Confirming its strategy of "adapting to conquer", the Group will continue to implement its 2011-2015 plan, intensifying activities aimed at improving operational efficiency connected with the Chrysalid programme and the Buyin joint venture and optimizing its commercial costs while reinforcing its business performance.

The Group wants to preserve a strong financial structure and is targeting a net debt to EBITDA ratio of around 2.0 in the medium term, and it will consequently maintain a policy of seeking attractive returns for shareholders aligned with generating operating cash flow.
The amounts allocated to the 2012 dividend will fall in a range of 40% to 45% of operating cash flow generated. France Telecom-Orange will propose to the Board of Directors the payment in September 2012 of an interim dividend of 0.60 euros per share for the fiscal year 2012. The Group does not intend to buy back shares in 2012, but it reserves the right to do so at a later date (subject to the approval of the General Meeting of Shareholders

As part of the ongoing Conquests 2015 program France Telecom-Orange presented its strategic and financial ambitions for the 2011-2015 period during the Group’s Investor Day. These goals are to be pursued in two separate phases, each with distinct characteristics in terms of growth, EBITDA and CAPEX:

an initial adaptation phase (2011-2013) during which the Group invests in its networks and markets, taking into account current and expected competitive, regulatory and economic conditions. This investment effort aims to anticipate new applications and customer needs in order to strengthen the Group’s market positions and its ability to monetize all identified growth opportunities;
and a conquest phase (2014-2015), during which the Group's goal is the return to sustained growth of both revenues and operating cash flow thanks to the investments made in the previous phase.

the adaptation phase (2011-2013) can be defined by the following ambitions:
a Group positioned for growth, with an aim to progressively accelerate revenue growth over the period (CAGR** of +0.6%);
EBITDA stabilized in 2013 above the 2011 level. This trend should be possible thanks in particular to the stabilization of EBITDA in France during this timeframe. The Group has been preparing since 2010 for an increased level of competition in its domestic market.
The Group’s goal is to achieve a cumulative EBITDA of around 45 billion euros in the 2011- 2013 period.
an aggressive investment plan aimed at ensuring that the Group is positioned as the best next generation network operator, consolidating its competitive advantage in terms of customer satisfaction, and enhancing the Group’s ability to monetize new growth opportunities. From 2011-2013, the Group forecasts cumulative CAPEX of around 18.5 billion euros, including 1 billion euros for fiber deployment in France. This represents an average rate of CAPEX to revenues of 12.6% over the period (excluding FTTH in France). The rate of investment is expected to peak in 2012 (~14%) as the deployment of fiber accelerates and the Group fulfills its network coverage and capacity objectives.

Taking these items into consideration, the Group announces cumulative operating cash flow guidance (EBITDA – CAPEX) of around 27 billion euros over the 2011-2013 period, excluding exceptional items.
For 2011, restated operating cash flow (EBITDA - CAPEX) excluding exceptional items for the first nine months of 2011 was 7.880 billion euros. The Group therefore raised its operating cash flow target for 2011, now estimated at slightly more than 9 billion euro

the trends expected in the 2014-2015 conquest phase should reflect the benefits of the preceding CAPEX phase, and translate into the following ambitions:
revenue: the expected revenue growth rate for the period is +2.7% (2013-2015 CAGR), with a return to growth in France and in the Enterprise segment, and a continued solid contribution from Europe and AMEA;
EBITDA, with 3.4% growth (2013-2015 CAGR);
CAPEX, with the return to a normalized investment level of 10% over the period, equal to approximately 9.8 billion euros (excluding FTTH in France, which represents an additional point, for a total CAPEX rate of 11% equal to 10.8 billion euros); and
operating cash flow, with a CAGR of +9% over the 2013-3015 period.

 In addition, concerning the ongoing review of its portfolio of assets, one of the other drivers of value creation, the Group does not expect, over the long term, to remain a minority shareholder of assets in which it does not exercise an operational role. In the event of a significant divestiture, the Group will examine the possibility of an additional return to its shareholders.

The Group renews its commitment to paying a dividend of 1.40 euros per share for the 2011 and 2012 financial years. The announced financial goals enable the Group to envisage a stable dividend going forward.

 


*Excluding exceptional items and excluding the payment of unemployment insurance for employees of France Telecom in France with civil servant status.
**Compound Annual Growth Rate.