As in 2012, the Group will face a more difficult environment in 2013 than initially expected
- the macro-economic outlook, particularly in Europe, will remained marked by very low growth,
- in France, despite the resilience of its mobile activities, the Group will continue to suffer the effects of unprecedented competitive pressure, which weighs on the overall value of the market,
- at the same time, the regulatory burden will remain similar to that of 2012 at a Group level, with further significant reductions in call termination rates in Poland, Spain and other European countries.
Given this unfavourable context, the Group will continue its adaptation strategy, activating four levers which will enable it to confront these challenges. First and foremost, it will improve its operational efficiency. Furthermore, it will preserve its turnover, while maintaining investments at a significant level in order to build future growth, and continue to develop new areas of growth.
Nevertheless, in 2013 the Group envisages additional pressure on its operational cash flow, which will remain above 7 billion euros. In 2014, the Group expects to see a reversal of this trend, supported by significant operational improvements, including:
- more favourable revenues, after the significant impact of lower prices for mobile services in 2012 and 2013, particularly in France;
- stabilisation of EBITDA in France, supported by a strong ambition to reduce direct and indirect costs;
- Group-level savings from the Chrysalid programme;
- stabilisation of personnel costs which will benefit from the impact of natural attrition;
- an increased contribution from the Group’s growth areas such as emerging markets and new services.
At the same time, the impact of regulatory measures should decrease significantly in 2014. As well as maintaining investment levels, the Group also expects growth in operating cash flow in 2014 compared to 2013.
To preserve its financial strength and capacity to invest, while conserving an attractive return for its shareholders, the Group’s objective is to return to a net debt/EBITDA ratio of close to 2 at the end of 2014 and it has decided to adapt its dividend policy. As a result, France Telecom-Orange will propose a dividend for both 2012 and 2013 of at least 0.80 euros per share.
In this context, the Group confirms that it will pursue a policy of selective acquisition, respecting the net debt/EBITDA target it has set, by
- focusing on potential consolidation opportunities in its current markets,
- and strengthening its growth potential through innovation.
