow growth, which is really the essential metric we have. And I'm extremely confident of the at least EUR 2.9 billion. You've seen the result of '21. We did better than expected, and we have this dynamic in mind.

Thank you, Ramon. Well, regarding your second question about EC policy, let's say antitrust policy. First, I try to be honest and not to do a wishful thinking. Because in that matter, this can be a risk. Well, obviously, there is no change in the framework of antitrust policy in EC. There is no change in the treaty. So basically, we are in a domain where it is the sovereign appreciation of the services in Brussels and of the commissioner that will then produce a decision or an inflection in this policy. So we can only rely on the feeling that we have, in the exchanges that we have with the people in Brussels. And in fact, I think that the main problem for us in the industry is what I would call the self-censorship of -- in that domain because the problem is that if you don't submit a project in Brussels, you don't know if there is a change or not.

So there is this sort of dense between the industry and Brussels, when Brussels is, of course, in charge of antitrust strategic, which is something which is quite delicate because there are some fears, clearly. So my view on that is that there are opportunities. I am pretty convinced that there are opportunities of stepping in-market consolidation in a number of countries, especially because it's a matter of cycles. We had some in-market consolidation operations in Spain, in Italy, U.K., in Germany 4, 5 years ago. With remedies, the remedies in fact, created a new, I mean, let's say, a new set of players in the market like Iliad in Italy or Masmovil in Spain.

And so I think we are ready for a new cycle of in-market consolidation that will, of course, be reviewed in Brussels when it is Brussels with a different analysis than what it was 5 or 4 years ago because we have today players that didn't exist at that time. We have Mavericks, we have -- so we are in a number of European countries in markets with 4 or even 5 or 6 players. Meaning that for that, structural reason, I think, more than anything else, that change in political mindset in Brussels, I think that we will see some new gain and some new opportunities in market consolidation just because the industry has, I would say, restarted its fragmentation in the past 2 or 3 years. And that, of course, it paves the way for future in market consolidation.

So I'm quite, I would not say optimistic, but ready, for sure ready to go to Brussels with good in-market consolidation projects. Of course, taking into account what will be the likely analysis of the services about -- around remedies. But there's some space to value creative in market consolidation in a number of countries in Europe despite the fact that the framework, the regulatory framework has not really changed in Brussels. This would be my -- roughly my answer. So let's do it. Let's try it.

Great. Ramon, maybe if I could follow up on the guidance. It wasn't entirely clear to me if the EBITDA growth guidance includes the positive impact of Voo and Romania or not. I understand on the CapEx, that's very clear, but on the EBITDA, I wasn't entirely sure.

No, Romania is done because TKR has been integrated in Q4. Voo is not yet in the books.

Thank you. Next question is from Jakob Bluestone at Crédit Suisse.

First of all, if I can also say, thank you to Stephane for the last 10-plus years and the switches for the future as well. I had two questions, please. Firstly, just on Spanish consolidation, which you obviously just gave some very useful thoughts around the position of Brussels.

But I'm just interested in just sort of diving a little bit deeper, you -- there's obviously been a lot of press reports about a lot of different combinations in Spain. Some involving you, some not involving you. And I'd just be interested in hearing if consolidation did not involve you, and as a result, you stood to lose some wholesale revenue, would you still see consolidation as a positive from an Orange Spain point of view? That's the first question.

And then just secondly, your guidance for next year, obviously, implies healthy EBITDA growth. But I was just wondering, can you make a comment around inflation and particularly labor inflation? What are your expectations for that? What's embedded in the guidance?

Well, maybe I will take the first question, but of course, Ramon or Jean-François, please, you can add any comments if you wish. Well, the first point is that, as I think you have understood, we are actively working on being involved in the possible in-market consolidation in Spain. We are not passive. We are not waiting for things to happen, we are actively involved.

Number two, if this consolidation is reached through a combination, which us excludes -- sorry, Orange, what would be the consequence. Well, the short or midterm first consequence would be probably a challenge in wholesale revenues. I just said probably because this is not mechanic. This is not automatic. We have first contracts, rather detailed contracts. And then there are also industrial aspects, our marketing aspect. So this is not something which is so obvious and so mechanic.

The second point is that -- my belief is that in any in-market consolidation situation, everyone at the end of the day, benefits from such in market consolidation. So there will be a benefit for everyone in terms of efficiency. I am not talking about market repair, of course. But if you look at the past, you will see that even without any price impact, when we are -- when we move from 5 to 4 to 5 to 3, it means better returns and better margins for the remaining players. So in any case, I think in market consolidation, even though we are not part of that, will open new opportunities for us. Maybe that would be a challenge because we will have to reinvent even more than today. But I do think that it will mean also opportunities.

And my last point is that it can be nice to trigger in-market consolidation, being involved and a part of the game, and this is clearly what we want to do. But the pay -- the price to pay is to manage 1 year or 1.5 year antitrust processing in Brussels with uncertainty, with negotiation, with a lot of management focus and time for that. If you are not part of the game, you spare, you save this time. And this burden is on other shareholders. So that's why basically, even though I still think that our priority should be to try to be part of the consolidation game. I don't think that this will be the worst possible news to see in-market consolidation in Spain outside ourselves.

Just to say, I fully agree with Stephane. Of course, I think we all know there are too many players in Spain. I think there is a very wide view and I would add that we are actively watching and participating to making the best possible picture with value creation in mind. So very focused. On the question on inflation, Jakob and EBITDA. First on -- and I'm going to answer this, but -- let's all keep in mind that when you look at the engine for growth for EBITDA, I addressed some of them. You have also cost discipline with the scale-up program, which is extremely important. We are mobilizing everybody in the company on this, which is cost efficiency programs that was just no alternative. And we are making good progress there. You could see the figure. And CapEx discipline leading to the OCF target. So just to make it very clear.

On inflation, which is clearly a challenge for all of us, I would say, maybe 3 things. The first one is that you were talking, I think, more about labor cost, but energy cost is clearly an issue everywhere. Energy cost is around 2% of our total OpEx. And we have covered 85% of our energy costs in 2022. So we did prepare ourselves for this situation and the perspective we gave for 2022. We have booked the impact of what's happening on the energy front. This is the first thing.

Second, on labor costs, well, situations are different in different countries. What I can say is that when we come to you with a guidance for 2022, we are watching what's happening around. So we took some assumptions here. But clearly, we're not at the same point in different countries. And one of the important discussions is still ahead of us in France. So we'll see. We will have this discussion. But we are aware that there is this context.

And then when you talk about inflation, of course, a key question, and we are discussing it quite often within the team and with Stephane, is what is our own capacity to adjust our own prices because it would be a bit strange if prices would increase everywhere, except in the services we do provide. And Fabienne was earlier talking about what Orange France could do, for instance, in 2021 with 4 bank book price increases, which addressed 1/3 of the total mobile customer base. So we have a capacity also, and I'm not talking about what happened in Poland, in Belgium, et cetera. So this will be part of the equation also, which is our own capacity to give a price -- and we have shown that we were able to do so in the past, so we will need to continue to go in this direction.

Next question is from Stéphane Beyazian in ODDO.

Can I ask -- sorry, a question on fiber, which I think it is one of the largest projects that you manage at the range and hopefully will be in place for the decades to come and on some of the moving parts, perhaps starting with one negative and a couple of positives. The negative is, is there any sort of risk from -- of extra investments from possible malfunctions in the rollout by suppliers that be under pressure to roll out so fast fiber that it's quite possible there are some issues in some regions in France. And regarding the positives, is there anything you can say and guide regarding the increase in the copper bonding fees, the shutdown of the copper networks? And finally, how much of capital expenditures over the next couple of years should move away from your (inaudible) goal as you terminate the build-out of fiber?

Thank you, Stephane. So maybe I'll ask Fabienne and maybe Jerome to developments on those wells say, fiber, copper to fiber questions.

Yes. Maybe, I can start. Thank you for the question. So I will try to -- yes, we observed some malfunction in the network and fiber. And I just want to recall, this isn't normal. So -- I need to repeat, I think, because it didn't work.

So thank you for your question. I said, you're right, we observed in France some malfunction in the network and specifically in the fiber. But just I would like to recall that it's normal because there is an acceleration due to the appetite for fiber though there's nothing worried about this point. And the volume of malfunction regarding all the activity we have on the French network, mobile, fixed copper fiber is very small.

So we have to be very cautious about that. But there is no -- as the media seems to write, big issue in France. So there's no -- we have any risk of extra investment from malfunction. We are working on this point inside Orange and with all competitors to be better, even if there is an acceleration. But I am not worried about this point.

The second question was about the shutdown of copper network. Maybe I can start and you will follow. Yes, we announced two weeks ago, the plan we decided to organize the shutdown of copper network. First of all, I want to recall that this is an industrial and customer program. Industrial because we have to shut down and stop the copper. But customer before, because we have to migrate customers from copper to fiber. We are very confident that this program will take time and that's why we repeat day after day that will be a progressively program.

And Orange will manage it with one big question, what is the value for Orange and how we can generate value day after day until the end of the copper. And this is a question we have with Jerome. It's why we are very cautious about this, and we will be in the future because we don't want to have -- we want to manage the impact and we want to generate the value until the end of the copper.

Thanks again, and good morning to everybody. So first, I'd like to a question of them being asked, but I'd like to just confirm the guidance we have given in July about our target concerning the impact of EBITDA of wholesale in France. So for me, it's clear. We announced this a decrease of EUR 500 million in EBITDA, and we are fully confident in the (inaudible) target. And I mentioned that because the fiber is part of the game. And we have a very solid and robust business model on fiber on wholesale fiber in France.

Back to the second question. So Fabienne mentioned the decommissioning plan of copper. And a part of the question is the increase of the unbundling tariff. We're clearly asking for a significant increase of the unbundling price. You know that there are discussions with the regulatory body upside with a consultation on progress. So our request is to have this significant increase because we consider that it's consistent with the trajectory trend of our cost in copper in France.

So what will be the end of the game? What will be the final decision, we don't know yet. But don't worry. If the decision was not as high as we expect, there is no risk because we put in our guidance of EUR 500 million EBITDA decrease, we put a conservative process. So there is nothing to worry about this question of unbuilding -- it will be only a bonus, and we do expect we get this increase -- significant decrease in the building types at the end of the consultation.

Well, thank you, Jerome. Thank you, Fabienne. I think we have time for a last question.

And we will take our last question from Georgios Ierodiaconou at Citi.

I have two follow-ups actually on some of the previous questions asked. You mentioned energy costs in one of the previous answers, that is 2% of sales. I just wanted to confirm whether that's the total average cost or the component, which is linked to the commodity prices. I believe, usually is around 50% of the total exposure is the one that's volatile. And then linked to that, whether you could comment on the hedging exposure in 2023. I think you mentioned 85% in '22. If you could perhaps give us an indication for the following year.

And then -- my second question, and sorry to go back into this pie a follow-up on Spain. And thank you for being very upfront and transparent about this. But perhaps a way to answer this question would be some of the combinations that do not involve you may appear at least for us easier from an antitrust perspective and some of the combinations that would involve you. So I'm just curious if you could comment on that. And if you believe that the net effect is positive, negative wholesale possible retail, the net effect is positive, whether that is a consideration when it comes to your decision to get involved at the end of the stage.

Thank you, Georgios. So on the first question on energy. My 2% (sic) [two cents] is covering the total energy cost. So it's above EUR 600 million, slightly above EUR 600 million, and it's a total cost of energy. In terms of covering, I gave the 85% mark for Europe in '22. And we are obviously working to see how much we can cover the future years. So this is ongoing work. We are signing PPAs in a number of countries, also investing in solar farms, et cetera. So this is ongoing work. This is for the first question.

All right. On your second question, well, I would answer that the only, in my opinion, the only combination that really would raise a major antitrust concern including Telefonica. For the rest of the market, I think everything is possible. I am not saying that everything is equally simple but everything is feasible. There is no, I mean, obstacle or major obstacle in the antitrust treatment of combination as far, of course, as Telefonica is not part of the game.

My second point would be that I think that everyone should be a little cautious about the way we are looking on antitrust treatment in Spain. What I mean is that it is usually heard that it is better or easier or simpler to have an antitrust review in Spain than in Brussels. Meaning that, of course, the combinations that are -- would be under local antitrust scrutiny would be more likely to happen without major remedies than in Brussels. I think that this is a pure speculation, in fact. And we have some examples in the past.

Look at what happened in Germany, for instance, where the local antitrust was firmly against the in-market consolidation and Brussels decided to authorize this. So I ask everyone to be cautious about that. I think that, once again, everything is open, in Brussels or in Madrid, with the exception of something that would involve directly Telefonica. And then it is a matter of designing a good project of anticipating the good remedies that will answer the concerns of any antitrust authorities in Brussels or in Madrid.

So I think it's time to say goodbye. So as you understood, this is certainly my last presentation and the message to you. So I just want to tell you goodbye to tell you that I was very happy to have those exchanges and relationships with all of you. I know personally a number of you. I think you are very professional from time to time, challenging all the time, challenging, in fact, but very professional. And we learned a lot from you. I think you helped us to maybe improve also the way we manage the company. And I want just to end by saying again how confident I am in Orange.

I do believe that today, the Orange stock is the best available stock in Europe if you really consider all the spectrum, I would say, of criteria. Of course, we have challenges. We are perfectly aware of that. And you know those challenges. But once again, I think we have very strong assets, and we have an unbeatable position in the telco space in Europe.

So that will be my last word. Thank you again. And I wish you and of course, I wish Orange the best for the future. Thank you.