RNS Number:1405B
Orange S.A.
13 September 2002
13 September 2002
ORANGE SA PRODUCES STRONG INTERIM RESULTS IN 2002
* Strong growth
* First net profit before exceptional items
* Increasing financial targets
Financial Highlights
* Total revenues up 13.8% to Euro8.1 billion
- recurring revenues up 17.5% to Euro7.4 billion
* EBITDA up 41% to Euro2.3 billion
- margin on GSM network revenues up 5 percentage points to 31%
* Operating income up 52.0% to Euro1.25 billion
* First net profit before exceptional items - Euro218 million (Euro500 million
loss in H1 2001)
* Write down in the carrying value of Wind from Euro4.3 billion to Euro3.2
billion
* Funds generated from operations up 58.2% to Euro1.8 billion
* Tangible capital expenditure maintained at Euro1.4 billion (Euro1.4 billion
in H1 2001)
* Cash outflow reduced to Euro193 million (Euro964 million in H1 2001)
* Net debt at 30 June 2002 of Euro6.1 billion
* Net debt to annualised EBITDA: 1.33 times (FY 2001: 1.89 times)
Increased Financial Targets
* Full year 2002 EBITDA target increased to Euro4.7 billion, an increase of
more than 40% on full year 2001 (previous target of Euro4.3 billion)
* Peak funding now estimated to be no more than Euro8 billion in 2003
(previous target of less than Euro10 billion by 2003-04)
Commenting, Jean- Francois Pontal, Group Chief Executive Officer, said:
"The Orange strategy is working. These results are a long way ahead of
expectations at the time of our flotation. We've passed another financial
milestone with our first net profit before exceptional items, and we're now able
to lift our financial targets for the second time this year. We are confident
we can maintain our momentum not just this year, but also for the years ahead.
"We believe that Orange is very well positioned to benefit from the exceptional
potential we see in mobile, both from the enormous growth of voice services,
which are far from mature, and from the exciting potential of non-voice services
which we are now beginning to see evolve."
Commenting upon the decisions on MobilCom and Wind, Jean-Francois Pontal said:
"Shareholder value is key to Orange's investment decisions. In March, we wrote
down the carrying value of our holding in MobilCom to zero. Since then, we have
acquired an improved understanding of MobilCom's business position. Even when
these are considered alongside prospects for market consolidation, we see no
business case for investing further in MobilCom and therefore will not do so."
"In light of recent developments, we have reconsidered our intention to dispose
of our shareholding in Wind and decided to retain it as a long-term investment.
Further to that decision, we have conducted an interim review of its carrying
value and as a consequence have decided to reduce its value in our books by
Euro1.1bn to Euro3.2bn. We will conduct a further review later in the year once Wind's
management has updated its business plan."
Simon Duffy, Chief Financial Officer, said:
"Orange's focus on the fundamentals has again produced strong financial results.
"Building on this robust performance, we have strengthened all our key financial
ratios and are moving rapidly towards positive cash generation. Our balance
sheet is clearly one of the healthiest in the sector, and our momentum means we
can both lift our targets for this year and reduce our peak funding estimate."
Graham Howe, Deputy Chief Executive Officer and Chief Operating Officer, said:
"Orange is progressively realising the synergies of our enlarged group and
benefiting from our vision of the WirefreeTM future.
"Operationally, we are seeing the impact in our customer growth, expanded
footprint, the positive trends in average customer revenues and churn and the
strengthened position of each of our re-branded operations, as well as the
success of our launch in Thailand.
"Each stage of our customer journey to the WirefreeTM future is proving to be
richer and more rewarding than even we had believed. We remain convinced of the
huge growth yet to come in voice services as well as the potential for non-voice
services, placing us well on track to meet our 25% target in 2005.
"We are maintaining our network roll-out plans, and over half our network
investment is integrating 2.5G and 3G capabilities. We are fully on track for
our planned 3G launches. It is also increasingly clear that we are able to
leverage our 2G networks to provide our customers with a "3G experience", and
this is what we are doing.
"Our OrangeWorld strategy is providing us with a clear and phased framework to
replicate through Orange all the ways people and organisations have always
communicated - by voice, text and picture; and soon by email and instant
messaging. It is also enabling us to create new patterns of social and
community communication and to introduce these as the availability of new and
interoperable WirefreeTM devices, networks and content become mainstream.
"All of this gives us high confidence that....
"The future's bright, the future's Orange."
For further information, please contact:
Orange SA Tel: 00 44 (0) 20 7984 1691
David Smyth, Group Director of Strategic and Investor Services
Patricia Lefranc, Senior Investor Relations Manager
Orange Media Centre Tel: 00 44 (0) 207984 2000
Denise Lewis, Group Director of Corporate Affairs
France Telecom Tel: 00 33 1 44 44 88 71
Bruno Janet, Senior Vice President Group Corporate Information
Nilou Ducastel, Group Press Director France Telecom
Citigate Dewe Rogerson Tel: 00 44 (0) 20 7638 9571
Anthony Carlisle Tel: 00 44 (0) 7973 611 888
London and Paris, 13 September 2002: Orange today announced half year
operational and financial performance ahead of expectations and the targets
previously set by the group.
Financial Highlights (six months ended 30 June 2002)
Orange's total revenues grew 13.8% on H1 2001(1) to Euro8.1 billion, and EBITDA(2)
(3) grew 41.0% to reach Euro2.3 billion. This reflects strong margin growth in
Orange's core markets and the positive contribution from the Rest of the World
operations. Driven by this, operating income grew 52.0% to Euro1.25 billion.
After interest expense of Euro197 million and our share of net losses in affiliates
of Euro207 million, profit before tax, goodwill amortisation and minority interests
totalled Euro825 million, a three-fold increase over the same period last year.
At Euro207 million, our share of net losses in affiliates was lower than last year.
Having written down the book value of MobilCom to zero last year, we have
discontinued including any of MobilCom's losses in our group accounts with
effect from 1 January 2002. The losses of Euro207 million relate to Wind in Italy
and TA Orange in Thailand.
Tax fell slightly to Euro382 million with the tax planning measures put in place
and the formation of a tax group in France from 1 January 2002.
As anticipated, goodwill amortisation decreased to Euro157 million, following the
accelerated write down of MobilCom in 2001.
After a minority interest charge of Euro68 million, the result was Orange's first
ever net profit before exceptional items, a profit of Euro218 million compared with
a loss of Euro500 million in the first half of last year.
The exceptional impairment charge of Euro1.1 billion related to the adjustment of
the carrying value of Orange's shareholding in Wind to Euro3.2 billion. This
reduced the bottom line to a net loss after exceptional items of Euro862 million.
Group Cash Flow
Funds generated from operations increased by 58.2% to Euro1.8 billion while cash
spent on capital expenditure increased to Euro1.8 billion, higher than last year
due to cash flow timings.
Financial investments of Euro288 million primarily related to the transfer of a
shareholder loan in Wind.
The net result was a significant reduction in net cash outflow to Euro193 million
(Euro964 million for H1 2001).
After taking into account non-cash movements in net debt of Euro262 million, mostly
resulting from changes in foreign exchange translation rates, our net debt
(excluding a further drawdown of vendor financing of Euro279 million) decreased by
Euro69 million in H1 2002. This compares with an increase of Euro1 billion during the
same period last year.
Given the favourable movements in expected cash requirements, Orange now targets
peak funding of its current Group to be no more than Euro8 billion in 2003. This
represents a substantial improvement on the figure quoted at the time of the
Orange IPO.
Balance Sheet
At 30 June 2002, shareholders' equity was Euro17.4 billion and net debt(4) was Euro6.1
billion. In addition, Euro513 million had been drawndown under vendor financing
arrangements at the end of June 2002 (Euro234 million at the end of December 2001).
Net debt to annualised EBITDA ratio(5) was 1.33 times, down substantially from
1.89 times at the end of 2001, helping Orange retain one of the strongest
balance sheets in the telecom sector.
Capital Expenditure
Tangible capital expenditure was Euro1.4 billion in H1 2002, almost the same as in
the first half of 2001.
Capex is expected to increase next year and in 2004 as 3G investment builds up,
towards a total of between Euro10 and Euro11 billion over the 2002 - 2004 period. By
2005, capex should begin to level off and then probably reduce.
With revenues growing rapidly, the capex to total revenues ratio of 17.7% in H1
2002 should fall towards 11% by 2006. Beyond that, it should fall below 10%.
Key Business Drivers
The group customer base grew to a total of 41.4 million, reflecting 2.1 million
net new customers added in the first six months of the year. The growth trends
in each operation reflected their respective market maturity.
In Orange's core markets, there has been a greatly increased proportion of
contract customer growth. In France, 66.3% of net growth in the first half of
the year was on contract tariffs (32.0% in H1 2001), while over 50% of Orange UK
growth was on contract tariffs (15.3% in H1 2001).
Growth in total revenues is in line with customer growth, up by 13.8% on H1 2001
to Euro8.1 billion. We expect growth in revenues to continue, driven by customer
growth, increased voice revenues and non-voice usage.
Recurring GSM network revenues in H1 2002 increased faster, by 17.5% to Euro7.4
billion and accounted for 91.5% of total revenues, compared with 88.5% last
year.
Group EBITDA grew by 41.0% to Euro2.3 billion with strong performances across the
Group. Group EBITDA margin also increased significantly to 31.3%, substantially
ahead of the 26.1% in H1 2001. The Group has revised upwards its EBITDA target
for full year 2002, and now expects a total of Euro4.7 billion (previous target of
Euro4.3 billion). This would represent an increase of more than 40% on full year
2001.
Group operating income was Euro1.2 billion in the first half of the year, a 52.0%
increase over the first six months of last year and an operating margin of 16.9%
(13.1% in H1 2001).
After interest, tax, goodwill amortisation and minority interests, Orange
achieved its first ever net profit (before exceptional items), a profit of Euro218
million compared with a loss of Euro500 million in H1 2001.
Orange took an exceptional impairment charge of Euro1.1 billion on the carrying
value of Wind, where the carrying cost in the balance sheet was written down
from Euro4.3 billion to Euro3.2 billion.
Orange France(6)
During the first six months of the year, Orange France reinforced its position
as the largest and fastest growing operator in the French market. The company
continued to benefit from last year's rebranding and delivered strong revenue
growth with EBITDA building in line with our accelerated targets.
Total revenues grew by 14.4% to Euro3.6 billion and recurring GSM network revenues
increased by 14.7% to Euro3.4 billion.
EBITDA increased by 17.4% to Euro1.3 billion. This represented a margin of 38.9%,
up from 38.0% for the same period last year, and keeping Orange France on track
to achieve its EBITDA margin target of 40% by 2003/2004.
Orange France added 802,000 net new customers in H1 2002, substantially
increasing its share of market growth. In the year prior to rebranding, the
company took 48.1% of French market growth. In the year since becoming Orange,
the share of market growth has increased to 57.6%.
Orange France has 18.6 million registered customers, 49.3% of the total French
market and 16.9% higher than at the end of June 2001. Of these, 10 million are
contract customers. For H1 2002, 66.3% of net growth was on contract tariffs,
compared with 32.0% in H1 2001.
Overall churn(10) was 21.4%, with prepay customers showing an increase as
inactivity levels grew. In the contract segment, the introduction of the Orange
brand and its associated values contributed to a significant decline in churn,
falling over 5 percentage points to 16.5%. As in the UK, Orange benefits from
the lowest churn in the market, and this should be helped further by the changes
we are making.
In common with our experience elsewhere, annual rolling contract usage(9)
increased by 3.8% to an average of 218 minutes per month, contributing to a
compound annual growth of 7.0% since H1 1999. On prepay, usage decreased to 49
minutes per month, but the declining trend appears to be nearing the inflection
point. Overall, average usage was basically flat at 139 minutes and marginally
higher than the number reported for all of 2001.
Orange France's contract annual rolling ARPU(8) was down 2.2% over the first
half of last year at Euro573. The decline reflected the 15% decrease in
fixed-to-mobile interconnection charges and the dilutive effect from the growth
in the hybrid "Compte Mobile Orange" tariff customer base.
Annual rolling ARPU on the France prepay base was Euro166 (Euro175 for H1 2001).
Orange France's overall annual rolling ARPU was Euro382 for the first half of 2002,
a 5.4% decline on H1 2001.
Overall average subscriber acquisition costs(11) were Euro142 per gross connection
and total subscriber acquisition costs fell to Euro371 million, 10.2% of total
revenues, with a modest increase in retention costs.
Orange UK
In the first half, Orange UK maintained its lead as the largest operator in
terms of active customers and continued to deliver real upward trends in
contract average revenue and usage.
All this contributed to strong revenue growth with EBITDA well on track to reach
the accelerated margin target we set in March this year.
In the UK, total revenues grew by 11.8% to Euro2.9 billion and recurring GSM
network revenues grew faster, by 21.4% to Euro2.6 billion.
EBITDA increased by 56.3% to Euro855 million for the first six months of the year,
driven by the increasing revenues and the declining influence of subscriber
acquisition costs. This represented a margin of 33.0% on GSM network revenues,
substantially higher than the 25.7% for the same period last year. As in
France, Orange UK is well on track for the accelerated EBITDA margin target set
in March this year of 35% by 2003/2004.
Orange UK added 415,000 net new customers in the first half of 2002, taking its
active customer base to 12.8 million.
This has been achieved despite using the most stringent definition of active
customers in the UK market. If Orange adopted the less conservative definition
used by other UK operators, its UK customer numbers would be approximately 1
million higher than those reported.
The proportion of contract customers in the base increased from 28.6% at 30 June
2001 to 31.0% at 30 June 2002, with over 50% of H1 2002 growth being on contract
tariffs (15% in H1 2001).
As with Orange France, Orange UK continues to have the greatest customer loyalty
in the UK. Annual rolling network churn(10) from the contract base fell to
14.9%, though some migration to prepay continues, albeit at a lower rate. The
level of migrations is expected to continue to reduce.
The increasing maturity of Orange UK prepay customers together with other causes
of inactivity, led prepay churn to rise to 21.6%.
Overall, Orange UK churn was 19.6%, an increase over H1 2001 due to the prepay
influence.
Annual rolling contract usage(9) has continued to increase, up to 330 minutes.
Since the first half of 1999, compound annual growth in contract usage has been
19.0%.
Prepay usage declined as the impact of earlier rapid customer growth fed
through.
The usage trends are reflected in average revenue performance. Annual rolling
contract ARPU(8) grew by 3.0% over the same period last year to #555. The
compound annual growth rate in contract ARPU has been 4.6% since H1 1999.
Annual rolling prepay ARPU was flat compared to H1 2001, and at #122, was
slightly ahead of full year 2001.
Overall blended ARPU, at #252, was only marginally lower than in H1 2001 and has
now shown two consecutive quarters of increase. The annualised Q2 overall ARPU
(#260) is higher again.
The average cost of acquiring contract customers increased to #217 as the focus
of competition moved to the contract market. Prepay subscriber acquisition
costs decreased to #20 following last year's increase in prepay handset selling
prices, and are expected to remain largely stable.
Subscriber acquisition costs continued to fall as a proportion of total revenues
from 16.4% in H1 2001 to 9.0% in H1 2002, offset to some degree by retention
costs increasing from 5.2% to 7.6% of total revenues.
Rest of the World Operations
Orange's operations in the Rest of the World(7) continued to grow strongly.
Orange's customer base in controlled subsidiaries outside France and the UK was
10.0 million at the end of June 2002, an increase of 28.9% on the first half of
last year.
Total revenues in the Rest of the World totalled Euro1.6 billion, up 18.5% on H1
2001, with solid growth across the board, but especially in Belgium and
Switzerland, the two largest businesses, where total revenues increased to Euro478
million and Euro323 million respectively.
Orange's Rest of the World operations collectively achieved positive EBITDA of
Euro334 million, almost a five fold increase over the first half of last year.
There was a particularly strong improvement in the Netherlands, which reduced a
Euro107 million negative EBITDA in H1 2001 to a Euro14 million negative EBITDA in H1
2002. In Belgium, EBITDA more than doubled to Euro143 million. Excluding a
one-off credit in H1 2001, Switzerland's EBITDA improved strongly to reach Euro22
million in the first half of the year.
Collectively, the three "established" countries - Slovakia, Romania and Belgium
- achieved an EBITDA margin of 38.8% in H1 2002, and while there is still some
second half seasonality, these businesses are likely to achieve their 35% margin
target early. Orange's three "developing" businesses - the Netherlands, Denmark
and Switzerland - collectively produced positive EBITDA for the first time.
Overall tangible capex in our Rest of the World operations was Euro531 million, up
11.1% on the same period last year, as we support the brand rollout by building
towards the highest quality networks in each country.
Non-Voice Trends
Adoption and usage of non-voice services continued to show steady growth and
Orange is confident in its target of 25% of operating revenues (equivalent to
around Euro10 per customer per month) from non-voice services by 2005.
In the UK, non-voice services accounted for 13.9% of network revenues in the
first six months of this year (9.6% in H1 2001). Belgium accelerated quickly,
achieving 12.2% in the first half of 2002, while Switzerland, Denmark and the
Netherlands also achieved in excess of 10%.
The core non-voice service remains SMS, although SMS services have evolved from
purely person to person to also include a wide range of information based
services.
SMS usage continued to grow in France, where Orange's customers sent 1.2 billion
messages in the first half this year, a 74.3% increase on H1 2001. In the UK,
Orange's customers sent 2.4 billion messages, up 38% on H1 2001.
In the UK, around 45% of prepay and approximately 67% of contract customers are
regular SMS users. In France, the numbers are around 25% and 40%, growing
consistently. In the UK, active prepay SMS users send on average 60 messages
per month and 61 from the contract users. The equivalent French numbers are 38
and 33 respectively.
Group Financial Highlights
(for the six months ended 30 June 2002)
* Controlled customer base 41.4 million +16.6% on H1 2001(1)
(at 30 June 2002)
* Total revenues Euro8.1 billion +13.8%
* EBITDA Euro2.3 billion +41.0%
* Operating income Euro1.2 billion +52.0%
* Profit before tax, goodwill
amortisation and minority
interests Euro825 million +200%
* Balance sheet strength Net debt to annualised EBITDA(5):1.33x
(at 30 June 2002)
Orange France
* Customer base 18.6 million +16.9%
* Total revenues Euro3.6 billion +14.4%
* EBITDA Euro1.3 billion +17.4%
* Operating income Euro1.0 billion +15.5%
* Orange strengthened its leadership in France
Orange UK
* Customer base 12.8 million +7.9%
* Total revenues Euro2.9 billion +11.8%
* EBITDA Euro0.9 billion +56.3%
* Operating income Euro0.5 billion +76.7%
* Orange confirmed its leadership in the UK
Rest of the World
* Customer base 10.0 million +29.0%
* Total revenues Euro1.6 billion +18.5%
* EBITDA Euro334 million +377.1%
Operating loss Euro(22)million; (H1 01(1) loss of Euro(206)m
Six months ended 30 June
(millions of Euro)
2002 2001(1)
(unaudited)
Profit and loss account data(1)
Total revenues
France 3,636 3,177
UK 2,870 2,567
Rest of the World 1,626 1,372
Inter-segment eliminations (73) (34)
Total 8,059 7,082
Cost of sales (2,814) (2,773)
Selling, general and administrative costs (2,929) (2,662)
Research and development costs (12) (13)
EBITDA(2)(3)
France 1,311 1,117
UK 855 547
Rest of the World 334 70
Shared group functions(16) (196) (100)
Total 2,304 1,634
Depreciation and amortisation (excluding
Goodwill amortisation) (1,059) (815)
Operating income / (loss)
France 990 857
UK 477 270
Rest of the World (22) (206)
Shared group functions (200) (102)
Total 1,245 819
Interest expenses, net (197) (219)
Other non operating items (16) (9)
Equity in net loss of affiliates (207) (316)
Profit before income taxes, goodwill amortisation and
minority interests 825 275
Income taxes (382) (411)
Goodwill amortisation (157) (322)
Minority interests (68) (42)
Net profit / (loss) before impairment charge 218 (500)
Exceptional impairment charge (1,080) -
Net loss (862) (500)
Net loss per share (0.18) (0.10)
Diluted net loss per share (0.18) (0.10)
Six months ended 30 June
(millions of Euro)
2002 2001(1)
(unaudited)
Selected cash flow data(1)
Funds generated from operations 1,759 1,112
Purchase of property, plant, equipment and intangible
assets (excluding UMTS licences) (1,804) (1,433)
Vendor financing 279 -
Purchase of UMTS licences - (186)
Changes in working capital (140) (445)
Free cash flow 94 (952)
Financial investments (288) (546)
Proceeds from the sale of investments 1 534
Cash movement in net debt(4) (193) (964)
Non-cash movement in net debt(4) 262 (42)
Total movement in net debt(4) 69 (1,006)
Selected balance sheet data (at period end)(1)
(millions of Euro)
(unaudited)
30 June 2002 31 December 2001
Long-term assets 26,261 28,198
Shareholders' equity 17,415 18,830
Total financing(17) 6,658 6,448
Net debt to EBITDA ratio 1.33(5) 1.89
Six months ended 30 June
2002 2001(1) (14)
(unaudited)
Operating data
France
Customers (in thousands) (period end) 18,625 15,926
Contract 9,977 8,391
Prepay 8,648 7,535
GSM network revenues (Euro in millions)(13) 3,371 2,940
Equipment and other revenues (Euro in millions) 265 237
Total revenues (Euro in millions) 3,636 3,177
Annual average revenue per user (Euro)(8) 382 404
Contract 573 586
Prepay 166 175
Monthly average usage per user (minutes)(9) 139 140
Contract 218 210
Prepay 49 54
Churn(10) 21.4% 20.6%
Contract 16.5% 21.6%
Prepay 27.0% 19.4%
Subscriber acquisition costs per connection (Euro)(11) 142 140
Contract 206 204
Prepay 83 91
UK
Customers (in thousands) (period end) 12,802 11,861
Contract 3,972 3,388
Prepay 8,830 8,473
GSM network revenues (Euro in millions)(13) 2,587 2,131
Equipment and other revenues (Euro in millions) 283 436
Total revenues (Euro in millions) 2,870 2,567
Annual average revenue per user (#)(8) 252 255
Contract 555 539
Prepay 122 122
Monthly average usage per user (minutes)(9) 138 146
Contract 330 328
Prepay 56 61
Churn(10) 19.6% 11.8%
Contract underlying (including migrations) 14.9% (23.7%) 15.5% (27.5%)
Prepay 21.6% 10.0%
Subscriber acquisition costs per connection(#)(11) 107 89
Contract 217 207
Prepay 20 50
Rest of the World Data
The number of customers, total revenues and EBITDA for our principal
subsidiaries included in the Rest of the World segment for the six months ended
30 June 2002 and 2001 are set out in the table below:
Six months ended 30 June
2002 2001(1)
(unaudited)
The Netherlands - Dutchtone
Customers (in thousands) (period end) 1,146 1,150
Total revenues (Euro in millions) 191 174
EBITDA (Euro in millions) (14) (107)
Slovakia - Orange
Customers (in thousands) (period end) 1,536 907
Total revenues (Euro in millions) 147 106
EBITDA (Euro in millions) 57 38
Denmark - Orange
Customers (in thousands) (period end) 585 567
Total revenues (Euro in millions) 109 90
EBITDA (Euro in millions) 2 (37)
Romania - Orange
Customers (in thousands) (period end) 1,857 1,381
Total revenues (Euro in millions) 190 182
EBITDA (Euro in millions) 90 91
Belgium - Mobistar
Customers (in thousands) (period end) 2,611 2,150
Total revenues (Euro in millions) 478 402
EBITDA (Euro in millions) 143 70
Switzerland - Orange
Customers (in thousands) (period end) 988 859
Total revenues (Euro in millions) 323 288
EBITDA (Euro in millions) 22 31
Other Rest of the World
Customers (in thousands) (period end) 1,248 718
Total revenues (Euro in millions) 188 130
EBITDA (Euro in millions) 34 (16)
Total Rest of the World(7)
Customers (in thousands) (period end)(12) 9,971 7,732
Total revenues (Euro in millions) 1,626 1,372
EBITDA (Euro in millions) 334 70
Egypt - MobiNil (given for info only)(15)
Customers (in thousands) (period end) 2,108 1,702
Total revenues (EG# in millions) 1,179 1,188
EBITDA (EG# in millions) 594 560
Notes
(1) Basis of preparation:
The Group's consolidated financial statements, consolidated income statement and
cash flow have been prepared in accordance with French generally accepted
accounting principles as they are applied by the Group.
(2) Earnings before interest, taxes, depreciation and amortisation
("EBITDA") is presented because it is a measure commonly used in the
telecommunications industry and is presented solely to enhance the understanding
of our operating results.
(3) Group EBITDA is after shared group functions costs of Euro196m in H1
2002 (H1 2001 costs of Euro100m).
(4) Net debt at 30 June 2002 excludes vendor financing of Euro513m.
(5) Net debt to annualised EBITDA = Net debt at 30 June 2002 / (H1 2002
EBITDA x 2).
(6) Orange France includes Metropolitan France, Orange Caraibe and Orange
Reunion.
(7) Rest of the World includes Orange's controlled subsidiaries
outside of France and the UK (excludes OrangeWorld, which is included in shared
group functions). See note (16) below.
(8) Annual average revenue per user ("ARPU") is calculated by dividing
GSM network revenues (including outgoing traffic, incoming traffic, visitor
roaming, access fees and value added services) for the previous 12 months by the
weighted average number of our customers during the same period. The weighted
average number of our customers during a period is the average of the monthly
average customer bases for the period. The monthly average customer base is
calculated as the sum of the opening and closing customer bases for the month
divided by two. ARPU is quoted on a revenue per customer per year basis. Orange
France (mainland) does not currently receive revenues from other French mobile
network operators for calls from their networks that terminate on Orange France
(mainland) network as in some other markets, in particular, the United Kingdom.
As a consequence, French and UK ARPUs are not directly comparable.
(9) Monthly average usage per user ("AUPU") is defined as total usage
(including outgoing traffic, incoming traffic and roaming) for the previous 12
months divided by the weighted average number of our customers during the same
period. It is quoted in minutes on a usage per customer per month basis.
(10) Churn, the measure of customers leaving our networks, is calculated by
dividing the total number of customers who disconnect or are treated as having
disconnected from our network, voluntarily or involuntarily, (excluding
fraudulent connections and money back returns) for the previous 12 months by the
weighted average number of our customers during the same period. The way we
compute churn differs between Orange UK and Orange France in the following ways:
a. For Orange UK, customers migrating between contract and prepay product
categories are included in individual product churn but do not impact total
churn as they remain Orange UK customers. Customer disconnections which occur
during the money-back guaranteed 14-day trial period are not included in churn
and we exclude from churn those connections which, in our view, do not result in
active customers, including as a result of prepay handset upgrades or the
removal of handsets from the UK market. Prepay customers are treated as having
churned if they have not made any outgoing calls and have received less than
four incoming calls in the last three months.
b. For Orange France churn includes those customers leaving the Orange
network and migrations between contract and prepay. Prepay customers are
treated as having churned after eight months if they do not "recharge" their
account during this period.
Going forward, the Group definition, currently applied in Orange UK, will be
progressively applied throughout our businesses.
(11) Subscriber acquisition costs are included partly in "Cost of sales"
and the balance in "Selling, general and administrative expenses" and are
expensed as incurred. We analyse subscriber acquisition costs separately by
subtracting the revenue we receive from handset sales from our total cost of
handsets included in cost of sales. We then add that amount to the commissions
that we pay to distributor channels and that are included in selling, general
and administrative expenses. To calculate annual average subscriber acquisition
costs, we then divide this total for a 12 month period by the total number of
connections (including in the United Kingdom connections of prepay upgraded
handsets and those removed from the United Kingdom) less disconnections under a
money back trial period and attempted fraudulent connections in the United
Kingdom for the 12 month period. Subscriber acquisition costs are quoted on a
per connection basis.
(12) Includes all of the customers of our controlled wirefree operations.
We do not include the subscribers of companies in which we have a minority
interest, such as Wind or MobilCom, nor customers from our service provider
subsidiaries such as our former UK service provider.
(13) GSM network revenues include access charges and usage fees.
(14) Orange France's contract and prepay 2001 operating data has
been restated for the reclassification of Compte Mobile Orange customers from
contract to prepay. In addition, contract and overall SACs and churn have been
restated to exclude transfers between contract tariffs, where the customer keeps
the same handset.
(15) With effect from 1 July 2002, Orange will proportionally
consolidate 71.25% of MobiNil's revenue and EBITDA, and 36.4% of net income.
(16) Shared group functions includes group overheads, other common
expenses as well as OrangeWorld. Previously, OrangeWorld was included in Rest
of the World. H1 2001 segmental EBITDA and operating loss has been restated
accordingly.
(17) Total financing includes net debt and vendor financing.
This document contains forward-looking statements. Although Orange believes its
expectations are based on reasonable assumptions, these forward-looking
statements are subject to numerous risks and uncertainties. Important factors
that could cause actual results to differ materially from the results
anticipated in the forward-looking statements include, among other things: the
effects of competition; wirefree telecommunications usage levels; the
availability, terms and deployment of capital for Orange; general economic and
market conditions, particularly with respect to the telecommunications sector;
and the effect and outcome of UMTS licensing, roll out and performance. The
forward-looking statements contained in this document speak only as of the date
of this document and Orange does not undertake to update any forward-looking
statement to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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