Orange: new strategic plan 'Lead the future' for 2023-2025

Orange results 2022 & new strategic plan.

• 22Q4:
• Scale Up cost savings plan reaches EUR 700m cumulative indirect cost savings since 2019 (excl inflation EUR 1b)
• Guidance 2023: EBITDA AL slight growth, ecapex strong decrease (15% of rev from 18% in 2022), organic CF (telecom) >= EUR 3.5b, leverage AL mid-term ~2x, dividend 72c
• Launches new strategic plan Lead the Future:
• 4 Pillars
1. Generate value from core (FTTH, Data, AI, 5G, 4G Home, satellite in FR (with Eutelsat), merger Spain with MasMovil [Belgium with VOO]; to raise ARPO)
2. Capitalise on infra (to add 5m fiber lines in Europe, 2m in MEA; RAN sharing; raise 3rd-party operator hosting rate from 1.37 to 1.5 by 2026 for TOTEM pylons; to decommission copper in FR and 2G/3G in Europe by 2030; to expand 4G & 5G in Africa; increase use of Data & AI; Network Integration Factories for automation & virtualisation)
3. Transform OBS (accelerate growth in Enterprise, stgrengthen position in cybersecurity, OBS to rename as Orange Business, to be leader in next-gen connectivity solutions, plans far-reaching program of cost optimization to return to EBITDA AL growth by 2025 at the latest, Orange Cyberdefence rev 2025 EUR 1.3b)
4. Growth in MEA (2020-2025 rev CAGR 7%, increased profitability; Orange Money (2022: 29m active users, EUR 100b in transactions) to expand beyond transfers & payments, also to non-subs)
• 3 Guiding principles: performance, excellence, trust
• ESG:
• CO2 emissions -30% (scope 1, 2) by 2025 from 2015, -45% (scope 1, 2, 3) by 2030 from 2020, net zero carbon by 2040
• Recycling to 30% by 2025 (currently 23.1%)
• Business model transformation: simpler, faster, more efficient, agility, simplification of processes
• Extends Scale Up cost savings program by additional EUR 600m by 2025 (on base of EUR 11.8b)
• Targets 2025: EBITDA AL CAGR LSD, increased capex discipline, organic CF EUR 4b in 2025, leverage AL mid-term 2x, ROCE 2025 up from 2022 (to grow by 100-150 bp by 2025), dividend 75c over 2024

EC proposals on broadband development under SIngle Market

EC speech (230206, Helsinki)

• 6G: Launches R&D project Smart Networks and Services Joint Undertaking (to lead the conception & standardisation of 6G)
• Broadband:
• Access regulation:
• plans Broadband Cost Reduction Directive Feb 2023
• plans Gigabit Recommendation (guidance for NRAs on how to use tools at their disposal to incentivise faster network deployment)
• Operating models: proposes morphing telcos from connectivity providers to infrastructure-as-a-service providers
• Fair share contribution (Internet Traffic Tax): plans consultation on "the future of connectivity and infrastructure": what is the infrastructure that Europe needs and how to timely mobilise investments? "raises the question of who pays for the next generation of connectivity infrastructure" (European Declaration on Digital Rights and Principles for the Digital Decade already established that all market players benefiting from the digital transformation should make a fair & proportionate contribution to public goods, services & infrastructure)
• Harmonisation, consolidation: how we can build a true Single Market for telecoms (curently based on business models based on national markets & high costs for national spectrum licenses), requires reflection on encouraging cross-border consolidation

OnePlus Cloud 11 launch event

OnePlus Cloud 11 launch event (New Delhi)

• OnePlus 11 5G outside China (smartphone)
• 6.7 inch, 5000 mAh, WiFi 7
• 8 or 16 GB RAM, 128 or 256 GB storage
• INR 57k or 62k; $700 or 800, EUR 830 or 900; GBP 730 or 800
• OnePlus Pad (tablet)
• 7:5 screen ratio, 11.6 inch, 2800x2000 pixels
• MediaTek Dimensity 9000 chipset, 144 Hz refresh rate, Dolby Vision, Dolby Atmos, 4 speakers, 5G, 8 or 12 GB RAM, 128 GB storage, 9510 mAh battery
• pre-orders from April 2023
• with OnePlus Magnetic Keyboard, OnePlus Stylo, Case
• Buds Pro 2 (earbuds)
• INR 12k (India version 2R for INR 10k), $180, EUR 180, GBP 180
• Keyboard 81 Pro

KPN 22Q4 details

KPN 22Q4 reporting, details:

• 22Q4:
• contributed EUR 23m to Getronics US pension plan (lowers annual contributions by EUR 7m for 3-4 yr)
• price increase 5.8% on mobile (cap 2 EUR/mo, 221001), 3.5% for BB (220701) (increases depend on CLA wage increase (6% for 2023 = +EUR 45m))
• upselling to higher speeds (50 Mb/s sunset, lowest in fixed now 100 Mb/s)
• direct costs up (higher non-service rev (CPE), Glaspoort access costs, B2B SR mix change)
• indirect costs down
• personnel costs down (efficiency, attrition)
• IT/TI down (digitisation)
• other costs up (energy)
• cost savings EUR 4m (incl one-off cost-of-living allowance for personal for high inflation)
• total opex savings 2022 EUR 38m
• Right-of-Use asset impairment EUR 16m on closing office The Hague
• Outlook 2023:
• adj EBITDA EUR 2.41b (EUR 5-10m higher than 2022; growth skewed to 23H2, yoy decline in 23Q1 on high comparison basis)
• capex 1.2b
• FCF 870m
• div 15.0c (+4.9%)
• new SBB EUR 300m (AGM 230412, ex 230414, payment 230419)
• KPN Netwerk to report extended HP numbers (incl street presence) from 23Q1
• accounting effect on consumer BB (rev sharing with SVOD) laps from 23Q2
• LCE inflection during 23Q2
• costs up on wage indexation (+EUR 45m), energy (+EUR 50-55m; 80% of total hedged, 20% spot market), inflation (impact on leases +EUR 10-20m)
• FCF: higher cash taxes (+EUR 100m), WC improvement; FCF-to-Sales ~16% coming years
• FTTP roll-out 2023 >600k (incl Glaspoort), currently 70% is HC
• target energy consumption 2023 425-435 GW (2022: 455; 2021: 480 GW), target energy 2024 flat from 2023
• target job cuts 2023 at least as 2022 (350)
• Other
• 2021 included an acquisition qualified as capex
• Glaspoort (non-consolidated) reduces EBITDA (access costs will end once Glaspoort is consolidated) but adds minority interest (below EBITDA)
• Considers fiber update analist meeting 2023