Orange S.A. (ORA) Earnings Call Transcript & Summary

So we thank you very much, everybody, to be here today, even if it was a bit difficult to come to [indiscernible]. We will -- we are very happy to welcome you at bridge for this presentation, full year presentation and Capital Market 2023. Just this presentation will be recorded, uploaded on the Internet, of course, available on Investor Relations website. I just want to remind you, we have a first session of presentation of full year 2022, starting at 8 end being at 8.45. We will have a short break. Please be in time. We will be back at 9. So be back few minutes before in order to start at 9. That's very important. And we will go through the Capital Market Day. And we'll start now with a full year presentation, and I will hand over the floor to Christel. Thank you so much.

Thank you, Patrice. So good morning, and welcome to our full year 2022 financial results presentation. I will start with the key highlights of the fourth quarter, and then I will leave the floor to Ramon to detail our results. So let's start straight on Slide 4 with the key achievements of the quarter. We delivered strong EBITDAaL growth in the fourth quarter, and met our full year guidance despite the inflationary context. Thanks to price increases we implemented in all our European countries, strict cost and CapEx discipline and the slowdown in fiber rollout in France, as we reached over 90% of our 2023 connectable home target. These good results were also made possible by our continued efforts on customer satisfaction with an NPS improvement in France of more than 6 points in 2022, and a decreasing mobile churn also in Spain and Poland. In addition, Orange Money was back to growth this quarter, and TOTEM confirmed its strong commercial momentum by signing this quarter a new commercial agreement with Iliad in France. Finally, we continue to develop Orange Cyberdefense through the acquisition of 2 companies in Switzerland, which gives us a presence in 9 countries and takes us very close to our target of EUR 1 billion revenues in 2023. We also believe that strong economic performance is only possible with social and environmental leadership. Here are the main KPIs that we use to monitor our progress towards a more sustainable, inclusive and responsible world by 2025. I will elaborate on this key element of our transformation later this morning. In line with our commitments, the financial results set out on this slide demonstrate our ability to offset inflationary pressures through our strong pricing power, with the acceleration of revenue growth at plus 1.3%, and through cost discipline. Over the year 2022, we managed to offset around 40% of the inflationary pressure on our cost, thanks to price increases. Thanks to the impressive EBITDAaL growth in this quarter at plus 8.5%, of which plus 5.6% coming from the base effects, we have achieved our full year EBITDAaL guidance with 2.5% growth. This strong EBITDAaL performance, combined with the beginning of the structural decrease in our eCapEx, are the drivers of our EUR 3.1 billion organic cash flow, which is also well within our guidance. Finally, our very solid balance sheet with a stable net debt-to-EBITDAaL ratio of 1.93x represents an important asset within the current environment. With that, I will now hand over the floor to Ramon.

Thank you, Christel. Good morning. So let's start with group revenues, which grew by 0.6% in 2022, reaching EUR 43.5 billion. As highlighted, top line growth accelerated during the year, driven by strong retail revenues on the back of price increases, which offset the decrease in wholesale, with also growth in equipment sales. Looking at our segments. Middle East Africa remains our main growth driver, with revenues up 6.4%. Europe is back to growth at 0.6%, thanks to the well-on-track recovery in Spain, where revenue has been back to growth since Q3. The continued strong performance of Poland and Belgium also contributed to this positive result. Enterprise posted a small 0.2% growth. IT and IS activities offsetting the decline of the legacy business. And France was down by 1.1%, with the decline in wholesale, partly offset by retail services growth of over 3%, excluding PSTN. On the next slide, group EBITDAaL grew by 8.5% in Q4, of which 5.6% came from the base effect of the employee shareholding plan granted at the end of 2021. For the full year, group EBITDAaL was up by 2.5%, in line with our guidance. Stripped of both the employee shareholding plan and the FTTH cofinancing received, group EBITDAaL grew by 2.3%. EMEA remains the main contributor to this performance, with double-digit growth of 11%, more than offsetting the sharp deterioration in enterprise, which, despite reducing its EBITDAaL loss between the first and second semester, ended at minus 19% over 2022. All the other segments contributed to the growth in EBITDAaL in '22. ICSS improved by EUR 141 million, thanks to significant cost rationalization of central functions. Europe grew by 1.6%, thanks to the turnaround in Spain, which halved last year losses at minus 4%. France was up 0.4%, supported by the growth in retail activity and cost discipline and TOTEM grew at 5.4%. Finally, Orange Bank improved its contribution despite restrictive macro conditions leading to stop mortgage loans while multiplying by 4 the value of its consumer credits year-on-year. All in all, in 2022, we improved the telecom EBITDAaL margin by 0.5 points to 30.1%. On the next slide, you see that our net income landed at EUR 2.6 billion, with a significant EUR 1.8 billion increase. The overall positive base effects were partially offset by the recognition this year of an impairment on Orange Romania of EUR 789 million due to the worsening competitive market environment, and an additional provision for the voluntary senior part-time program in France to reflect a more-than-anticipated take-up, which will, however, support our financials going forward, and more generally our transformation journey. Our scale-up savings program has been a major contributor to securing our guidance. The objective of our program was to reach EUR 600 million in net savings by end 2022 compared to 2019. We have exceeded this target by achieving over EUR 700 million of net savings by end 2022. We achieved the savings by optimizing our headcount, supported by our senior part-time program, by a disciplined wage policy, and also by intensifying our rationalization initiatives, mainly in head office activities and support functions. In '22, in addition to these initiatives, we launched contingencies across all geographies and were, therefore, able to absorb inflation impacts of around EUR 300 million. In other words, excluding the impact of inflation, we would have reached EUR 1 billion in cumulative savings compared to 2019, 1 year ahead of our 2023 target. Turning to our investments on Slide 12. 2022 is confirmed as the starting point of eCapEx decrease at group level, which were down by 0.7%. In Q4, the growth in investments was linked to their nonlinear timing in 2021. Our 3 main countries decreased their eCapEx in 2022 due to the slowdown of fiber rollout, especially France, with the biggest decrease of EUR 365 million. A limited part of this decrease has been reallocated to Africa, Middle East, and will [ drive ] EUR 1 billion, fully in line with our guidance of at least EUR 2.9 billion, with growth of EUR 657 million derived from an increase in EBITDAaL and a decrease in eCapEx. Net debt stood at EUR 25.3 billion at year-end. This EUR 1 billion increase came despite the growth in organic cash flow and is notably due to license payments and the purchase of outstanding hybrid notes in November for GBP 426 million. Our net debt represents 1.93x EBITDAaL, well in line with our medium-term objective, delivering an improvement of our average cost of debt at 2.5%. Finally, our strong liquidity position of EUR 16.7 billion remains a crucial asset, especially in a tightening and volatile environment. Let's now start the business review with France, where revenues were slightly up in Q4, thanks to continued growth in retail services and a smaller decline in wholesale activities, a topic on which we will come back later today. Indeed, retail revenues grew by 0.8%, or by 2.4%, excluding PSTN, thanks to strong net adds, both on fiber, reaching 7.2 million fiber customers, and on mobile, reaching 581,000 mobile net adds in 2022, a record year since 2017, with a positive portability balance relative to all our competitors. Besides strong volumes, we continued to push on value with convergent ARPU up by 2%, a customer Net Promoter Score, up by 6 points and a reduced mobile churn at a record low level for Q4. Over 2022, EBITDAaL was up by 0.4%, resulting in an EBITDAaL margin increase of 0.5 point to 37%. Improving profitability was the result of significant cost reduction efforts, France being the main contributor to the scale-up program. Finally, eCapEx decreased by nearly 10% in 2022, due to the advanced rollout of fiber in France, where 33.5 million homes are now connectable, and the decrease in customer connections compared to last year. In light of an inflationary context that will weigh more heavily in 2023, we have already put in place measures to support EBITDAaL, while continuing to reduce CapEx. Indeed, we are actively participating in the ongoing repricing of the French market, and we will continue to drive down costs. Let's now turn to Europe, where growth continued this quarter, thanks to B2C, still driven by convergent price increases, B2B and to the recovery of customer roaming. Wholesale revenue mainly reflects the regulatory cut in call termination rates. We were able to deliver EBITDAaL growth of 1.6% this year, accelerating in the second half of the year, 2.6% increase after plus 0.6% in H1. This was due primarily to price increases implemented in all European countries, strict cost discipline to offset inflation and the recovery of roaming. Overall, we delivered an ongoing improvement in Spain and an outstanding performance in the other European countries at plus 5.8%. The price increases that we have gradually introduced throughout the year have helped us to mitigate the effects of inflation in 2022, and should fully offset inflationary impacts, including energy, in 2023. In Spain, the return to growth was confirmed this quarter with revenues up again. The stabilization of retail was driven by a clear improvement in churn and an increase in convergent ARPO. Thanks to the reshuffling of Orange convergent offers launched in August, the improvement of the value mix and our strict promotional policy, we expect this momentum to continue in 2023. We have just announced a new price increase from March on Orange convergent and mobile offers to counter inflation headwinds. The EBITDAaL improvement trend has continued with minus 1.5% in H2, combined with a return to both operating cash flow and organic cash flow growth in 2022. This is the result of the recovery plan initiated in 2020, which includes the ongoing transformation of our local B2B business and a relentless focus on cost reduction. All this supports our objective of a return to strong EBITDAaL growth in 2023. Let's move on to Africa, Middle East, which contributes increasingly to group growth. Full year revenues increased by 6.4%. Our mobile customer base reached 143 million at the end of 2022, up 6%, of which 53 million 4G customers, up by 19%. At the same time, the Orange Money active customer base grew by 16% to reach 29 million. On the fixed side, our fixed broadband base reached 2.8 million, up by 24%. In the last quarter, revenues were up by 5.7%, with data up 18%, fixed broadband up 19% and B2B up 16%. The Orange Money business is already back to growth at 5.7%, thanks to our quick and decisive action, translating into an increase in transaction value to a record of EUR 100 billion this year. As a result, we achieved, in 2022, a double-digit EBITDAaL growth of 11%, greater than revenue growth, thanks to a strict control of indirect costs, which grew at a slower pace, translating into an EBITDAaL margin improvement of 1.6 point to 37.3%. Turning to OBS, our Enterprise segment. Revenues recorded a slight growth, both for the quarter and full year, thanks to the growth in mobile and IT and IS, which, together, offset the decline in legacy business. Regarding our EBITDAaL, which is still decreasing, even more less in H2 than in H1, we know we have a situation to tackle. We will elaborate on the OBS recovery plan, a group priority, later this morning. Let's now move to TOTEM before closing with our guidance for the year. At the end of '22, TOTEM owns 19,500 sites in France, up by almost 400, and 7,600 sites in Spain. In '22, revenues were up by 15% and EBITDAaL was up by 5% despite the certain costs of the new entity. Only one year after the carve-out, [indiscernible] has achieved its first commercial successes, demonstrating the attractiveness of our mobile infrastructures and the quality of our expertise with Telefonica in Spain, Iliad in France and the network deployment on a future Paris Metro line. As a result, hosting revenues from third parties grew by 10% in '22, and our tenancy ratio increased to 1.7 -- 1.37 tenants per site, a first step towards achieving our 1.5 target by 2026. Let me now hand over to Christel who will conclude this presentation.

Thank you, Ramon. So let's have a look at our guidance. We achieved all our '22 financial commitments, demonstrating our resilience in a difficult environment, with a plus 2.5% EBITDAaL growth and the start of our eCapEx decrease, both fueling a significant growth of our organic cash flow, while maintaining a stable leverage ratio and a EUR 0.70 dividend. Looking ahead to 2023, whatever the level of inflation, we are determined to continue to grow EBITDAaL and to pursue the eCapEx decrease. I, therefore, reiterate our objective to reach at least EUR 3.5 billion organic cash flow in 2023, while maintaining a leverage ratio around 2x on the medium term. Our guidance, as always, is set on a pro forma basis, meaning it does reflect our intrinsic performance and does not include any change of scope. Finally, regarding the dividend, we will propose an increased dividend floor at EUR 0.72, of which EUR 0.30 as interim dividend in December 2023. Building on our solid cash growth trend, we have set our strategic plan for the coming years, which I look forward to presenting to you later. Thanks for your attention. We are now happy to take your questions before turning to the next step.

Nicola is the first one.

Nikolaos from HSBC. I've got 3 very short questions. The first 1 is just to confirm your guidance is made on the basis of constant foreign exchange. Secondly, in France, you mentioned low churn in Q4. Are you seeing any claims down spending or taking cheaper offers? And the last 1 is on cost savings. If you can just detail the EUR 300 million impact from inflation?

Okay. So maybe on the guidance, yes, we always have a pro forma basis for our guidance, which reflects only the intrinsic performance of the activities. On cost savings, and the impact of inflation of the EUR 300 million figure I gave, so you have 3 main elements here. First important point is, I would like to reemphasize the success of the cost savings programs we have. Because delivering EUR 700 million of net indirect cost savings on this period despite all these headwinds is, I would say, quite outstanding and is well in advance of the guidance we gave for the year, which was EUR 600 million savings. If you look at the impact of inflation, you have roughly EUR 150 million for energy costs, and this is consistent with the figures we gave previously, and we will have for '23 another impact, which will be a bit higher. We have roughly EUR 100 million of the impact of wage increases, which were higher in this context of inflation. And we have around EUR 50 million, which come from subcontractors. You know that we made an effort to accompany our partners in this difficult context and a few other costs. So the EUR 300 million is roughly EUR 150 energy, EUR 100 for wages and EUR 50 for [indiscernible].

And maybe on your question regarding do we see the impact, I mean, on on churn from repricing, it's too early. I mean that's something that, first, we are monitoring very closely, obviously. But what we see is more less -- especially in France, less aggressive promotional campaigns from the market and a general increase in front book prices, both in mobile and broadband, so it's probably still too early to draw conclusions. But yes, we -- so far, we don't see massive impact.

Jakob?

Jake Bluestone from Credit Suisse. I've got 2 questions, please. Firstly, just on France, EBITDA in -- or in H2. If we strip out the sort of comp effects, so the cost that you had in 2021 it looks like your EBITDA probably would have been down during the second half of the year, which maybe is a little bit softer than expected. Is that just related to those cost effects that particularly [indiscernible] in the second half? Or is there anything else you'd particularly highlight on why the sort of underlying French EBITDA was down in the second half? And then just secondly, in terms of your 2023 free cash flow guide to the above EUR 3.5 billion, can you maybe just sort of walk us through what are the items below EBITDA minus CapEx to get to the EUR 3.5 billion? It looks like there might be an improvement in working capital perhaps. So if you can just sort of help us understand the drivers below EBITDA and CapEx?

So on the France EBITDA Q4 performance, so I think in France, generally speaking, we have 2 trends. One, which is a very solid retail performance. and obviously, a wholesale performance. And we mentioned that actually the decline in wholesale was actually slower than we've seen earlier in the year in Q4. We will come back to that -- I mean, to these 2 trends in the following presentation, of course. And indeed, we had the massive base effect from the previous year. But I don't have any specifics on the Q4 trend. At least there's no specific in Q4 that we had not seen earlier in the year.

Why was -- the question was really why was H2 EBITDA down excluding the base effects? And I guess the answer is, just the OpEx and the wholesale? Or is there something else?

It's the wholesale. It's the wholesale impact. I mean, wholesale is impacting our EBITDAaL trajectory in France, and we'll come back to that. So I guess that's the negative trend that you see. Now I can't comment on why H2 would be different from H1, but...

But we can also recall, Jacob, that when we started the year in 2022, the expectation that EBITDAaL in France would be down for a year. Don't forget this. So H2, H1, you have some cyclicity here. But the end game in '22 is better than expected. We were expecting a negative outcome for France in EBITDAaL in '22, and you end the year with a plus 0.4% with a number of elements due to inflation, cofinancing, there was a drag also on cofinancing. So there are many elements here. But I think, overall, what I would recall from '22 for French EBITDAaL is that the performance was better than initially expected. So I think it's quite an outstanding performance, if I may say so, with a very strong commercial performance, incredible good performance in terms of cost control. So we may come back to it later, but I would say the final figure is probably better than the 1 we expected for 2022 in France. And on your question on what is below operating cash to drive organic cash flow growth. In fact, our organic cash flow growth in 2023 for the guidance of at least EUR 3.5 billion is really, essentially, if not fully driven by the operating cash, which is progress in EBITDAaL and strong decrease in CapEx. Working cap is not an explanation of this growth, okay? The other elements in terms of tax and interest on the debt are also balanced. So really operating cash is explaining organic cash in 2023.

Let's move to Andrew, please.

It's Andrew Lee from Goldman Sachs. Thanks for very clear and straightforward group guidance. I guess what everyone is trying to do now is try and dig into the drivers underneath the the bonnet. And just following on from your questions on France and growth in 2022, it looks like there's a guidance for kind of slight decline in EBITDA. And then, Christel, you said you want to talk about this later, and I'm sure we'll get more detail later. But one of the big concerns is that wholesale drag and the overlapping networks and how that's maybe changing the structural drivers of our your French business. It looks like there's a slightly greater drag in 2023. So I wondered if you could just give us some high-level comments on France and wholesales -- wholesale as a driver of that just pertaining to those points. And if I might just ask a second very quick question, just restructuring and employee reduction. Is that still included as a cost item in your free cash flow guidance?

So on your first question, and I hope the next presentation will really address that because we know that's a question that you ask. And Indeed, the guidance -- I mean, France will be slightly decreasing for EBITDAaL, and that's because of the wholesale impact, but also with an engine on retail that will be very solid. So we'll come back to that in the second part of the -- of this morning, and I hope we address the question. But that's the reality in France. On the guidance and restructuring, I mean we have massive departure of employees because of our early retirement program that was fully booked in our 2022 and actually 2021 accounts. So for next year, we do not include any more, I would say, massive reduction of -- I mean, departure program. We will have, as always, small -- I mean, restructuring -- I mean, because of non-continuity of activity, and we will discuss also later this morning how we transform our enterprise business, which will also be one of the big areas where we have to address our cost structure. But really the free cash flow guidance does not include any more massive, I would say, early retirement program as we've seen.

We don't have any question from the call. Anything else from the ground? In that case we can take the break. Thank you. It will be longer. Be back before 9, please. [Break]

Well, everybody is back. Thank you so much to be so punctual. We really appreciate. So we're going to start in time. We are in advance, absolutely. We will be -- once again, I tell you that this is also for the people who join us immediately that this presentation will be recorded. There will be a replay available on the website. And we are now going through the Capital Market Day 2023, with period '23, '25 through the strategic plan presented by Christel Edman, our CEO. It starts at 9%, ending at 11:30, and we will be half making a presentation and a Q&A and I hope you will be less shy in the ground or in the year. Thank you very much, and I hand over to Christal immediately.

Good morning, everyone. I'm really pleased to present today the Orange Group's new strategic plan together on stage with Ramon Fernandez, our CFO; Javier Monier Lempres, CEO of Orange Business; Michael Trabbia, CTIO and CEO of our Wholesale division; and [indiscernible], CEO of Orange Middle East and Africa. Our plan is based on one strong conviction, telecommunications have become essential. In addition to the explosion in digital usage, and increasingly high customer expectations, the sector needs to respond to the growing challenges of resilience. Our industry is now at a crossroads. Our plan will be based primarily on our strength. Orange is proud to be 1 of the world's leading telecommunications companies the leader in fiber deployment and present in 26 countries in Europe and Africa. Our results released this morning demonstrate that we have achieved all our financial objectives despite 2022 headwinds, thanks to pricing actions and cost containment. These proof of our resilience and the quality of our fundamentals allow us to have a long-term sustainable growth ambition for our group. Nevertheless, we do not underestimate the difficulties within the sector and our environment, and therefore, the need in parallel to transform our company to increase agility. I took office 10 months ago and spent a significant amount of time meeting staff and reviewing all our activities and geographies. I will now present our new plan, which is built on 4 pillars and a new solid foundation. The first pillar, capture full value from our core business. The second pillar, capitalize on our infrastructure assets, which are the strategic and long-term nature. The third pillar, transform and focus in our B2B division, while investing in our fast-growing cybersecurity business. The fourth pillar, continue to grow in Africa, a long-term growth market, where we have a leading position. This new plan is based on the implementation of a new enterprise model that I will summarize in 3 words: performance, excellence and trust. Performance with a focus on our operational and capital efficiency and more generally on execution with an industrial approach that must be best-in-class. Excellence with the expertise of Orange women and men written in our group's DNA. And trust, which is at the heart of orange purpose. It continues to be the common thread running all our decisions. By 2025, we plan a continued organic cash flow growth as well as the responsible sharing of our value creation. In particular, our confidence in cash flow generation will translate into progressive dividend increase policy. It is, therefore, with enthusiasm and determination that I will present to you today surrounded by my team, our strategic plan, which will answer all the questions that you shared with me when I took office. So here's today, agenda with part 1, outlining our strong fundamentals, part to describing the 4 pillars of our new strategic plan Part 3 explaining our new enterprise model and finally, part for clarifying our capital allocation policy and guidance. Let's move straight to Part 1. I would like to start by highlighting our very strong fundamentals. Orange, today, has an undisputable lead on fiber rollout in Europe. We have more premises that are connectable to fiber than Dutch Telecom, Vodafone, British Telecom and Telecom Italia combined. This leading position in fiber rollout explains the decrease in our eCapEx and, in particular, fiber eCapEx, and the monetization potential ahead of us. Let's begin with France where FTTH has been extensively rolled out almost to the point of completion. Our France network already gives us access to more than 33 million premises connectable to fiber, or 76% of all premises. In private areas, we will complete our current connectable lines by using our own deployments for fewer than 3 million lines and by accessing the networks of third parties for the remainder. In public initiative network areas, our part of the rollout is fully managed by Orange Concessions, and we will complete our current connectable lines with a tactical mix of cofinancing and leasing. I would like to highlight that we also offer a full very high broadband connectivity across the entire country already, thanks to fixed wireless access or satellite solutions. In addition, apart from network size, the main competitive advantage for Orange is being the first mover. Indeed, France perfectly embodies this unique advantage with fiber penetration within our customer base that has doubled within 3 years up to 58%, a sustained and maintained market share, and, above all, a front book price differential with ADSL maintained at EUR 5. At the end of 2022, 22% our own fiber network was monetized through retail and 69% when adding wholesale. This positioning as a fiber pioneer has improved customer satisfaction, increased the value of our offers, and as such, consolidated our commercial leadership in France. To sum up, fiber is extensively deployed in France. So we are entering a slower rollout phase with significant remaining monetization potential. Let's now see how the French experience has been applied to the rest of Europe. Elsewhere in Europe, more than 60% of our premises in Spain and close to 50% in Poland have already been connected to fiber. In these 2 countries, in which we have achieved more than 90% of our deployment targets, the rollouts no longer have a significant impact on our consolidated eCapEx, thanks to the leasing contracts concluded in Spain and our fiber co in Poland. The pace of rollout for the other European countries, which are less advanced with fiber, will be set to maximize our commercial trajectories and boost our convergence strategy as we will be fully convergent in all our European countries after the VO acquisition in Belgium. Following this deep dive into fixed infrastructure, let's review our best-in-class mobile infrastructure. Our 4G coverage is now approaching 100% in Europe, and exceeds 90% in Middle East, North Africa region. The penetration of 4G in Africa, Middle East has increased sharply since 2019 with 66% coverage, and there is still a significant potential ahead as it represents only of our mobile base. In terms of 5G, we cover more than 50% of the population in France, while outside France, 5G is now marketed in 7 countries. Spain is the most advanced market, with 5G covering more than 75% of the population. We monetize 5G with a premium price compared to using this new technology as a differentiating factor with high-end and convergent offers while investing in it at the pace of adoption. That said, the monetization potential of our mobile infrastructure is still very significant. Our mobile ambitions will fuel our ESG commitments since 5G allows a reduction in consumption per gigabyte 10x lower than 4G. For these investments into infrastructure to create value that must be recognized by our customers for the network quality provided. The quality of our networks and excellence of our customer service in Europe speak for themselves, with massive increases in NPS over the past 3 years and a reduction of mobile churn. This has allowed us to increase our mobile and convergent customer bases in Europe by 5% and 8%, respectively, over the period. This also demonstrates the power of Orange brand, which is ranked the second most valued telco brand in Europe in 2023. In addition, let's see how we've been able to tackle the return of inflation in Europe. We know there're 2 crucial means to tackle this issue. First, to increase prices; and second, cost discipline. And these explain our strong 2022 results, and we will need to pull these levers even further as I will detail later. Alongside these 2 major actions, we have proven our resilience, thanks to several differentiating factors. Our high levels of energy hedging, our payroll discipline, the ownership of our infrastructure, the strength of our balance sheet, which will be key, the bargaining power of buying our partnership with Dutch Telecom, totaling approximately EUR 15 billion of OpEx and CapEx orders per year, and our lead in fiber rollout, allowing reduction in CapEx. These trends demonstrate Orange resistance to headwinds, and how we've been able to achieve our financial targets in 2022, in particular, cash flow generation. Organic cash flow has indeed jumped by almost 1/3 since 2019. This was the result of our capacity to leverage our convergent network strategy in Europe, acceleration in Africa, Middle East, and strong cost discipline compensating the challenges of our enterprise segment. This performance has been achieved in a challenging regulatory context. European policymakers now acknowledge the need to invest in digital infrastructure and that the current regulatory framework has favored the transfer of value to [indiscernible]. This framework has therefore reached its limits in today's volatile environment. Digital infrastructure are more crucial than ever for strategic independence. We have already made some progress, for example, with the symmetrical regulation for all fiber players in France and the EU's launch of an initial investigation into fair share. But we will go further. In France, we are working with ARCEP on the unbundling and civil engineering tariffs in wholesale to reflect our actual cost. At the European level, we are joining our European peers in the call for easing the terms and conditions of internal market and cross-border consolidation so that telecom operators can gain the necessary scale, ensuring that big tech platforms also contribute fairly to network costs just as wholesale relationships apply between operators. Ensuring that regulatory actions favor investments in networks more than an escalation of prices in spectrum auctions. Let's now move to the details of our plan. As I said earlier, this new strategic plan is based on 4 pillars: monetize, capitalize, focus and transform, grow, fueled by a new enterprise model. So let's start with the first pillar of the plan, monetize. We changed that capturing growth from our assets, building on our strength and excellence. This first pillar concretely translates into 4 main actions, refocusing on our core business, leading by excellence in customer service, boosting our network's performance and driving our value strategy in France and Europe. We have launched a comprehensive review of our business portfolio and have already started the disposal process with the sale of and OCS and Orange Studio to refocus on our role as content distributor. In addition, we have stopped the connected home offer in France. We have also launched a strategic review for Orange Bank activity in Europe to see how best we can capitalize on its improving financial trajectory in connection with its good commercial performance. We will come back to this in due course. The stand-alone plan for the bank is to reach breakeven at the turn of '25, '26. This demonstrates a new agile approach to our business portfolio. Secondly, we will leverage our excellence in customer experience and hence, by a greater integration of AI to support our value strategy. Let's see how we do this in concrete terms. We want to become the market reference in customer experience. This means a smoother and more personalized physical and digital customer journey. Specifically, we will continue to increase the share of digital in sales and in customer support. We will also leverage AI at scale to improve our ability to predict customer expectations. Observing that recommendations made by AI to sellers have already increased sales in France by 6%. We will focus on safe, seamless and green offers, safe with cybersecurity built into the network, seamless with connectivity that's personalized, modular, flawless on the go, and green with, for instance, repaired and refurbished devices. We are striving to improve our NPS in all geographies. A third key monetization tool is our commercial and pricing strategy. The monetization of our investment in Europe is fueled by a bold retail commercial strategy that includes repricing. With the spread of remote working, customers are ready to pay for an optimal connection and a quality customer experience. In an inflationary environment, our value strategy in Europe involves continued price increases that are calibrated and adapted to the competitive context in order to offset our cost inflation while, of course, closely monitoring customer satisfaction and churn. In Europe, including France, we plan to offset 70% of the inflation impact on our costs through price increases in 2023. These repricing actions go alongside our commitment to connectivity for all since we feature low-income offers under EUR 10 in all our geographies. In Africa and Middle East, we're also agile and we will adjust prices with the necessary magnitude where it's relevant. Let's now go deeper into our countries, starting with France, to assess the commercial and financial trends for 2025. Over the next few years, France will face opposite trends with its retail and wholesale businesses. Starting on the retail side, we have been back to growth since 2021 despite the decline of ADSL, which has been offset by fiber, 5G and the quality of the customer experience. We are confident that we will continue to achieve retail revenue growth, excluding PSTN, of between 2% and 4% per year by 2025. This will protect our market share as we pursue our value strategy enabled by high customer satisfaction. Our NPS is already the highest in the market, and we aim to grow it by a further 10 points over the next 3 years. Commercially, by 2025, we plan that penetration of 5G will grow by threefold, reaching 70% of our mobile customer base. 80% of our broadband retail customers will be on fiber with 41 million FTTH connectable homes, up 7 million compared to 2022, of which half rolled out on our own. And 75% of our own fiber network will be monetized by 2025. Retail and wholesale combined up 3 points versus previous target. We will supplement this fiber coverage with 4G, 5G and satellite offers in the most remote areas as it is the most cost-effective way to ensure a 100% very high broadband access. Let's now focus on the wholesale. On wholesale, the switch from copper to fiber has accelerated. As a result, our wholesale copper revenues are decreasing faster than expected. As such, we forecast that by 2025, the number of wholesale copper lines will be reduced by more than half. And copper will account for only 30% of our fixed wholesale revenues, which is manageable. This acceleration in transition has pointed us to adjust our forecast. As of today, we plan on a wholesale revenue decrease of minus EUR 1 billion over the '22, '25 period, but the wholesale EBITDAaL loss will be much more limited to around minus EUR 400 million over '22, '25. Please note that in 2022, we managed to slightly grow France EBITDAaL despite a negative contribution from wholesale of EUR 300 million. We have embedded in our plan a fair increase in unbundling and civil engineering tariffs by the regulator to reflect the mechanical increase in our unit cost of active copper lines. We will mitigate most of the decrease on wholesale EBITDAaL, thanks to retail growth and continued transformation of our cost structure. In addition, eCapEx decrease will support cash flow growth. In France, headcount has already decreased by 40% between 2012 and 2022. This annual net reduction of approximately 3,000 employees will continue until 2025, with natural attrition and our existing voluntary early retirement program. In summary, for France, we will limit the impact of the switch from copper to fiber by 2025, thanks to the strength of retail and cost discipline. Between '22 and '25, we thus expect slightly negative revenues and EBITDAaL CAGR. Nevertheless, cash flow will increase, thanks to a significant decrease in eCapEx now that the bulk of the fiber network has been deployed. Next, I want to show you how we plan in Europe to reinforce the trend of value creation, which is now well underway. In Europe, the 2019, '22 period was marked by the ramp-up of convergence, B2B and the recovery of Spain. Europe, excluding Spain, generated a revenue CAGR of plus 3.4% and an EBITDAaL CAGR of plus 4.3%. Our convergence strategy will represent 2/3 of our fixed broadband base by 2025 with a convergent base CAGR of 5%. The acquisition of Wu in Belgium, with its very high-speed network, will help us achieve this objective. Orange Belgium should double its fixed broadband market share and generate significant synergies. The B2B business, which is managed directly in each European country and not by our enterprise segment, will also be a strong growth driver with mid-single digit revenue CAGR. Our value strategy in Spain will allow a return of EBITDAaL growth from 2023. In summary, the Europe segment, including Spain, will generate over the period '22, '25, a low single-digit revenue CAGR at a mid-single-digit EBITDAaL CAGR, with a mechanical improvement of the EBITDAaL margin. In order to strengthen European growth, we have also negotiated several consolidation and partnership deals to maximize value within our European footprint. We have initiated 2 important transactions, our combination project with MásMóvil in Spain has just been filed to the EU Commission, and Wu in Belgium, pending imminent approval from the competition authorities. Once completed, both operations will de facto have a very different profile. In Belgium, we have also recently signed a new wholesale agreement with Telenet to access its fixed network and planned FTTH network in Flanders. As a reminder, these transactions are not yet finalized and so not yet included in our financial projections. The associated financial impact will be communicated in due course. Let's continue with the second part of our strategic plan, capitalized in which we want to emphasize the absolutely strategic nature of our activity as an industrial and infrastructure operator. Our proven fiber and mobile expertise will certainly future-proof the value of our network. Let's now deep dive on our network and infrastructure strategy with Michael Trabbia, our CTIO and CEO of our wholesale division.

Thank you, Christel. Before turning to Infrastructure Value Management, let's comment on our network strategy. Our goal as operator is to become the reference in network agility, resilience and performance. This ambition includes software transformation, automation and AI. We will measure our progress in this transformation based on the standards set by the TM Forum for the level of automation in network operations. Our ambition is to move from Level 1 or 2 currently, depending on the country to Level 4 by 2025, specifically on 2 key processes: the test integration deployment process and the network monitoring and fault management process. To further increase network automation, we are implementing group-wide network integration factories and shared operation centers. They will allow new on-demand network services operating in network as a service mode, creating new business opportunities. They will also strengthen the resilience and security of our networks by allowing way faster operations. For example, we will be able to complete -- to have a complete recovery of a core mobile network in less than an hour against at least 1 week today. We'll also be able to do continuous security updates and to the detection of network anomalies in 3 minutes instead of 5 hours. Finally, this transformation already helps us to optimize network CapEx and OpEx and to reduce network power consumption up to 20%. The use of AI at scale will be key for this transformation and is made possible by solid foundations. We manage security, data protection, ethics and ESG requirements on a global basis. This allows us to dramatically accelerate access to data and to share and replicate use cases developed across the group. This structural transformation for our networks will go end in end with the decommissioning of older technologies. In addition to simplifying processes and optimizing our costs, it will help to reduce our environmental footprint. Firstly, we will expand 4G and 5G and FTTH coverage complemented, as Christel mentioned earlier by fixed wireless access and satellite in remote areas. Secondly, we will retire legacy copper and first-generation mobile technologies. Regarding mobile, Orange will decommission its 2G and 3G technologies in all European countries between 2025 and 2030. Regarding copper, decommissioning in France has already been initiated. The industrial closure phase will start in 2026 and end in 2030. By then, we will save copper maintenance costs while fiber and maintenance costs are 4x lower. We will manage this decommissioning with the objective of an overall neutral economic impact, notably thanks to the revision of unbundling prices. Completely switching to more modern, secure, reliable and energy-efficient technologies will also help reduce our carbon footprint. And therefore, contribute to achieving our net zero carbon objectives by 2040. Thirdly, we will maximize pooling of infrastructure and network with [ Ran sharing ], [ Towerco ], [ FiberCos ]. And finally, we will further optimize network maintenance. Let's now turn to the management of our infrastructure that offers solid prospects for value creation. Orange considers its activity as an infrastructure operator to be absolutely strategic. The job of passive infrastructure manager is at the heart of our industrial know-how. These are businesses in which Orange has remarkable positions in Europe with solid growth prospects over the coming decades and particularly attractive risk-reward profiles. There are also strategic assets for our retail activity. In this context, our strategy is to continue to develop these asset classes in Europe. The framework we set to ourselves to do so is an ambiguous. We will act in strict compliance with the group financial guidance. We do not rule out external financing, including via deconsolidation mechanism as with fiber cost in France and Poland. But we definitely want to retain the option of keeping control of these assets in the long term to benefit from their value creation and to protect the telco volume. On fiber as an infrastructure operator, Orange has rolled out EUR 49 million on connectable, of which EUR 46 million in Europe. These industrial expertise and best-in-class asset portfolio position Orange as a fiber pioneer in Europe. The value of this investment was fully recognized in 2021 by financial investors with our deals in France and Poland. Looking ahead, we will continue to work on different options to further develop this asset class. Now on mobile, TOTEM has been fully operational since H2 2021. With 27,000 mobile sites in France and Spain, TOTEM is the #5 player in the European TowerCo market. From a value creation perspective, based on installed assets, the creation of TOTEM is already bearing fruit, better asset knowledge, allowing better management. Land management and optimization and an increase in the tenancy ratio, thanks to hosting agreements that follow on from our first commercial successes, notably with [ Telefonica ] in Spain and [ Iliad ] in France. To achieve this as an industrial at TowerCo, our offer differentiates itself from the competition, thanks to our understanding of our customers' network issues. Most of our sites are fiber. We provide green energy in Spain, and we have a strong presence in French rural areas. In terms of developing now the tower base, Totem has several opportunities. First, the contribution of other European Orange towers is under study. Second, we have initiated a build-to-suit program with third-party MNOs that is supported by our proven industrial firepower. Based on current agreements, we have set a target of circa plus 2,000 sites between 2022 and 2026. Finally, we are uniquely placed to participate in the European tower market consolidation. At the same time, in Africa and Middle East, we have full ownership of 30,000 towers, which opened value creation opportunities, always with the desire to retain control of our assets. Still in EMEA, we plan to expand our mobile coverage in rural areas, notably through partnerships that would allow us not to burden our balance sheet while benefiting from optimized financing conditions. So to summarize the second component of the plan, our infrastructure strategy is to continue to invest in our unique assets to keep them at the forefront of network developments, driven by value creation. I will now hand over to Aliette, CEO of Orange Business, who will present the third part of our strategic plan, Focus and Transform.

Thank you, Michael. Hello, everyone. So I guess you saw that we announced this morning that Orange Business Services is becoming Orange business. This name change symbolizes the simplification and the focus we want to achieve. As other operators, Orange business is being disrupted by a fast-changing market landscape. Collaborative tools, cloud and software are replacing telco legacy solutions such as fixed telephony and private enterprise networks, which were historical cash [ co's ] of Orange business. Of course, this market shift also accelerated by Cabot is not new. For over 10 years, Orange Business has been reshuffling its portfolio to build capabilities in the digital space. The digital activities represented 29% of the Orange business mix in 2015, and it now accounts for 44%. This change in activity mix has not only very seriously impacted our gross margin mix. It has also converted Orange business into a kind of hybrid objects half telco have digital company. This has created maneuvering difficulties, which bundled with a very large portfolio of activities have also created day-to-day operational execution challenges. This has translated into a 32% EBITDA decline over the last 3 years. And the 2025 financial plan we are showing today has been totally rebased compared to what was presented to you at the B2B day mid-2021.. Of course, the situation calls for a decisive overall of the Orange business operating model. But before detailing the plan, let me be explicit about where do we want to go. My very strong conviction is that while networks are becoming software and while software is moving to the cloud, the world of telecom and the world of digital will ultimately converge. Traditional B2B telecom services are being transformed into infrastructure integration and system integration. In this context, Orange Business has very differentiated assets in the fields of what I'm calling the 3C. The 3C are connectivity, cloud and cybersecurity. Those assets and expertise are highly recognized by our enterprise customers and put us in a unique position to efficiently orchestrate the global digital infrastructures. Consequently, I truly believe that Orange Business has a strong right to play and can become the European reference as a network and digital integrator. Yet to succeed, we must decisively shift our operating model and adopt all the attributes of an integrator. This will require an energetic action plan. Such action plan includes changing our organization, which was done on January 1, leveraging the various digital companies we acquired in the past decade in a kind of cultural reverse takeover. The next step is to rework our cost structure. We aim at significantly reducing both our SG&A and production costs through an ambitious cost-saving plan. I will not share the numbers today as I'm sure you will understand that I will keep the exclusivity of the details to our social partners. I will trigger a consultation process with them mid-March and I will report progress on a quarterly basis. And we will do all of that while providing comprehensive training to our staff for acquiring the necessary skills. In this fast-changing world, the required skills are changing much faster than individual carrier cycles. And we have the responsibility, I have the responsibility to accompany our employees through those evolutions. We will, therefore, set up a large-scale reskilling and upskilling program with more than 5,000 employees who will be trained from traditional telco areas to the world of virtualization, cloud, data, AI and cyber. Now let me share with you the overall architecture of the Global Action plan based on 4 levers, which will enable a return to profitable growth in 2025.. The first lever that you're seeing here is about simplification and cost reduction. It includes several items such as a new organization since January 1 and a new leaner management team reduced from 17 to 12 members with more than half new, including 3 external joiners. It's also about the rationalization of the past 7 business units into 3 business lines under a single marketing and product entity. Then the simplification of our presale processes under 2 geographical zones, owning the P&L, whereas such a P&L used to be monitored in a fragmented way across the 7 business units. And last but not least, the adaptation of our cost structure, as I already mentioned, the objective is to bring Orange business back in line with market standards in each of its activities by ending low-margin contracts and better [ passing ] on inflation, increasing our offshore ratio, leveraging organizational synergies and rationalizing our application portfolio. Moving to the second lever. It's about focus our investments into priority areas. Orange business will focus on 4 strategic value propositions, where it is uniquely differentiated, thanks to its deep understanding of enterprises infrastructures. This focus includes a drastic simplification of the product portfolio through a reduction by half of the marketing products within the next 12 months. The 4 value propositions are the following: the first one is the transformation of digital infrastructures, leveraging our ability to orchestrate network, cloud, cloud and security components altogether in order to lay the foundations for secured and flexible connectivity to the cloud. The second one is the foundation of the employee experience. combining our know-how in connectivity, mobility, voice, video and collaboration tools while warranting security. The third one is the foundation of the customer experience, combining our know-how in contact centers, networks, voice, AI and IT integration. And the fourth one is the foundation of digitization of operations, especially in factories, based on our mastery of 4G and 5G private mobile networks, IoT connectivity, edge cloud and security. Moving now to the third pillar. The third lever, which is the transformation of the traditional connectivity business. The core of our 4 value proposition, you saw that I said it already is about orchestrating and securing end-to-end digital infrastructures. To do so, we will leverage our strength in next-gen secured connectivity. It's about reinforcing our position of leader in virtualized networks but also about providing fast and agile fiber and 5G deployments. We are launching an ambitious project to digitalize our entire connectivity portfolio and develop future proof as a Service next-gen connectivity solutions. And last but not least, our fourth lever, is about strengthening our digital capabilities in France and in Europe. I'm talking about cloud, data, digital, and more particularly, fiber, which Crystal will highlight in a minute. We are aiming at keeping growth rates in line with the market while significantly improving profitability. Again, by aiming at market margin levels, particularly in the cloud services area. Such an action plan and the redesign of the Orange Business company model aimed at recurring EBITDA growth by the end of the plan. We will limit the gross margin decrease in our traditional fixed and mobile services to an average annual rate of minus 8% over the period. Conversely, our IT and [ IS ] services gross margin is expected to grow by plus 8% on average per year, fueled by IT services. Combined with our SG&A reduction efforts, EBITDA will return to growth in full year 2025. To conclude and as a recap, we aim at being a leading and high-performing network and digital integrator. We clearly have the assets to do so, and we will adapt our operating model and cost structure accordingly. It will be done through a structured action plan on which I will regularly report progress. We will have a negative mid-single-digit EBITDA CAGR over the period '20 to '25 and EBITDA will go back to growth in '25 at the latest. Let's now go back to Christel, who will discuss a rapidly growing activity with cybersecurity.

Thank you, Elliott. This is an intense transformation plan, obviously. That includes a very dynamic activity, our fiber defense business. Our aim is, of course, to accelerate growth of Orange CyberDefense. The market is forecast to grow around double digit over the coming years, and we have already demonstrated our ability to outperform the market. Orange is a leading and trusted operator, meaning that cybersecurity is in our DNA and is a core business, and we aim to be a leading player in Europe. Within the enterprise segment, with a revenue close to EUR 1 billion in 2022, Orange Cyber Defense is already close to its 2023 target. Organic growth will be supported by underlying market dynamics, of course, driven by the increasing needs from individuals all the way to large corporates. The recent acquisition in Switzerland, combined with other potential bolt-on acquisitions will accelerate our growth beyond purely organic. We will continue to allocate additional resources to boost Orange Cyber Defense growth, and we are targeting organic revenues above EUR 1.3 billion in 2025. So far this morning, we have outlined our growth perspectives in our core business in Europe in our infrastructure, in our enterprise segment with Cyber Defense. In the fourth and final part of our plan, I will now ask Jerome Henique our CEO of Orange Middle East and Africa to present the exciting growth opportunities that we have in the region.

Thank you, Christel. It is worth pointing out that Middle East and Africa's turnover has already increased by 25% over the period 2019, 2022, equivalent to a CAGR of plus 7.7%. Over the same period, grew with a CAGR of 13.1%, almost twice the revenue rate, while OCF again doubled [indiscernible] with a CAGR of nearly plus 25%. ROCE is increasing and is greater than WACC. And EMEA now represents 16% of group sales in 2022, up from 13% in 2019. Over the same period, 2019, 2022, retail activity, about 90% of turnover in 2022 grew by 32% with the drivers being mobile data fixed broadband and with the mobile base up 17% at 143 million customers. So what operational levers will we use to maintain the strong organic growth in the area. There is a large potential related to demographics, Internet adoption and the growth in users whose capture is made possible by network and infrastructure deployment. Our policy of digital inclusion, providing offers at attractive prices and digital training also positions us better to take advantage of these factors. Given this solid foundation using the levers for growth and differentiation built up over 20 years, we will now go further. First, we plan to accelerate multiservices in the financial field, content, energy, agriculture, health and B2B. Second, we will also enrich our Orange Money offers to better counter OTT threats, and we will make it a true OTT digital platform. Let's now take a look at the trends that you can expect for EMEA to 2025. To start with, I want to confirm that the commitments made at our Africa Day for the period 2020, 2023 of around 6% revenue CAGR and double-digit EBITDA CAGR will all be met. Over the next 3 years, revenue growth will at least keep the same pace as the previous 3 years with a CAGR of greater than 7%. This will be driven by the growth of our customer bases as well as our growth engines. Once again, mobile data, Orange Money fixed broadband and B2B, which will represent more than half of the revenues by 2025. On top of this, we will continue to exercise cost discipline with a specific focus on sales and distribution costs, continued pulling and shared services centers. Strong top line growth and disciplined execution will drive EBITDA growth with the 2025 CAGR of at least high single digit and an EBITDA margin close to 40% by 2025. We will secure fees growth as the contribution of each of our 4 geographical clusters will be even more balanced in 2025 than in 2022 for both turnover and EBITDA. Our CapEx investment will support organic growth and will facilitate the ongoing network expansion in the most relevant locations. EMEA CapEx will increase at a much lower rate than turnover, reducing the CapEx to sale ratio from more than 18% in 2022 to less than 16% in 2025. First, the continuous improvement in EMEA ROCE, which is higher than WACC, will continue. I will now give back the floor to Christel for the next chapter.

Thank you, Jerome. So let's move to the next topic. The execution of our strategy will be based on the implementation of a new, clearer and more efficient enterprise model based on the 3 areas of action I have already stated this morning, performance, excellence and trust. Let's now walk through these principles. Our environment is experiencing profound change and the group faces major transformational challenges. To support these challenges, we will put in place this new enterprise model that facilitates more efficient and more rigorous execution. It will involve 3 areas of action fueled by our ESG commitments that I will describe later. Performance with a particular focus on our operational and capital efficiency and more generally, on execution with an industrial approach that must be best-in-class and always focused on customer excellence. We will simplify and optimize support functions, a transformation that is also triggered by the massive success of our senior part-time program. excellence with the expertise of Orange women and men. We will continue to invest in talent development and skills to support future business needs through upskilling, reskilling particularly in the areas of data, AI and cybersecurity. Trust, which is at the heart of Orange's purpose, it continues to be the commentary running through all our decisions and a guarantee of economic, environmental and social performance, which itself will undergo a radical transformation. Our actions in all these areas with an emphasis on ESG will help us become more agile to create room for maneuver and to reinvest in the growth of the group our employees and our businesses. Orient is the trusted player that gives everyone the keys to a responsible digital world. This is our resonant purpose. Environmental and social issues are profoundly changing the way Orange runs its business. Using its purpose as a compass, Orange will transform itself to develop a more efficient and more resilient enterprise model. Our ESG by design transformation relies on 3 major areas: environment, trust and digital inclusion and empowerment. Our achievements are already acknowledged by strong ESG scores. For the first area environment, we need to cope with multiple changes, climate emergencies as well as structural changes such as access to natural resources, legislation and regulations and society expectations. We want to be a driver of environmental transition, transforming ourselves with a strong commitment to be net zero carbon by 2040 and a new milestone of 45% reduction in total CO2 emissions by 2030, promoting a circular economy within our processes and with our partners. Our ambitions will be validated by SBTI. How will we meet this challenge? The group's main source of energy consumption is from networks NIT. In 2021, the Green ITN program facilitated the saving in energy consumption of nearly 960 gigawatt of electricity and 18 million liters of fuel oil. Amongst other ambitious measures to meet the challenge of reducing our carbon footprint, we will put the eco design of our products and services at the heart of our decisions with the aim of reducing their end-to-end environmental footprint. Our second area of commitment is to work for a society of trust, setting the ambition of being the leader in cybersecurity in Europe and a key player in digital trust. We will achieve this by developing our enzyme defense. We are filing our policy of protecting personal data, promoting the ethical use of AI and data increasing the awareness of responsible digital technology and fighting cyberharassment. At Orange, we believe that digital is a powerful tool for inclusion. This is our third area of commitment. We are fulfilling our promise of digital inclusion and empowerment around 3 areas: network and services access, offer affordability and digital skills development. ESG is at the heart of all our processes with the full commitment of the group's management team for whom part of the compensation is linked to nonfinancial KPIs. We would like to remind you of the 2025 ESG milestones, which are fully -- we are fully committed to deliver. Of course, the ultimate goal of our new enterprise model is to create sustainable value and to strengthen our financial performance. I will now hand over to Ramon to present the elements of our capital allocation policy.

Thank you, Christel. So let's start with cost discipline. Indeed, no fundamental transformation can be achieved without strict cost discipline, and we will continue along this path. Following the achievement of our 2019, 2022 cost saving plan, we expect to achieve, again, 5% net cost saving over '22, '25 despite inflation on a new cost parameter of EUR 11.8 million excluding energy expenses, which are too volatile in the current context and anyway are addressed by their own specific optimization program. Our EUR 600 million cost reduction program will be powered by the initiatives already initiated within the current scale-up framework, automation, digitalization in Europe, internal secondhand equipment exchange platform, et cetera. It will also be powered by the new enterprise model described by Christel with an optimization of support and central functions and further pooling of resources. In France, the latest senior part-time programs allow a significantly sizing leading to more than 7,600 early retirements over 2022 and 2023. This is more than 10% of France workforce with half of departures coming from central and support functions. This attrition effect will represent net EBITDA savings of around EUR 300 million between '22 and '25 on top of the EUR 150 million already achieved in 2022. We will also maintain strict CapEx discipline. As you can see, the is now decreasing, thanks to our lead in the fiber rollout in France and in Europe with a partial reallocation to Africa, Middle East, to fuel that segment's strong growth. The group target of a CapEx to sales ratio of around 15% from 2023 is confirmed. We have explained how we will increase group organic cash flow generation over the 3 years of the plan. Let's now take a look at our capital allocation policy before turning to our guidance. Our investments are made to support growth. At the same time, our permanent focus on sustainable value creation requires a diligent management of our assets. First, our road map to sustainable value creation will involve an even greater use of ROCE internal rate of return and payback tools with a long-term view at all levels of decision-making. Second, asset management with no taboo means conducting regular portfolio reviews that will determine based on these criteria, the necessary measures to drive efficiency and transformation, monitor their implementation and make the necessary divestments decisions. As part of this portfolio reviewing the size decisions have already been taken. We will, therefore, approach without [ Dogma ], the principle of asset rotation. We always bear in mind that an asset can be monetized in part or in total, as we continue our permanent quest to maximize an asset's inherent value and to reallocate resources towards our key priorities. Third, as part of an efficient capital structure, we will maintain a disciplined capital allocation policy supporting our strategic priorities. This will fuel a ROCE improvement between 100 to 150 basis points by 2025. We will pursue a highly disciplined M&A policy and remain open to strategic partnerships. In Africa, where we have not made any acquisitions since 2016, Africa, Middle East division will, as it does today, self-finance its CapEx plan and may use third-party capital for inorganic growth. Needless to say, we will continue to strictly control all our organic investments reaching a group CapEx to sales ratio of around 15% from 2023. Thus, our policy of protecting our balance sheet structure will remain unchanged, and we confirm a medium-term leverage target of around 2x. This will allow us to maintain the flexibility needed to meet our strategic challenges and to exercise if we wish the various options for regaining control of our joint ventures in due time. Finally, our policy on shareholder returns will be fueled by our organic cash flow generation. To sum up, everything in this strategic plan have 1 overarching objective, sustainable value creation for the benefit of all the company's stakeholders. I give now the floor back to Christel, who will end this presentation with the guidance.

Thank you, Ramon. First, we have already seen this morning our 2023 guidance, confirming solid organic cash flow ramp up with a dividend flow up to [ EUR 0.72 ] payable in 2024. Let's move straight to the guidance contained in the 2023, '25 strategic plan. To begin with, let me remind you that our guidance, as always, is set on a pro forma basis, meaning it does not include any change of scope. That being said, our EBITDA projections over '22, '25 lead to a low single-digit group of EBITDA CAGR, driven by high single-digit Middle East and Africa EBITDA CAGR a mid-single-digit EBITDA CAGR in Europe, France remaining resilient with a slight decrease and a recovery of Orange business in 2025. I price increases, energy cost control and the beneficial effects of the transformation will also fuel our margin increase. In addition, we will decrease in CapEx, reaching a run rate of 15% revenues from 2023. This performance, in turn, will fuel a continuous increase in organic cash flow, reaching EUR 4 billion by 2025. And we expect ROCE growth over the planned period. As far as balance sheet structure is concerned, our policy will remain unchanged, and we confirm a medium-term leverage target of around 2x in order to keep our current very attractive financing conditions. Lastly, we aim at progressively increase our dividend from a floor of [ EUR 0.70 ] today to [ EUR 0.72 ] for '23 payable in '24 reaching a new floor of [ EUR 0.75 ] for 2024 payable in 2025. To sum up, I hope that our in-depth dive into the different aspects of our new Lead the Future strategic plan has convinced you of our strength, our determination and ability to generate more cash flow and create more value. The entire management team and I are now ready to answer all your questions.

Let's start now with Stephane. On your right.

So first question, what do you see the difference in terms of the way you want to drive Orange versus the way it was driven in the past, whether it's in terms of conducting business, in terms of addressing stakeholders going forward again versus what was done in the past. And perhaps a second question regarding Africa. We've seen a little softer growth in Africa in the second half of 2022 compared to what you want to achieve for the next couple of years. So can you come back on perhaps some of the exceptionals that you had in 2022? And how you want to reaccelerate that revenue growth going forward?

Thank you, Stephane. So I'll take the first question, of course, and I'll let Jerome answer on the second one. I think first, I hope you were convinced this morning that this company, Orange made right strategic decisions in the past. We would not be the pioneer in fiber if we had not made the decision to invest in fiber way before all our other European competitors. So the company has very strong strength. Now what I will focus on, and I think that's probably the difference you're alluding to is that my maybe industrial or operational background makes me focus a lot more on execution. And I think the entire management team is focused and committed to driving execution. And I think I spent a lot of time, the entire employees of the company are really engaged and committed to succeeding and they love and they're passionate with this company. And they've also been very clear with me when I met with them over the past 10 months that we are sometimes too slow, not enough focused on execution. And so we need to free up energy in the company so that we just get the full potential that Orange serves and that our customers expect. So I think that's really -- the real difference is really this focus on execution that we will have as a management team. And maybe that's my own personal touch.

About Africa slowdown on growth in H2. It's true for Q3, more than for Q4, where we recovered 5.4% growth. The main reason was our strategy of answering to a price for Orange Money on some countries, and this has driven a drop in 1 of our 4 growth engines, which is Orange Money in 2022. But as mentioned this morning, we recovered growth starting Q4 and the strong growth, particularly double-digit growth in December, which makes us confident that fees grow will continue in the years to come. It will be a double-digit growth for 2023 and a double-digit CAGR up 2025 because we had to reduce our prices, but it has driven a strong price -- strong elasticity on customer base on volume of transactions. and on value of transactions, as mentioned this morning, we reached the threshold of EUR 100 billion value of transaction, which really makes us confident that in the future, it will accelerate. We had as well some excess in some countries, particularly adverse regulatory decisions in Ivory Coast that will no longer continue in 2023. So that as well makes us confident that we will speed up starting 2023.

Let's start with Nick and then to Matthew, Nick, first.

It's Nick Lyall from SocGen. Could I ask 1. This morning, you didn't mention anything particularly about new JVs or towers and transactions. So is it fair to -- is it because of timing or maybe prices you're finding in the market. Or is it more of a focus on 100% ownership and less minorities as sort of simplification of the structure as well. And on the dividend, the focus seems to be very much on the ordinary dividend. Again, should we count out things like specials? When you get in the cash in from Spain, for example, again, no large one-off divis or buybacks again, a focus on sort of simplicity in the ordinary dividend, please?

So on your first question, I think we are -- we have not made any new announcement, but I think we are very clear that we want to be pragmatic -- and in some cases, we are using JVs. And in some cases, we consider that some assets are less strategic on the long term, in which case, we will and we are already doing, I mean, sharing, maximum sharing, actually leaving some infrastructure. And in other cases, when we have assets that we do consider being strategic for the long term, we can be open to bringing on some new investors, but we want to make sure that we keep the strategic control for the long term of those assets. So there's not -- it's not a black or white answer, it's really a case by case as we've been already doing in the past. And indeed, we didn't announce anything new this morning, but there will be. I mean, we will continue to implement a model that we've already implemented in France, in Poland with our different assets. Regarding the dividend and your question specifically to the MasMovil deal, so I think that, first of all, the MasMovil deal, as you know, we just notified the competition authorities. So we're still in the process, and it's not done. The MasMovil will be a JV for us, and we will only have a 50% stake in this entity which will be a highly leveraged entity and for which we have an option to reconsolidate in the future. So today, we believe that the best option is to further consolidate our balance sheet with the proceeds coming from this transaction.

I had a question first on ROCE. I see that you've given a number of indications and targets, and I welcome that in terms of your ROCE trajectory. But I had 2 questions related to that. First, what is the starting point? And second, you've now looked at all the assets for over a year. you mentioned that you want to reassess the portfolio on a continuous basis. But should we assume that by now, you're basically happy with all the assets you have excluding Pay TV and maybe Orange Bank? Or are you still in the process of looking at the assets and maybe within 6 months, 12 months, 18 months, you could consider other disposals. So where do you -- where are you in this process of portfolio of asset revision? Then I had a second question on your dividend policy. And I welcome the fact that you give floors for [indiscernible] 2023 and '24. You link it to the free cash flow growth. Rough math suggests that the growth in DPS is half the growth in free cash flow, and you shied away from linking it more precisely. So what could be an upside to this DPS? Is it, you're going to be having a faster acceleration in your free cash flow in the next few years? If you could give a bit of color on that. And then very lastly, in terms of retail and wholesale price increases, what have you included in your guidance? I think you mentioned some wholesale price increases. But you're also fighting for more. So I don't know if that's in there. And in terms of the retail price increases, what have you embedded.

So on the -- I'll give you the ROCE question.

Okay. So on the ROCE, and there are many different types of calculations on the market, right? But let's say, it's a good as a starting point. And so what we said is that our objective is to increase this figure by 11 -- sorry, 100 to 150 basis points in the next 2 years.

On the -- so on the portfolio review, as you pointed out, indeed, we've made already a number of decision. And as I mentioned this morning, we have also launched a strategic review for Orange Bank. I mean you would not believe me if I tell you that we will stop here and never reassess because the whole presentation this morning was hopefully very clear on the fact that we will, I mean, permanently manage our assets in this way, which means that at this stage, there may be a few activities that actually I would consider not strategic, but I'm not going to mention them because otherwise, we have no option to monetize them. So that's the rule of the game. On the dividend policy, I think you've made the conclusion that, I mean, the payout ratio linked to organic cash flow growth. Clearly, we want to create value and organic cash flow is our KPI to create value. And indeed, we are showing this increasing floor that's a signal to our investors that value come from the plan, which is organic cash flow growth. We have not decided to create a mechanical, I would say, link between organic cash flow growth and dividend policy, payout policy. But I'm sure we'll continue to discuss that. And we are very focused first on executing this 3-year plan with this increase of dividend flow, of course.

Now let's move to the operator to [ Roshan ] waiting for a question, and we will be back to [indiscernible]

Well, there was a question on wholesale as well. And so on the wholesale, we are indeed discussing with the regulator. It's been actually a bit in the news because we have a very firm position on what -- on how the law works. But yes, we've indeed what we believe is a fair increase of some wholesale prices, regulated wholesale prices. And so I think, Michael, maybe you want to give some details on what.

Yes, we have included some fair increase in the wholesale prices, especially around EUR 2 on the unbundling price and also some increase on the civil engineering, so which accounts all in all, for around EUR 130 million in 2025.

Let's switch to the operator. And I think [ Roshan ] is caring on, Operator.

[Operator Instructions] We will now take our question from Roshan Ranjit at Deutsche Bank.

Okay. I've got 3 questions, please. Firstly, on Africa, Middle East, if I think back to the previous CMD, you are talking about trying to kind of crystallize value and I think it goes back to some of the maybe previous earlier questions. And you have a number of, I guess, strategic assets. How should we think about this unit? Because I think at the time, and this has clearly increased now is 15% of your group EBITDA. But in terms of kind of the market you the credit for that asset, it seems still kind of, I guess, on the back burner in the eyes of the market. So how do you expect to drive that kind of value creation and that to the forefront of people's minds. Secondly, on cybersecurity, you talked about bolt-on deals and you've highlighted the previous that you have done. Should we be thinking about future deals of a similar magnitude or for the right opportunity, you could look at bigger assets? And finally, just on the new scale-up program. You overachieved our target for this year, so '22. But if I remember correctly, I think there's still some delta left on EUR 300 million of the old program. I understand the cost base has changed, but should we be thinking about that EUR 300 million now being rolled into the new plan? Or has that just been -- I don't know, maybe a change of times mean that those incremental costs are harder to deliver.

So -- I mean, to your first question, I think it's not new that we try to convince you of the value that sits in our Middle East and Africa unit. And that's why that's one of the pillar of our plan. And so we will hopefully continue to execute as we've done very successfully in the past 3 years, and our plan is to continue to create value, EBITDA growth and hopefully, quarter after quarter, you get convinced of this extremely core asset for us and the potential value creation that sits in it. On cyber, so our position today in fiber is obviously made of both organic growth over the past 7, 8 years as well as some deals acquisition that we conducted. And so as we said, we will continue with bolt-on deals. I mean, the first growth engine is organic growth, of course. But we will do bolt-on deals if we see valuable assets that we consider bring value, as we've just done in Switzerland, end of 2022. As to I mean, larger deals. I don't know if there are many large deals that will exist, but we would always be very cautious on the synergies, ability to digest and really -- our plan today is more based on bolt-on because we want to have a disciplined M&A policy and making sure that we execute on synergies of any deal we conclude. Expansion of footprint in Europe, is something that we've done successfully through acquisition. That was the objective of the acquisition in Switzerland, for instance. On scale-up, Ramon?

Yes, on scale up. And if I may, on the first question on Africa, what can we do to get it more on people's minds. This is precisely why has been talking to you this morning because as Christel said, we also have growth in Europe to look at the EBITDA growth in European countries. I mean, it's very strong with growth with infrastructure, with growth with cyber security but Africa may be a bit more difficult to get in people's mind. So this is why Jerome was there, and I hope it will contribute to a better understanding of value creation in Africa. On the question on scale-up. We are starting -- [ Christel ] is starting a new plan. There is a new strategy. There is a new perspective. So I think it was clearer to stop the clock. We have in the pocket what has been achieved under the previous plan. We started from EUR 13.8 billion indirect cost. And 2022, it was down to 13.2 billion, minus EUR 700 million net cost. It's clear and simple. So we start again, 31st of December '22. Looking ahead until '25, we have a new basis of EUR 11.8 billion costs. The basis has been enlarged to some direct costs for distribution in Europe, and we say we are going to reduce this in net terms by EUR 600 million. So it will be 11.2 at the end of the period. It's extremely clear. There is another important difference we said, energy costs are out of a basis. It was in the previous one. because it is managed aside. And as you know, we had, I think, quite a proactive hedging policy, which helped us to mitigate the hike in energy costs. And I think the group was also quite safe on this side. So it's very clear. We start again a new process, and it is the same percentage, 5% of total decrease reported to the basis we were looking at in the previous plan and even [ expand ].

We are back on the ground with Nicolas.

Nicolas Cote-Colisson, HSBC. I may ask you another question on Africa. Would you consider opening the capital to either local investors or to the open market? Because that could be also a move that help you to hedge from, I mean, again, some geopolitical risks in some of your countries. And maybe to follow up on acquisitions, given Ramon mentioned the third-party capital inorganic growth. What kind of criteria are you looking at or considering when you are scaling opportunities in Africa, especially?

So I think, I mean -- and Jean will be able to complement, but we already have local investors in many of our countries in Africa. That's -- so that can be local private investors. I mean, in Senegal, we have the single government. So -- and sometimes it's IPOs actually like in Ivory Coast. So it's -- that's our model. It's not the case in every country. And in some countries, indeed, we own 100% the operations. So it's really case by case. But indeed, being local in all our operations in Africa is absolutely key for our success. At the same time, the creation a few years back, 3 years, 5 years back, of our headquarter for Orange in the [ Western ] Africa in Morocco,was also a significant milestone to then trigger further efficiency because we manage not only the countries but also the region as a whole with some shared services centers and a lot of mutualization that creates value. And that's also something we look at because when we consider acquiring new operations, we want to make sure that we create synergies by including them in our portfolio. Now I think as Ramon reminded, we have not done any acquisition since 2016. So -- but we've been reviewing many opportunities. And so we are always looking at what's -- I mean, it's risk reward, value creation, so very, very pragmatic, and we will continue to do the same.

Andrew for the next one.

It's Andrew from Goldman Sachs. So Christel, you talked about -- a lot about execution. But if we think about the biggest drag on the whole sector over the last 2 decades and the reason for a lack of investor appetite in the space, it's been regulation, right, that has basically dragged down returns. And as you join the group, we're looking at returns of 6%, you're not creating value today, but neither is most of the rest of the sector. So the question was just -- in one of your earlier slides in the first presentation, you talked about maybe regulation and government support improving. And I guess what everyone is trying to get their heads around is exactly how practically, does that become a reality? You mentioned net neutrality and big tech paying for access, quite hard to see how that actually gets implemented. But I wonder if you could talk about what you've seen in your early days in the role to give you confidence that we may get that turnaround, which would allow that execution to actually generate value creation in the future?

So I mean, that's a very important question. And maybe I'd like to reinforce the reason why. I mean, when I joined the company, I was actually -- my first reaction was, we cannot leave this business that is so essential for the future, for resilience, for strategic independence. How come we have an entire industry that has tried to diversify to find growth? There's something wrong in the model. And so that's why we have to make sure that we create value from that business. And obviously, as Orange, and that's all the presentation of this morning, it's obviously next-generation infrastructure, et cetera, but regulation is indeed important. And that's why, I think with all our European peers, they have now -- I think -- I mean, whether it's at Europe or actually in some countries, people realize what's happening, which is that some traditional operators cannot invest in infrastructure anymore. So obviously, many infrastructure funds are coming to invest or to acquire those infrastructure. And obviously, tech players are capturing some value. But what's going to happen in 5 to 10 years to that if we actually don't know who owns the infrastructure, that is, again, so critical for security and resilience of our world in Europe. And I think this is -- so this is a political debate. This is not for us as companies to decide. But this is where we all have a strong voice as, I mean, European leaders on we need to change something. And I think the consultation that the European Commission is now launching or is about to launch will at least try to get some facts and data on this. And again, the objective is to make sure that we can, for the long term, continue to invest in our infrastructures and understand who owns those infrastructure. When it comes to the evolution of our industry, and I think that's something -- and very often people ask me, "Okay, what's the next big thing in our industry?" And I think the most exciting journey ahead of us is not exactly the next big thing that we're going to launch. And I was at , so I've been the one promoting 2G, 3G, 4G and so on. The next big thing is that our industry that is actually an old industry, carrying 4 mobile networks and 2 fixed networks currently in France, will become younger, more agile next-generation because as we decommission 2G and 3G, as we decommission copper, as we get software infrastructure, as we become actually an open network that actually has a lot of data and critical assets and when you talk to big techs, I mean, obviously, cloud computing, all the trends that we discussed this morning with Aliette, I mean big techs hardly need our infrastructure for their services to operate as promised to Enterprise customers or citizens. And so there will be a balance. And if it's not an economic balance at some point and already happening, when they need edge computing, that's for us to capture the value that sits in this evolution. When we think -- so there's going to be a lot of other evolution coming in that will go in the direction of -- we've talked a lot about cloud infrastructure, but cloud infrastructure is nothing without the network to connect to the people. And so there will be a lot more discussion between the tech world that sits on top of networks and evolution that will sit in our networks. And the value, one way or another, will evolve in the next 10 years. But again, the potential that sits just under us by becoming younger, I mean just simplifying our network, is just enormous, and that's a journey to 2030. That's maybe not to 2025 completely, even though we will, as Michael presented this morning, decommission 2G and then decommission, started already, copper, et cetera, but that's a 2030 journey. But that's enormous potential of efficiency and, I mean, as we add software on top of it, a lot more agile ways of, I mean, operating our networks and providing even more personalized services to our customers.

We will move to Russell and then back to Georgios.

It's Russell from New Street Research. Two quick questions, please. The first, could you just remind us the energy delta for '23, please, of the group? And then how will that play out in '24? I mean obviously, wholesale prices have come down. So I presume it will be a nice tailwind from a headwind, but I guess it all depends on your hedging, et cetera. So if you could just tell us. And then the second question is just on the CapEx. So you've been very clear, 15% of sales, '23 to '25. In 2025, what proportion of that is FTTH? So in other words, in absolute terms, can CapEx fall further in '26, '27 because there's more FTTH CapEx to roll off? Or in absolute terms, is that [ evident in '25 ] what we should sort of assume the group is going to spend, going forward?

So on energy, and I think we said it already. I mean, 2023, it's a EUR 300 million increase of cost, on which we are almost fully covered, 97% or 98%.

97%.

97%. And for '24, actually, we have -- we continue with our hedging policy, as we mentioned this morning, and we are currently above 50%, I think 60% already covered at actually prices that are -- I mean, I don't know if they are good or bad, actually, but that's something that we monitor. And we use the current lower price of energy, of course, to take some more hedging position for '24, but we've only covered 60% in '24 and 50% in '25 to keep some room. So now I know that your question is what's the upside or what's the downside, moving forward, and there are upsides or there are downsides. But the reason why in our cost reduction plan, we did not include energy is because we know that we need to follow the price of energy specifically as a stand-alone, I would say, initiative to continue to monitor, first, to consume less energy because the best energy is the one we don't consume. And then, of course, second to buy with certainty at prices that are available. But there may be some upsides indeed, but...

Yes. I think so. I think we can say so. I think we can say so. And in '24, the average price for hedging is currently significantly, in fact, lower than '23. And for those who know France, there is a beautiful system called [ ARENH ], which, of course, is contributing to our efforts because we are eligible at a very high level, given the profile of our electricity consumption to the [ ARENH ] French system. So yes, there is more upside on this.

And sorry, I mean when you say upside, do you mean upside to guidance? Or are you assuming within guidance that you do get this tailwind from energy?

The risk is well under control, it means.

Within guidance, to be even clearer.

So let's move to Georgios...

There was a question on CapEx and fiber. So I think, I mean, beyond 2025, of course, we will continue -- I mean, the CapEx on fiber that we will have, once we've massively deployed the networks, will be customer connection. So we will have some fiber CapEx, but it will be linked to commercial increase and so to revenues.

It's Georgios from Citi. And I've got three questions. The first one is on to [ them ]. You mentioned the build to suit the contribution of assets from the rest of the group and then finally, consolidation. I just wanted to maybe touch on the latter. Do you have any preference for in-market consolidation with synergies or cross-border will be preferable? And then I just wanted to understand how you envisage the control of this business because, obviously, having its own balance sheet where you're consolidating may be suboptimal for the group leverage targets? The second question is on business and more in the mid- to long term in terms of the applications and the services we want to provide to our customers. I understand cybersecurity is something every telco, more or less, has invested in. But there are other services perhaps that you need to provide. Some of the -- some of your peers, maybe the other main continental peer is not investing in acquiring these kind of services, but more acts as a platform for partners to offer some other companies decided to make investments. I'm curious how you are thinking about Orange moving in that direction? And then the final question is on pricing. And you're raising prices in most markets, but not all markets are the same. So I'm just curious if the decisions were made at local level, particularly in Spain, or whether it's a group decision to raise prices.

I'll start by the last question because it's the easiest. So I don't have a big computer in my office where I can push the prices and -- no, no, of course, it's being made at local level. And that's something that we monitor very closely, of course, at group level because that is so important in this current inflationary environment, but it's really managed by our country leaders because we follow very closely, obviously, and every market is different, as you mentioned. And sometimes we are leaders. Sometimes we are followers. And so -- and within a market, we have different brands and different positions. So this is very granular and local know-how that helps us do that. Again, tapping and leveraging customer satisfaction, NPS, strong -- and network quality. On the -- so on TOTEM, my preference for any deal, whether it's actually TOTEM or -- is the one that creates more value. So it's not, I mean, in-market, on out-market. And again, as we said this morning, our first value creation opportunity for TOTEM is coming from organic growth. And we will obviously consider opportunities. And we are approached all the time by many players who would like to do things. But let's be very clear, and I think that was our message this morning, as an operator, our assets and infrastructure have a lot of value because we have invested in infrastructure that are next-gen ready. And there are -- I mean, we can say and some people say, I mean, a tower is a tower. But it's also the engineering, the fiber, the energy connection. And all of that, being an operator, we bring some value actually, and that's why some investment partners look to investing or partnering with us on this type of opportunity. The one thing that is very important as well is that I'm -- I mean, I do not consider that those infrastructure are not strategic, being an operator. That does not mean that we need to own, as we said earlier, 100% of our infrastructure. But when it comes to TOTEM, these assets are strategic for us. And so that does not mean we will not consider consolidation opportunities, but always making sure that we have the control of the strategic nature because those assets are, again, critical for our business, especially in the long term.

[Foreign Language].

A question for Aliette. Yes, [indiscernible] on business. And the way I understood your question is, where we will position Orange business in the future and where is the potential for value creation? I mean, if you look at how -- what an office was looking like with employees a few years ago, you had a desk and you had a fixed phone and you had a big computer connected with an ethernet cable. And applications were hosted somewhere in the data center into basement. And from a security perspective, we had what we call perimeter security, we are putting firewalls around the site of the office, and employees were all working on site. What's happening today and what will increasingly happen in the future is that employees are working from anywhere. We see that the applications are hosted everywhere in the cloud, and most enterprises, they have a multi-cloud hybrid strategy. We see that managing the security in this context and managing the connectivity, which is very often a mix of Wi-Fi, fixed connectivity, 4G or 5G, is becoming very complex. And the way we see ourselves, and that's why I described as a network and digital integrator is that in the future, we will be integrating all those pieces in our sweet spot and where there is tremendous market value. It's at the crossroads between, what I call, those 3 Cs, so connectivity, cloud and cybersecurity. Because we are in a world which is increasingly complex, both from a technological but also from a regulatory or geopolitical standpoint for our Enterprise customers. And I think we are moving into a new phase where, for them, if they want to master, if they want to control their digital transformation, both from a user experience, but also from a budget standpoint, they will need to have partners orchestrating those pieces together. And today, when you have something like a device like this one, which is not connecting to Wi-Fi, or you are entering into room to do a video and it's not properly working because the video is not synchronizing properly with others that are on different devices and so on, very often, our Enterprise customers in those situations, they don't know who to call because you don't know if you need to call for the equipment manufacturer, for the network provider, for the cloud provider, for the integrator who installs the WiFi and so on. So having an integrator or an orchestrator able to maximize their user experience has tremendous value for our customers. And that's exactly our sweet spot, and that's where we are very good. And we are today the worldwide leader in next-gen virtualized connectivity. We will leverage this to become the leading network and digital integrator.

Jakob, next one.

Jakob Bluestone from Credit Suisse. I've got three questions, please. Firstly, there's been some comments recently from your predecessor, Thierry Breton, recently, talking about cross-border consolidation in the telco industry. Can you maybe just share with us what do you think about cross-border? Do you think it makes sense or not? . Secondly, there's also been, I'd say, some fairly hostile commentary recently from ARCEP in the press. Can you maybe just help us understand what's going on there? Is there a sort of deterioration in the relationship, is this just the press kind of sensationalizing? And obviously, maybe linking that to Andrew's question earlier about, is regulation getting better or worse? And then thirdly, on Orange business, Ramon, you talked about how there are no taboos in your sort of capital allocation and portfolio thinking. I guess on Orange business specifically, do you expect the ROCE to exceed the WACC in 2025? And if not, why did you go for a restructuring instead of an exit?

So on the cross-border consolidation in the telecom industry, I think, at least so far, the telecom industry value creation came from national consolidation, and our strategy came from a convergent strategy with Belgium, Romania in the past and the proposed deal in Spain. The real synergies that you get cross-borders, some of it, we have already with [ Deutsche Telekom ], our JV buy-in creates tremendous synergies because we have procurement synergies. When it comes to our market today, as long as we have 25, 26, 27 countries with as many regulators, as many auction for spectrums, et cetera, our markets will remain local. So finding synergies in the long run, there may be with virtualization of networks, and we are implementing more -- I mean, managing in a more mutualized way our networks. So we are implementing it. So the first synergies, I would say, they sit for us within Europe across our countries before thinking about indeed creating synergies through M&A transactions. On the ARCEP situation, so actually, I mean, I won't comment on the media, but we have -- I mean, we've always been discussing with ARCEP all the time. So it's just that the current debate that we have is that we believe, I mean, we have a strong position on the number of rides that we have. And when we believe that the regulation does not apply and that -- we just defend our rights. And so that's why we have -- we are using, I would say, a legal path to something that I hope will end up through a normal negotiation, as we've done all the time, actually. But we need -- we have to stand out firm to defend our rights as a company and the value that sits in our infrastructure.

If I may, Christel, just on ARCEP, I think we have a complex relation that's normal for an incumbent with the regulator, but we are in speaking terms. I think it's important also to mention that we respect what they want to increase the rollout of infrastructure for sure, but we also expect them to integrate the financial and the economics behind it. And that's the two disagreements we have on the fiber rollout and on the pricing of the unbundling on the civil engineering. So that's the topic we have today, but we are still on speaking terms with ARCEP.

You want to take me the ROCE question for [indiscernible] or...

I can take that one.

So you can take the ROCE. And I mean, why no exit? Because our Enterprise business is a core business for us, and I do -- and I am convinced that we do have, as Aliette explained, I think enterprises definitely need our services, moving forward. And while we need to go through the transformation, actually, there's tremendous potential. And indeed, we asked ourselves the question, should we indeed just build the car? That would be a cash cow business, that's what we learned. But no, we do want to invest because, I mean, security, connectivity, resilience are needs that we are uniquely positioned to serve, moving forward. And so that's why we are making the decision indeed, transform this business to position it, to reposition it on what it should be for what customers expect.

And Jakob, if I can complement to the specific question, will the ROCE be above WACC according to our plan in '25? Not yet, but it can change rapidly because, as you know, it's a very low-intensive CapEx activity. And so it's extremely sensitive to the EBIT evolution. And as Aliette and Christel said, we plan, we put on the slide that we plan a rebound in EBITDAaL in '25, and Aliette said, at the latest in '25. So...

One question here from Fernando.

This is Fernando from Santander. Just two questions. The first one is related with the legacy savings. In that sense, I would like to know, which is in your current guidance, 2025, is included in terms of legacy savings? But not particularly trying to understand the potential of the copper decommissioning in France, which is the current cost that you are having in your accounts in your copper network here in France to understand, as I said, the potential savings from decommission and making the network [ younger ]. And the second point is also related with regulation. Thinking on the -- on Spain, you have already communicated in the filing. Just trying to understand what is your current position ahead of the potential remedies. In that sense, if there is any red line from your side, what is the first views on the front regarding the potential remedies to appear in the bill?

So on the copper decommissioning in France and coming back to the question on regulation, the reason why we have also an open, I would say, dialogue with ARCEP and the reason why we plan a normal increase of the wholesale price for copper is because we will have customers connected to our copper networks until we fully decommission, which is 2030. And from a political standpoint, we are being expected to continue to invest and to maintain that copper network to make sure that the quality of service of our millions of customers today, who are still using this copper network, is good. And so that's the debate that we have with ARCEP, which is that even though we've been investing massively on fiber and we invest massively -- or we invest on 5G and new technologies, we continue to invest on our copper network. And so that's -- so it's -- so there will be savings, but there's also continued investment. And that's the debate that we have currently with ARCEP with a very clear position, which is that if we are not being paid, the economic value of the investment we make, we have no other option but to reduce the investment that we make in our copper networks and -- which will have an impact on the quality. On the legacy savings beyond '25, actually, it's probably -- I mean it's not in our plan because the [ plant ] stops in 2025, and that's something that we are working on. And again, it will depend. As you know, we started the decommissioning process with a very operational pilot in France in several regions because we obviously -- it's not only dependent on us. It also depends on our competitors, our local communities, on customers. So that's a framework that we're currently working on to define, knowing that, indeed, the real decommissioning commercial stop of copper line commercial activity will be in 2025. So it's probably too early to say because a lot of parameters will depend on the pace on what we discuss, what we decide. But again, we will make sure that we protect the ability to cover the cost that we have in the long run until we fully decommission the copper network. On Spain, the MASMOVIL deal, I think our position is very clear that this deal will create value for customers in Spain. And so we see no reason why there would be any remedy. We're just notified. Let's be clear, we know that this deal is going from Phase 1. It's probable, clear, it will go to Phase 2. And so it's really too early to say. But again, our position is very clear, the combination with MASMOVIL in Spain. And remember that Spain is a market that's highly convergent. More than 80% of customers in Spain are convergent customers, and you know that. And this deal will create ability for the JV to invest in infrastructure. And so the value really sits from the synergies between MASMOVIL and Orange and will create value, in the end, for the customers in a market that's highly competitive, as you know, because there are a lot more players in Spain that we see in most of the countries in Europe.

Alexandre, and then we will move to the other side.

Alexandre Roncier, Bank of America. I'd just like to come back to CapEx and in particular, in France. I think over the past few years, there's been a lot of volatility in costs -- in co-financing. So I'll just like to come back on -- maybe be a bit more granular over the next few years on what does your guidance assume. How much co-investing do you have left in '25? What's the net? And equally, is that the -- is the volatility the reason why we don't have a clear absolute guidance on CapEx decline and just maybe a relative one?

So indeed, we don't provide [ gradual CapEx ] because, I mean, first -- I mean our total CapEx is a lot more than just fiber. We mentioned fiber and copper, but it's also 5G, 4G, and it's also IT. So there's a lot into it. And we don't want to give very detailed, I would say, CapEX decline guidance as long as -- I mean, we will create value through cash flow growth, and we are very clear on this 15% stream on CapEx, which means that it's also a good incentive because the entire company knows that if we grow our revenues, we will be able to invest more, that always within this guidance of 15%.

Yes, if you want me to -- in terms of co-financing, we -- I think you are able to follow the story. You know that we had a EUR 5 billion bucket to -- and that roughly 1 point -- I would say, EUR 1.2 billion, EUR 1.3 billion remains available. And that after 2025, our expectation was that there would be roughly EUR 500 million yet available. Then it all depends on what our competitors decide to do. They are renting or they are co-financing, it's not in our hands. We know the buckets. We have an expectation. It's -- and then all the other pieces are there. I think it's a good question to ask all the details. I would just allow myself to tell you that we have been delivering our commitments on CapEx. We are comfortable with what consensus is expecting for '23 regarding CapEx, which is, as we see the guidance, a strong decrease. And we are also comfortable with the fact that we can maintain this kind of level, which is significantly lower than the previous year, over the next years. So when we said that we would be back around 15% of CapEx to sales ratio, this is where we are roughly in '23, as we said, and we said we would continue. And we are going to stick to this. And it's fully embedded in the plan. And we know how.

On the other side, yes.

Thomas Coudry from Bryan Garnier. Two questions, please. One, on the long-term incentive plan for the management. I believe that the organic cash flow generation objective was accounting for 50% of the previous plan. Is it still the same? Can you drive us through the main, let's say, items of the plan -- of the incentive plan for the management? And then second question, I would like to hear you on innovation, which is something that we -- where we talked about innovation in the network. But I would be interested to see how you view innovation in the sector and at Orange, obviously, in particular, because we see that it's rather difficult to bring innovation to the market for [indiscernible] telecom operator. You mentioned the stopping of connected home. So how do you see the potential of innovation at Orange? I'd be interested to hear you about that.

So on the long-term incentive, actually, it's unchanged. So we keep the same 50% incentive on organic cash flow indeed. On potential of innovation, so I think the one thing that is clear, but that's true for Orange, that's true for industry, that's true for most industries, I would say, we need to have a very open approach to innovation. And so when it comes to innovation in our core know-how, obviously, we have teams that are working on, I mean, next generation of WiFi, how to improve home LAN, how to create, I mean, 5G, new networks. I mean, so this type of innovation, obviously, which is very core for us, we do it in-house, and we have teams. And Michael will be able to complement on it. Naturally speaking, what we do more and more, first of all, is that we work with our peers in Europe as well because there are a number of innovation areas where we just simply cannot succeed unless we work as one industry. And so we have a number of initiatives with our peers in Europe around, I mean, opening our networks, collaboration, whether it's -- and so -- and that's something that our industry has done forever, but we've done it traditionally through standards, which is good because the standards, in the end, create the scale for adoption. But what we see with standard is that it tends to be too slow for the pace that's needed today. And so we have actually a forum where we work with a few of our other European peers on innovation on a very active basis on a number of topics. And stay tuned because I'm sure, in Barcelona, we will make a few announcements. Of course, we also work with start-ups, and we have Orange Ventures investing in start-ups. And the value we bring, obviously, to start-ups, we need to be very clear, and that's where the strategies are, what are our strategy, moving forward, and where do we want actually to tap into open innovation models to create value. But it's true that we -- in the past at least, we've been probably too much into a make approach while we need to be a lot more into a systematic, I would say, make, buy or partner approach, and the world is anyway open, so we need to partner. And that's what we do, and that's we will do more and more. And I don't know if, Michael, you want to complement.

Just one word on innovation. First, we innovate all the time. And what are the goals of our innovation? They probably have changed a little bit. So today, we're focusing on innovation with positive impact. That's a big focus for us, how can we provide our services that are green, that are responsible? This is about eco-design, this is about all what we do on the Green ITN that allows us to save energy in our network and IT. And this is an important part of innovation. The second part is how do we leverage AI, in particular, for all our network efficiency, our customer relation, our processes. And this is also an important element. We focus innovation where it matters for our customers at the home, especially for home LAN, which is a very important part and expectation for our customers, about business, B2B, and we have discussed that with on-demand services, with agile services. And this is the next battle that we need to win. We are too slow as an industry, and we need to be agile also to connect our customers and to offer on-demand connectivity and for customer relation. And I would just like to -- I would not have said differently than Christel. We had been too much, in the past, in the make philosophy. This industry for services is about scale. And here, we definitely focus much more on partner. It can be different kind of partnership. It can be with different players, with our peers, with the big techs, with start-ups. And that's what we do to bring innovative services to our customers, and that's our role. We are the entry point to the digital world for our customers, and that's what we want to focus on.

Let's be back to London with Jerry, and we'll come back. Operator, please?

We'll now take our next question from Joe (sic) [ Jerry ] Dellis at Jefferies.

I have two questions, please. For the France permit, you're guiding to slightly negative revenue and EBITDA development over the next 3 years. Thinking about 2023, I guess you face sort of cost inflation headwinds, perhaps on the group wage perimeter, which is about a EUR 7 billion perimeter and also related to energy costs. . If those cost inflationary items aggregate to maybe EUR 300 million to EUR 400 million in 2023, what would be some of the sort of offsetting factors at the EBITDA level, please? And currently, as I see, consensus is modeling France EBITDA down 1% in 2023 and then stable in 2024. Are you comfortable with consensus on France EBITDA forecasts? My second question has to do with the enterprise activity, please. You talked obviously about stabilizing EBITDA in 2025. So two questions, please. Do you believe you'll be able to stabilize EBITDA organically? Or will it depend on an M&A contribution? And if so, are you able to give us some scale of the potential sort of M&A budget that you have in mind? I appreciate it's sensitive, but it is a sort of a CapEx-like item.

So on the second, I mean, the guidance does not include any M&A. And so the plan is to come back to -- I mean, turnaround, come back to profitable EBITDA in 2025 without M&A except, as we mentioned, some bolt-on for cybersecurity. But again, our EUR 1.3 billion trajectory for cyber does not embark any budget for large M&A because that's something that we would consider. As we said, the current plan is based on the pro forma activities that we have today. On the France EBITDA, indeed, as we said, over the course of the plan, we will have a slightly negative EBITDA trajectory in France with two different trends, I mean, very different trends, retail growth at 2% to 4%, excluding PSTN, and then the trend on wholesale, which we discussed extensively. In 2023, we continue, and it's exactly the same trend. We have on one side, I mean, a successful engine with retail. We continue indeed to the decline, as we showed on the graph this morning, with wholesale. And we continue our efficiency programs, as we've done in the past 10 years, 15 years, I mean, and I look at Fabienne, and we have many, many of those. And remember, as we mentioned as well, and Ramon can come back to it, we have our massive early retirement program with 7,600 employees, I mean, retiring, which creates also a massive, I would say, trigger of internal efficiency and reorganization and working on our support functions, et cetera. So that's what's supporting. And now on the specific guidance, I think -- we think that the consensus is achievable. And as we insisted this morning, the focus on organic cash flow growth is the focus, and we are very clear on our CapEx trajectory and the achievement of our deployment in France, which will sustain the organic cash flow growth that we expect in France in 2023 and the years after.

Let's come back to [ Kerala ] here.

It's [indiscernible] from Citi. So three slightly different questions. Just going back on the wage inflation point, I know you're about to start the process with the unions now, I suspect. What's the argument you're going to say because, obviously, they're going to come back with quite aggressive demand? So I'd love to hear from your perspective what are the counterarguments against that. Secondly, on OBS. We've seen lots of telcos try and restructure enterprise services. One of the things that people underestimate in that process is the amount of legacy and headwinds from that. Can you give us an idea of how much of that revenue base is legacy? And how do you expect that to evolve in the next 1 to 2 years? And then finally, on cross-border M&A, there's a theme that's emerging. I suspect Mr. Breton will talk about it at Barcelona. I'd love to hear your perspective, but particularly because if I take away your simple plan, in my head, the growth drivers that you're talking about become less domestic, less regional and much more scalable. And therefore, the future growth drivers lend themselves more to M&A than they have done in the past. But I'd love to get your perspective on that.

So on your -- the first question on -- I mean how do we cope with inflation and the negotiation, I mean, and the situation for our employees, and then -- that's something that's very important for us because we do need to have very engaged employees. And so that's a process that we have in every country through negotiation, and we've implemented a number of measures, especially targeting low salary-level employees to make sure -- because, obviously, they are the first one to suffer from inflation. So in most countries, we have some specific actions targeting these category of employees. And again, then it's a negotiation that we have in most countries. And then remember that most governments as well are putting in place different schemes to support enterprises in this context of inflation, which obviously we tap into from one country to another. But again -- and then the negotiation that we have ongoing, for instance, in this country, which is not concluded yet, but which was started, it's a negotiation, and really, we do want to make sure that our lower level, salary -- I mean, lower salary-level employees get what's needed to make sure that they can cope with the situation. So we implemented, for instance, end of last year, specific bonus, onetime bonus for them. And again, it's a negotiation, so too early to conclude. But we have obviously planned in our trajectory, financial trajectory, the inflation, that's actually the IMF inflation in the way to project, moving forward, for the 3 years. On OBS, I think the reason why, as Aliette presented this morning, we have this reset is exactly because we know there is a legacy business that's declining. And so we cannot build the plan for the next 3 years without projecting ourselves with this decline. And that's what's included in the plan. So we do plan a continued decrease of this legacy business.

On this, we know that today for Orange Business, we have still 56% of our business, which is what I would call core business, not necessarily legacy business, but core business, 44%, which is IT and [ IAS ]. And as Christel said, the way we've built our strat plan for the coming years is that we've very, very carefully looked at the market forecast on each of the legacy segments. And we've made sure that hypotheses we've taken are fully consistent with the biggest analyst in the Gartner and IDC of the world on those segments. And we know that the most sensitive part for us is the voice PSTN business in France. And that we will still, in 2025, have more than EUR 100 million of gross margin on this segment. So there will still be this existing legacy business, but we are very carefully monitoring and modeling this in the plan. And on the cross-border M&A, I think we -- I mean we've discussed it this morning. So I won't comment on any specific. But again, the synergies that we have today with [ Deutsche Telekom ], buying JV are resynergies without involving any M&A. And you're right to say that with the technology, with softwarization of networks, there should be more synergies cross-borders. But as I said earlier, we will first make sure we implement them between our operations in Europe before thinking of M&A deals to create value on top. But again, it's really not on the '25 horizon that I see massive change on value creation through cross-border type of deals.

I think we have a last question in London. Operator, please.

We will now take our next question from Adrian from Romania Financial Newspaper.

This is Adrian from the Business Daily Newspaper [indiscernible] in Romania. Now three short questions. Would you please dive in on the market conditions and financials in Romania in 2022? You mentioned briefly the need of impairment, so we'd like to hear more. Also, what can you share about your plans for Romania in this year and the following regarding CapEx, price increases, maybe layoffs or on the contrary equipment? And also one final question. Looking back, do you see the benefits you were aiming for when you acquired Telekom Romania, the fixed operations?

Thank you. So, I mean, I will hand over to Marie-Noelle, who can give more specifics on the plan, I would say. I don't want -- I'm not sure we want to detail any specifics on the CapEx plan for Romania. But on the market conditions, of course, they are difficult. As you know, we are now a convergent operator, but like in every country, actually, where we operate, we have tough competition, and that's true in Romania as well. The -- we are indeed converging TKR and Orange, and we've been actually through this integration process for more than a year now. And so we hope to get the benefit of this transaction, and that's the plan that we presented this morning. But indeed, it's true that the -- we -- as part of our 2022 results, we booked an impairment of more than EUR 700 million -- EUR 789 million, actually, on our Romanian operations linked to, on one side, a business plan that has evolved, taking into account the ongoing market situation, as well as an increase in the WACC because of the Eastern Europe situation. And I don't know, Marie-Noelle, if you want to complement on the...

No, on the plan by itself, we're working now for more than a year, on Orange Romania Communications. And the ultimate game is to merge these 2 companies. So we are starting to work with the Romanian government, who issued a request for people, which we will be able to work starting maybe next month, in order to deliver all the synergies that we were having in the plan. The competitive situation is not an easy one in Romania, like everywhere, but we are also discussing with the authorities and the regulation about our capability to benefit from a more open fiber network from some competitors. And this will be an ongoing discussion for the next weeks and months. But the team itself is now fully merged in the same [ bidding ] for them. As you know, in Bucharest, we are really delivering on strategy for our customers, one strategy for NPS, one strategy for our network. And this is really the beginning in 2023.

Okay. I think the Capital Market Day, with no extra time for question, means people look at . Maybe Christel, will you make a short conclusion?

One word of conclusion. Well, thanks a lot, first for -- I mean, thank you for joining us this morning. I hope you understood that not only we have a very solid guidance for 2023, but we have also real organic cash flow growth, value creation in front of us, and that's everything that we'll now focus on executing. So thanks, again.