Executives: Karine Adam - Head of Investor Relations Philippe Marien - Deputy Chief Executive Officer Christian Lecoq - Chief Financial

Officer
Analysts: Sanvir Dhillon - Exane BNP Paribas Daniel Morris - ‎Barclays Investment Bank Nicolas Didio - Berenberg Stephane Beyazian - Raymond James Financial Nicolas Cote-Colisson - HSBC Jakob Bluestone - Credit Suisse Jeremy Dellis - Jefferies Group LLC Eric Lemarie - Bryan, Garnier & Co Frederic Boulan - Bank of America Merrill Lynch Thomas Coudry - Bryan, Garnier & Co Jonathan Dann - RBC Capital

Markets
Operator: Ladies and gentlemen, welcome to Bouygues First Quarter 2018 Conference Call. And, I handover to Karine Adam, Head of Bouygues Investor Relations. Please go ahead.

Karine Adam: Good morning, ladies and gentlemen. I would like to remind everyone that you can find on the company website, at www.bouygues.com, the earnings press release, the presentation we will be commenting on during this conference call, an Excel file with historical figures for the group and each business and the company's financial statements.

Statements made on this call are forward-looking statements, such statements reflect objectives that are based on management's current expectations or estimate, and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements. Before starting our presentation, I would like to share with you on Slide 3, two items that had an impact on 2018 results compared to 2017. The first item is the changed aspect in accounting that was announced with full-year results. Starting from January 1, 2018, we are now reporting under IFRS 9 and IFRS 15 methodology. The application of IFRS 9 is affecting financial instruments and IFRS 15 revenue recognition.

The impact is not material at the group level. As a reminder, for 2017, the change from IFRS 15 had a positive impact of €19 million on the group sales and a negative impact on current EBIT and net result of €14 million and €3 million respectively. Focusing on Q1 2017, the IFRS 15 effect was negative; €10 million on the group sales, €8 million on current EBIT and €3 million on net results. There was no impact on cash. While the change in accounting is not material at the group level, IFRS 15 impact is material at Bouygues Immobilier and Bouygues Telecom.

A restatement of the 2017 quarterly results that are fully comparable with 2018 is available in the annex of this presentation. The second item is the acquisition by Colas of Miller McAsphalt on February, 28. Given its recent acquisition by Colas, Miller McAsphalt assets and liabilities are not consolidated at 31 March, 2018. The provisional price of €585 million for 100% of the shares acquired was fully recognized in provisional goodwill. No contributions to the results of acquired activities have been recorded in March 2018.

Miller McAsphalt's results will be fully consolidated in Q2 2018 and will include March. I would now like to turn the call over to Mr. Philippe Marien, Deputy CEO of Bouygues.

Philippe Marien: Thank you, Karine. Good morning to all of you, and thank you for joining us.

I would like to welcome everyone to our conference call to discuss Bouygues' first quarter results. With me in the room is Christian Lecoq, CFO of Bouygues Telecom. Following my comments, we will be answering your questions. To begin on Slide 5, I remind you that like every year, first quarter operating results are not indicative of the group's full year performance. Turning to the key highlights of the quarter, first, Bouygues Telecom continued to display good commercial momentum with its best quarter of FTTH net-adds, since the launch of its fiber offers, and delivered robust earnings growth.

Second, the backlog remained at a record level as construction businesses are well positioned in upbeat markets in France and internationally, even though the activity has been affected by adverse weather conditions in Europe. In this context, we can confirm the full-year outlook shared with you in February. Some key figures on the Slide 6, sales was stable year-on-year at €6.8 billion, including a negative currency impact of €170 million, coming mainly from the depreciation of the Hong Kong dollar, the U.S. dollar and the Australian dollar against the euro. Like-for-like and at constant exchange rate, sales increased by 2%.

Q1 2018 current operating profit was a loss of €111 million, but as every year first quarter results are not indicative of the full year performance of the group. Both Bouygues Telecom and TF1 increased their profitability in the first quarter of 2018. In line with 2017, Bouygues Telecom continued to improve EBITDA margin and current operating profit with a year-on-year increase of 1.6 points and €18 million respectively. At €38 million, TF1 current operating profit was up €2 million due to cost control including savings on cost of programs. Current operating margin increased by 0.4 points to 7.7%.

Turning to construction businesses, as usual, first quarter financial results are not indicative of the full year performance. Beyond Colas' usual seasonality, harsh winter conditions in Europe have penalized the activity of the construction businesses. Colas activity was the most affected in the first quarter, and to a lesser extent Bouygues Immobilier and Bouygues Construction. To be more specific, precipitation levels across France were 2 to 3 times higher in Q1 2018 compared to normal levels. And the number of our not worked due to bad weather has grown by 20% year-on-year.

However, we are confident that the construction businesses should be able to catch up the first quarter delay in activity before the end of the year. Operating profit included non-current income of €55 million in Q1 2018, of which €69 million was a capital gain on the sale of sites to Cellnex versus non-current charges of €17 million in Q1 2017. Finally, net profit improved by €53 million from a year-ago, including Alstom's contribution of €73 million in Q1 2018, a €28 million increase over last year's first quarter contribution. Let us now turn to Slide 7 to review the financial structure of the group. You can see on this slide that the group maintains a strong financial position.

Net debt was €3.8 billion at end March 2018 compared to €1.9 billion at end December 2017. The increase mainly reflects, first, the usual seasonal impact from Colas; and second, the acquisition by Colas of 100% of the shares of Miller McAsphalt Group for €585 million. Please note that net debt at end March 2018 has yet to include the acquisition of aufeminin by TF1 and Alpiq Engineering Services by Bouygues Construction and Colas. Regarding aufeminin, TF1 has announced the finalization of the acquisition of the majority equity interest held by Axel Springer, which amounts to 78% of the capital at a price of €39.47 per share for a total of €291 million. TF1 will also file a mandatory simplified tender offer for the remaining shares at the same price.

We expect net debt of approximately €4 billion at the group level by end 2018. I will now turn to the review of operations starting with the construction businesses. Let's begin with the backlog on Slide 10. In the first quarter, we maintained the good momentum of 2017. As a result, the backlog reached a record level of €31.7 billion on end March 2018, up 4% year-on-year and up 7% at constant exchange rates.

Both France and international markets drive this performance. In France, the backlog at end March 2018 is up 5% year-on-year. You can see on the chart the growth in the backlog of each of the three construction businesses. This is thanks to an upbeat French market, mainly in the Greater Paris area due to the Grand Paris tender. In addition, some big cities and region are extending or upgrading road and rail transport networks due to urbanization.

In international markets, the construction businesses remain strong. International backlog was up 3% year-on-year and up 10% at constant exchange rates. Some significant contracts have been booked in Q1 2018, including the construction of a solar farm in the south-east Australia for nearly €150 million, an innovative modular residential construction project in Singapore worth €90 million and several rail contracts in the UK for a total of €140 million, including the extension of the Birmingham Metro. Overall, the share of the order book in international markets for Bouygues Construction and Colas remain unchanged at 57% compared to end March 2017. Let us now turn to France, where we have strong visibility as illustrated on Slide 11.

Since the beginning of 2017, the French construction market has returned to growth, driven notably by the Grand Paris project that has recently been confirmed by the government. This project gives strong visibility to our three construction businesses with calls for tender extending from 2017 to 2030. As a reminder, the Grand Paris project

consists of: first, Grand Paris Express, the new metro of Paris region involving the building of 200 kilometers of automatic metro lines and 68 stations. Second, our Eole extension to the west of Paris, including the upgrade and the building of 55 kilometers of automatic metro lines and the renovation or construction of 14 stations. And third, property development projects with the objective to build 140 square meters of new neighborhoods around the Grand Paris Express stations.

The cost of the transportation infrastructure project is expected to be around €35 billion. At end Q1, only €8.1 billion of projects has been awarded, of which €1.3 billion has already been included in Bouygues Construction and Colas backlog. You can easily see that the Grand Paris infrastructure project offers great commercial potential for the coming years. In addition, the objective of Grand Paris to build 70,000 new housing units each year and to renovate and revitalize the district around the stations leads to a positive outlook in property development. At end Q1, 55 property development projects for inventing the Grand Paris metropolitan area have been awarded representing investments of around €9 billion.

Relying on Bouygues Construction and Bouygues Immobilier's strong expertise in urban development offers, Bouygues is the most awarded bidder with 11 projects won to date. Those projects will have a long development phase and they have not yet been included in the backlog. The total amount to be spent for the financing of Grand Paris property development is estimated at around €35 billion. As highlighted previously, you can see that with €9 billion already awarded out of a €35 billion plan, we have good visibility for the years to come. In the short-term, the outlook is promising in France for Colas with growth in road works and rail supported by the resumption of public funded projects, the Grand Paris project and the second highway plan with an objective to spend €800 million over three years.

And probably more as you have heard this morning by the French government. Let us now move to Slide 12 to focus on two major urban development projects, one in France in Q1 2018 confirming Bouygues leadership in sustainable mixed-use neighborhood. Bouygues Construction and Bouygues Immobilier have built a strong expertise in designing and developing sustainable districts with more than 30 eco-neighborhood built or under development in France, Switzerland and the UK. Those projects focus on promoting measureable surrounding, soft mobility, innovative services as well as biodiversity conservation with recycling and lower energy consumption. They are addressing the needs of clients and future inhabitants in partnership with big companies and startups.

At the beginning of 2018, Bouygues was selected to develop two major sustainable district projects in Paris. First, the Charenton-Bercy district in Southern Paris, a massive project we won through the call for bid inventing the Grand Paris metropolitan area. The mixed-use program comprises 360,000 square meters of housing, offices, retail, entertainment and public facilities. Several emblematic architectural projects will emerge such as 180 meters high green tower with suspended gardens. The district will include a new cluster dedicated to tech and video games.

The first phases of this urban development are scheduled to start in 2021, and a discussion is underway with residents. This project should generate more than €2 billion of activity for Bouygues Immobilier. Second, Bouygues will develop the Chapelle International District in Northern Paris, a mixed project on an old railway site that will include certified high environmental quality offices, housing, student residences and a multisport venue for the Olympic Games, and a new campus for the University of Paris Pantheon-Sorbonne. This project represents work for nearly €110 million for Bouygues Construction. Let us now turn to International markets where Bouygues Construction and Colas continue to pursue their expansion in countries, where they have a longstanding presence.

Looking at Slide 13, the group has continued to expand in two major countries, Canada and Switzerland, which offer growing markets, good outlook and a low risk profile. First, Colas completed the closing of the acquisition of 100% of the shares of Miller McAsphalt group on February. As a reminder, the Miller McAsphalt group is a major player in road construction with a strong foothold in Ontario and in bitumen distribution in Canada. With annual average revenue of approximately CAD1.3 billion and an average operating profit margin of 7%, it employs 3,300 people. The acquisition of Miller McAsphalt will allow Colas to expand its geographic coverage, strengthen its presence in Ontario and significantly increase its bitumen storage and distribution capacity across Canada.

This transaction is part of Colas' long-term strategy to continue its development in North America. Second, Bouygues Construction and Colas had announced on March the acquisition of Alpiq Engineering Services, a leading Swiss player in the energy industrial services and rail infrastructure sectors. Alpiq Engineering Services employs around 7,600 people, and it reported 2017 sales of approximately CHF1.7 billion, with an adjusted current operating profit of CHF67 million. The sales were generated mainly in Switzerland with 55%, Germany with 24%, and Italy with 12%. The closing of the operation is scheduled for the second half of 2018, subject to the approval of the European and Swiss competition authorities.

Let us now get a closer look at this acquisition on Slide 14. Alpiq Engineering Services is a major European player in energy and services operating in several activities. First, building technology and design, and transmission and distribution are core to Bouygues Construction existing businesses. Alpiq is a leader in Switzerland in those two activities, which cover the whole country through an extensive network of agencies. Its presence also extends to Germany and Italy in building technology.

Second, Alpiq is a European leader in catenaries for rail and tramways. It is present mainly in Switzerland, Italy and Central Europe and this activity will reinforce Colas Rail. The third activity, industrial engineering in Europe is a benchmark in Germany with power generating facilities, industrial services and nuclear decommissioning. Those activities will contribute to Bouygues Construction's development strategy in the energy and services sector. During the past 20 years, Alpiq Engineering Services has built strong and all-inclusive technical expertise in its businesses, and have the ability to deliver and manage high value-added projects.

Let us now move to Christian Lecoq.

Christian Lecoq: Thank you, Philippe. Starting with Slide 16, you can see that we maintained good performance in mobile during the quarter despite heavy promotional activity in the market. We won 453,000 new mobile customers in the first quarter of 2018, of which 132,000 were new plan customers, excluding MtoM. At end march 2018, Bouygues Telecom served 14.8 million customers.

The 4G offers continue to progress into our customer base. At end march 2018, we benefited from 8 million active 4G subscribers, which amounts to 72% of our total customer base excluding MtoM, compared to 67% one-year ago. In addition to this goal, there were a continuing increase in usage. 4G customers' average monthly data consumption was between 6 gigabyte and 7 gigabyte in the first quarter of 2018 compared to 3.3 gigabyte in the first quarter of 2017. Moving to Slide 17, we see that FTTH has been instrumental in first quarter [fee growth] [ph] in the market impacted by strong price pressure.

FTTH net adds have accelerated in the first quarter of 2018, as we benefited from the new organization we established in mid-2017 to enhance our efficiency in local services to marketing. It was also helped by a boost in a number of premises marketed as we will see in the following slide. Bouygues Telecom won 64,000 new FTTH customers in the first quarter of 2018, the best quarter since the launch of the fiber offer. The total of FTTH customers was 359,000 at end March 2018 compared to 144,000 one-year ago. Half of our FTTH growth in the first quarter is new customers, which is good news.

We expect this positive trend to continue, supported by the increase of connections marketed and the new launch of offers we launched on April 23 focused on Internet access quality and tailored to specific customer needs. For example, Bbox Ultym, our new offer for intensive or demanding users who need a faster, more robust Internet connection includes, first, high-speed internet everywhere in the home thanks to fiber connection providing up to 1 gigabyte per second download speed, the latest generation WiFi and for the first time in the market, WiFi repeater included in the offer. And secondly, a new generation Android 4K TV set-top box including a personal video recorder and the search of quality content bonuses such as Start by Canal. Overall, the total customer base reached 3.5 million global users at end March 2018. Slide 18, which you are already familiar with, highlights Bouygues Telecom's FTTH network rollout.

As you can see of the chart, the number of marketed premises has accelerated at end March 2018 reaching 4.7 million compared to 4 million at end December 2017. Marketed means that only the final door to the home needs to be done. This increase mainly came from the medium-dense area, where we are co-investing with Orange by tranches of 5%. In this area, marketed premises have increased by 0.5 million over the period. The remaining €0.2 million increase came from the very dense area through co-investment with SFR and in the public initiative network area, where we started marketing our first premises mainly through our agreement with Axione.

Bouygues Telecom is now able to market its FTTH offer in 85 out of 96 departments located mainly in France. The FTTH network roll-out and the number of marketed premises will continue to accelerate in 2018 in order to meet our goal to market 12 million premises by end 2019 and 20 million premises by 2022. On Slide 19, you see the Bouygues Telecom's total sales were up 5.9% compared to last year. Looking at sales from services, they were up 4.9 year-on-year. As a reminder, sales from services is one of the two new performance indicator with ABPU that we have put in place following IFRS 15 implementation in order to better analyze for new evolution.

Sales from services not only include sales billed to the customer, sales from incoming voice and text, spreading of handset subsidies and sales from services provided to business customers. ABPU means Average Billing Per User, and is a result of dividing sales billed to the customer by the average number of customers over the period. If you focus on sales billed to the customer, they increased by 5.5% compared to last year. This growth reflects, first, higher mobile and fixed subscriber bases and second, the positive impact on Q1 2018 of the end March 2017 price increases and premium mobile offer and all fixed offer. Please note that you can find a definition of the sales from services and of the sales billed to the customer in the glossary at the end on this presentation.

Furthermore, restatement of the 2017 quarterly sales from services is available in the historical data file published on our website to be fully comparable with 2018. Continuing the 2017 trend, Bouygues Telecom posts robust earnings growth in the first quarter of 2018 as shown on Slide 20. EBITDA for the first quarter of 2018 was €247 million, an increase of €28 million over the first quarter of 2017. Moreover, EBITDA margin on sales from services was up 1.6 points to 23.9%. Current operating profit rose by 56% compared to the first quarter of 2017, reaching €50 million.

Operating profit at €111 million, includes €69 million related to the capital gain on the sale of 331 sites to Cellnex in the first quarter of 2018. This amount of €69 million is unusually high for the quarter due to the delay in transfer of site from 2017 to 2018. We are still expecting about €190 million of capital gain in 2018. Gross CapEx of €329 million in the first quarter is in line with expectation for 2018.

Philippe Marien: Thank you, Christian.

I would like to briefly comment on the financial statements. We have already looked at sales and current operating profit on Slide 6. I will only review the line other operating income and expenses on Slide 22. In the first quarter of 2018 recorded non-current income of €55 million mainly related to the capital gain on the sale of sites at Bouygues Telecom, it also reflects non-current charges associated with the network sharing at Bouygues Telecom and the Newen PPA impact at TF1. Turning to Slide 23, the positive change in the associates and joint venture line is explained by Alstom net contribution.

As announced, its contribution was €73 million in the first quarter of 2018 versus €45 million in the same period of last year. This €28 million increase has been partially offset by a decline in Colas' associates as the contribution of its Asian subsidiary Tipco Asphalt was lower in Q1 2018 compared to Q1 2017. On Slide 24, net debt was €3.8 billion at end March 2018, up by €1.9 billion compared to end December 2017. The increase over year-end is mainly explained by the traditional seasonality of Colas and an outflow of €627 million in acquisition and disposals coming mainly from the acquisition of 100% of the shares of Miller McAsphalt group by Colas. You can also see that change in operations have notably improved in the first quarter of 2018 compared to the first quarter of 2017.

Turning to the breakdown of operations on Slide 25, you can observe that net cash flow decreased very slightly by €14 million year-on-year. This decrease was offset by a €21 million decline in net CapEx due to Bouygues Telecom and TF1. As a reminder, the transfer of sites to Cellnex did not start until the second quarter of 2017. And last, working capital requirement decreased by roughly €300 million year-on-year due mainly to the improvements in trade receivables, and advance and down payments balance sheet items at Colas. We will - we remind you that for the full year, we expect a deterioration in working capital requirement of about €350 million at the group level.

Finally, we will turn our attention to the outlook for the full year. As you can read on the Slide 27, and as stated at the beginning of this call, we confirm the outlook shared with you in February. This concludes my presentation. Operator, please open the floor for questions.

Operator: [Operator Instructions] First question, San Dhillon, Exane BNP Paribas.

Please go ahead.

Sanvir Dhillon: Hi, guys, two questions if I may. A lot has been made of the increase in the competitive environment in France over 1Q, and that's kind of run through in some of your competitor numbers. Could you comment on the sustainability of those price initiatives from your competitors and how you think about reacting if you see a continued slowdown in your net adds? And secondly, I believe you mentioned half of your FTTH subscribers are new subscribers you won from competitors. Could you give an idea of where you are winning those subs from? Thank you.

Philippe Marien: Okay. So about your first question, it is about the SFR strategy during the Q1, and what - since it is clear that SFR are focused on the volume strategy results and then the value-oriented goal. I think that you saw that this morning in the results. Bouygues Telecom, first we think that relevant indicator remains the growth of sales and not the volume I will say, it's the first point. Second point about the impact of such strategy on our own figures, in the fixed, I remind you that we already had the low price offer and so we are not impacted by SFR aggressive offer.

And on the mobile, the market was already very competitive before SFR new strategy, with many fresh new offers there. So for us, there's no big impact coming from SFR new strategy. It was your first question. Your second was about the split of our FTTH net adds. We said that half of FTTH net adds is coming from migration, so from our own clients and the second part is Newen clients, which is good news for us.

Sanvir Dhillon: Yes, yes, the second question was just on those new clients you tend to win your new FTTH clients from or is it just across all three?

Philippe Marien: Yeah, coming from all across those, just not specific.

Sanvir Dhillon: Okay. Cheers, guys.

Operator: Second question, Daniel Morris, Barclays. Please go ahead.

Daniel Morris: Good morning. Thanks for taking the questions. I have two as well, please. The first was just a follow-up on the fixed KPI dynamic. Can you give us a little bit more color about what's driving the continued slowdown in the fixed KPIs? Is this more to do with churn on your obviously ever-growing base or is it more about changes on the acquisition share? The second question is a little bit more technical.

Slide 18, you showed some helpful detail on your fiber strategy. I just wondered can you update us on what the economics for the very dense area is going to look like for you, once you get to that 4.5 million homes mark at the end of 2019. If I understand correctly by the end of 2019, I think you'll still only have about 1.5 million homes through the SFR JV and the rest in negotiation on different basis. So can you let us know what the economics will look like for the non-JV homes? Thanks.

Philippe Marien: The first question is about dynamic, the dynamic as done - the dynamic in the work that is in the past.

We are very happy with our figures in Q1. Especially, due to the fact that we don't - we didn't use many heavy promotion and flasher [ph] during this Q1. So our performance is very good in Q1 when you take that into account. About your first question, in the very dense area we have two different arguments. One is with - two different, I would say, rollout.

One is clearly with SFR and for around two-third of the area and the [De Jean Paul] [ph]. We are rolling our own network. So I would say the financial KPI is quite the same as the - SFR argument. The rollout with SFR is an old rollout and this time the price to rollout fiber was higher than what it is today. So the return on investment is quite the same.

Daniel Morris: Thank you.

Operator: Next question, [Josh hallach, Bernstien] [ph].

Unidentified Analyst: Hi, thanks for taking my question. I basically wanted to ask you about why you think you managed to do best than Iliad has in this quarter? And then, I wanted to know what your feelings are about Iliad's plan to change its marketing sales strategy, its management team in France, do you think that's a positive thing for the market or a negative thing? Thank you.

Philippe Marien: Now, we are not in a position to comment the strategy and the position of our competition.

It's your job and not ours. The fact is that definitely our strategy for the time being is deliver better results than some of our competitors, that's the only comment we can say. So, clearly, all our assumption and the items of our strategy up to now delivers better results, that's the only comment. After that discuss with Iliad to understand what is its strategy, the future strategy, and how the result is like that.

Unidentified Analyst: Okay.

Thank you.

Operator: Next question, Nicolas Didio.

Nicolas Didio: Nicolas Didio from Berenberg. I have two questions. The first is regarding the 2018 guidance, regarding the improvement of the margin for the construction activities.

I just wanted to know, I mean, how much of the 2018 targets is relying on non-repeat of the Q1 weather conditions. Do you have enough buffer on your business and in terms of provisions and cost savings to absorb a very poor Q3? Or would it lead to, I mean, the margin to be flat or slightly down? And the second question is regarding the smart cities. I think the deal with Dijon is supposed to deliver, let's say, the old service at the end of 2018. Are you on track on this and what's the development on that kind of business for the rest of France? Thank you.

Philippe Marien: Yes, obviously, if we have rain from now up to December, definitely we will not be in a position to deliver our guidelines for sure.

But today there is no reason to think about this type of condition. So obviously, if we have very adverse climate condition during the summer and in Q3, we will have to change our guidance definitely. Colas is more or less dependent on more - on weather condition. So we have no sufficient buffer. And for Colas it's difficult to have a buffer, because you are able to work or not, that's all.

So our assumption is based on the fact that we will be in a normal or more normal condition in term of weather conditions for sure. Regarding Dijon, I don't think that the schedule is to be ready to have all the facilities and all the services in place end of this year. It's more for the years to come. So today, we are totally on the schedule and the planning. There is absolutely no fear on the delivery of this project.

And definitely, we consider that, obviously, there is trend to have other type of contract like that in the future and definitely we consider that part of our growth in construction businesses will be based on the fact that other country - other cities will develop this type of smart city scheme. So we agree, it's part of the good trend of the market in construction in France, but also in other type of - in other countries.

Nicolas Didio: Thank you. Can I just ask one little question on Alpiq, what kind of synergies can we expect from this acquisition. I mean, right now, if I just do the simple math, it's 3.9% margins, can we expect the margin to go up or just the revenue side will be…

Philippe Marien: No, in fact there is no reason to have a lot of cost synergies or synergies, it's more an addition of new territory for us.

Reinforcement in Switzerland and the development in Germany for Bouygues Construction and for Colas in catenaries, Switzerland, Italy and Central Europe; so definitely, it's more an addition of new markets for us than a case in term of cost synergy, because there is no reason to have a lot of cost in synergy cost. So definitely an addition more than synergy story.

Nicolas Didio: Pretty clear. Thank you.

Operator: Next question Stephane Beyazian, Raymond James.

Stephane Beyazian: Thank you. Just one question left for me, which is you have a very nice segmentation of boxes at Bouygues Telecom in the market and I was just wondering whether we can better understand your customer inflow between the different boxes. I guess, my question and my bottom line is, to what extent a significant part of your customer inflow is coming to the Bbox seats, which is a sort of low-end product in the market, because we have a couple of factors such as the competition in the low-end market, also the growing success of Apple TV and connected television, et cetera. So I was wondering whether there is a sort of trend of unbundling the TV from the bundles in the market and possibly more and more customers coming to the low end products in the market. Any color on that would be great.

Christian Lecoq: Okay. First, we just launched this offer a few weeks ago, so it's too early to comment about the commercialization. Your second point was the possibility for the client to not take the 3P offer and to prefer to other [Apple TV] [ph] or something like that. To date, that's really the case, our 2P offer is not our main inflow in term of customers and it's more a way to attract customers and then to migrate them in the shops towards 3P offer.

Stephane Beyazian: Okay.

Thank you.

Operator: Next question Nicolas Cote-Colisson, HSBC. Nicolas Cote-Colisson: Yes, thank you. First question is on Miller McAsphalt, it has been three months since you acquired the asset. So if you can tell us more about the revenue and EBITDA - your EBIT contribution for 2018.

Should we replicate kind of a historical trends or should we expect a different profile may be driven by some synergies? And regarding telecoms, if you can provide us with a split of your FTTH customers between the very dense area and the rest, and maybe share with us your view on your fiber CapEx budget for the current year? Thank you.

Philippe Marien: Regarding Miller McAsphalt, we were in the company since the April 1, so for 2018, definitely, the good assumption is to repeat the past with no big impact in term of synergy, that's the first element of my answer. The second one is, as for Alpiq, the most important point for the Miller McAsphalt acquisition is definitely to add new territory in Canada and better position in term of bitumen distribution. In term of synergy and cost synergy, the result will not very material, because there is no reason to have a lot of synergy. But a lot of growth for Colas, because of this new territories and better position in term of bitumen distribution.

Nicolas Cote-Colisson: Thank you.

Christian Lecoq: So regarding telecom, your fist question was about the split of our customer base between very dense, medium dense and public initiative network area. We don't give you split, just keep in mind that as the occupancy rate is higher for the, I will say, the marketed premises, these are all marketing premises, of course, we have today more subscribers in the very dense areas than in the medium dense. The momentum is very good in the medium dense area. And the second question was about CapEx in the fiber, we are spending around €200 million per year in our fixed network and seasonally for FTTH.

Nicolas Cote-Colisson: Thank you. May I ask just a very short question, Philippe, you mentioned or you confirmed that the net debt target for the end of the year is at €4 billion. Does it mean that you're not expecting anything from Alstom selling the joint ventures to GE?

Philippe Marien: No, because - the consequences of the - for us the consequences of the - for us and for all Alstom shareholders, the consequences of the exercise of the option on energy JV for Alstom will be in the second dividend during the merger between Siemens and Alstom. So we will see the financial consequences of this fact after or at the time of the merger…
Nicolas Cote-Colisson: I see. Okay.

Thanks very much.

Philippe Marien: …through a dividend distribution. Nicolas Cote-Colisson: Perfect. Thank you.

Operator: Next question Jakob Bluestone, Credit Suisse.

Jakob Bluestone: Hi, good morning. I've got two questions as well. Firstly, just on the acquisition of Alpiq, I think this is sort of your first move into Germany, I guess, Europe's largest market. Is this - I mean, could we see you sort of starting to scale up in that market? And so could you maybe talk a little bit about how you see that from a competitive point of view, given you are sort of coming in, I guess, as a new entrant essentially? And then secondly on telecoms, is it possible to have a service revenue growth rate for mobile? I think you reported for fixed and mobile combined when you report an ABPU mobile, I think, it's 12 month rolling, so it just would be interested in what was service revenue growth in mobile for Q1? Thank you.

Philippe Marien: So regarding Alpiq in Germany, so definitely today Bouygues Construction is not involved in Germany, neither in construction nor in energy and services.

So definitely for us, it's an opportunity through the acquisition of Alpiq to enter into this market. It's the first step. So before to scale up and to develop massively, our Germany - German footprint, we will manage on the first time Alpiq in Germany and after we will see, so it's a first move. The idea is first to manage properly this first move, after that we will see. But definitely, Germany is a very good market, dynamic one, low risk profile.

So very interesting in the basket of our favorite type of countries. Again, it's the first move. We have to understand very well the country, the way to work in this country before to start buildup.

Christian Lecoq: So about your question about the split of service revenues, you will find all the information in the annex with - all the figures for the year or for last year. For Q1 2018, the mobile service revenue is €719 million and the fixed service revenues is €312 million.

Jakob Bluestone: Great. Thank you very much.

Christian Lecoq: You're welcome.

Operator: Next question Jerry Dellis, Jefferies.

Jeremy Dellis: Yes, good morning.

It's Jerry Dellis from Jefferies here. I have two questions, please. Firstly, on telecom revenue trends, once again you mentioned that Q1 of 2018 benefited to a degree from the May 2017 price increases. I suppose from the second quarter those price increases begin to lap out of the year-on-year comps. So how confident are you the latest round of price increases will be able to sustain telecom service revenue growth at the current levels or should we envisage some form of slowdown into the second half? And then secondly, you have 2019 guidance of telecom free cash flow at least €300 million before working capital movement.

That would appear to rely on a fairly sizable reduction in your CapEx spending between now and 2019. I just wondered if you could walk us through the building blocks of lower telecom CapEx going into the 2019 year, and it would be particularly useful if you could clarify the level of receipts from Cellnex that you're assuming within that 2019 free cash flow guidance. Thank you.

Christian Lecoq: So your first question was, yes, about of new guide - revenue increase for this year. Our guidance we said that at the beginning of this year is to have service revenue increase more than 3% compared to last year.

So as you saw that we are 4.9% in Q1. It is higher than 3%. And so of course it could be at a lower level for the next quarter due to the fact you said that you will have not - at the end of this year should have a comparison impact year-on-year, quarter-by-quarter. About your, of course, free cash flow, so we maintain our target, which €300 million free cash flow in 2019 due to

four factors: first, we'll continue to increase our mobile and fixed customer bases; and second, we will continue to optimize our gross margin and mainly by migrating clients from DSL to FTTH to offset DSL monthly fees; second point - third point, sorry, we will continue to stabilize our cost; and fourth, as you said, we will decrease our CapEx after 2018 due to the fact that it will be the end of the roll-out of our network shared with SFR. One part of your question is will we have some proceeds coming from Cellnex in 2019? Could be - we could have some, but not at the same level than this year or last year, because of, I would say, all the transfer of sites mainly took place last year and will take place this year.

We will have a small remaining part in 2019, but it will be very small.

Philippe Marien: So just a word, we don't reach the €300 million because of massive disposal to Cellnex.

Jeremy Dellis: Thank you, very clear.

Operator: Next question Eric Lemarie from Bryan, Garnier.

Eric Lemarie: Yes, thank you.

I got three questions, please. So first one regarding Colas performance in Q1, should we assume maintenance cost as being particularly strong in Q1? And if this is the case, should we expect on contrary much less maintenance cost in Q2, and maybe a rebound on margins? This is my first question. My second question on Bouygues Immobilier, so reservations are down 15% in value in Q1 for the property development business. Should we expect a decline of reservation on a full year basis, on contrary a gradual catch up in the next quarter? And the last question on Colas actually, could you remind us what is the risk of a stronger oil price on Colas' input cost through the bitumen price? Thank you.

Philippe Marien: So regarding Colas, in fact, the main reason of the lower result compared to one-year ago is definitely adverse weather conditions.

The main consequence of this condition was the fact that we were not able to handle mainly high-hand [ph] pavement activity, so activity with bitumen and asphalt, which are with a higher margin in the business. So rain and freeze and so on, the consequence of that or the fact that low level of activity plus activity with lower level of margin than the regular and normal activity is the main explanation. The explanation is not really maintenance or very specific activities, so that's the first element. Regarding on Colas, your third question was about...

Eric Lemarie: Yes, regarding the oil price.

Philippe Marien: Yeah, the price, oil price and bitumen, yes. In fact, the real consequence of an increase in the bitumen price is the fact that the volume of activity can be reduced, because in fact local authority has a budget in euro or in dollar or in certain currency. And, in fact, if there is an increase in term of bitumen, the price of the works are increasing and so they order less job, because they have a certain amount of euro to spend and not quantity of bitumen to order. So - in fact, there is no impact in term of risk, in term of price margin and so on. The only consequence is less volume.

And regarding the second question - reservation of Bouygues Immobilier, no - yes, we remain with a stable or slight decreased reservation level in [Technical Difficulty] for Bouygues Immobilier. First, we have a very low level of reservation in block, so for social investors and social offices, but for the year, we remain with a good level, but probably more in the third and fourth quarter of the year. And we have a negative comparison effect on the private investors, because in the first quarter of 2017, it was before the presidential election and we had a lot of people using the Pinel scheme, which was not the case in 2018. And we consider that this situation will be not the same for the full year. So definitely, we consider that stabilization or slight decrease compared to 2017 will be the assumption for the full year.

Eric Lemarie: Thank you. Very clear. Thank you.

Operator: Next question Frederic Boulan, Bank of America.

Frederic Boulan: Hi, good morning, everyone.

Couple of follow-ups. Firstly, you flag the opportunity for around the Compaire [ph]. If you can help us a little bit in terms of your ambitions both on the transport layer and the real estate side in the next years and how this could support your back book. Second question around telecoms, you seem comfortable with your level of broadband additions in Q1. I sense a bit of a change in focus towards value as we've seen with your new April offers.

I mean, is this the right understanding of how your thinking is evolving towards a target before very much focus on this 4 million subs target? And then a follow-up on the free cash flow question on telecom. If you can expound that logic at the group level for next year, in particularly around free cash flow in the activities, in the construction activities, and also working cap at the group level, just to see what's going to drive you towards your group free cash flow ambitions next year? Thank you.

Christian Lecoq: I will answer your first question about our broadband net adds for the Q1. Well, we continue to have the target to reach 4 million subscribers as soon as possible. So we'll continue our volume strategy in the Q1, in fact, in the future.

But we don't want to do - I will say that anything to do that, we are very cautious. We want to continue to increase the quality of our service, and of course, our value of Bouygues [ph], so the main focus is still volume.

Philippe Marien: So regarding our ambition on the Grand Paris, in fact our ambition is to use the older Grand Paris project either in infrastructure side or in the property development side, use that to improve our profitability and the result of the construction. So in fact, our target is definitely not to have market share or to reach a level of activity, but to use this great opportunity and to take benefit from this opportunity to increase margin and profitability. It is the reason why we remain and will remain a very selective in all these projects.

And again the target for us is not volume but definitely result. But you have seen that for the beginning, we have taken our relative fair share in term of infrastructure and we have won 11 out of 55 projects development - property development projects. So for us, the Grand Paris will be in the future very visible in our activity, but again driven mainly by a result effect and not a volume effect. Regarding free cash flow, you know that we don't give free cash flow target for the group. But as you have the final net debt, you have the variation of the working cap, you have the level of our CapEx, I think that you are able to calculate yourself the level of free cash flow we are targeting.

Frederic Boulan: Maybe just a follow-up on that last point. So I think you have a - so implicitly you have an increase in EBIT before M&A. So you have I think a cash flow of around €300 million for this year hit by this working cap. My question was more next year was - when you have telecom...

Philippe Marien: Next year 2019, you meant? You mean 2019?

Frederic Boulan: Yeah, exactly, when you have telecom improving, do you also expect construction to improve as well? And how do you think about your medium-term ambition, I think, is to go back to €1 billion?

Philippe Marien: Okay, okay.

Okay, so definitely the move in our free cash flow is an increase year-after-year in the coming two, three years for sure, it's - first is the target, but it will be also the result of the positioning we have in all of our businesses. So definitely, the trend is an increase in term of free cash flow in the coming years.

Frederic Boulan: Thank you very much.

Operator: Next question Thomas Coudry, Bryan Garnier.

Thomas Coudry: Yeah, thank you for taking my question.

One, very quick question, please, on telecom is on the mobile ARPU. Can you please - it's been rather stabilizing these past quarters. Can you give us some insight on the underlying dynamics, is there still a significant impact from lower incoming revenues from SMS and voice? And also, can you tell us how your mix, your acquisition mix is evolving between low-end and high-end, and how you expect it to move looking forward? Thank you.

Philippe Marien: So, keep in mind that we are now, we're accounting about ABPU, so Average Bill Per User or not anymore in term of ARPU. So, yes, incoming revenue is not included in the ABPU.

So you don't have - you will not have this impact for the next - this quarter and for the next quarter. In the figures, we are [indiscernible] about the regulation of the ARPU, yes, we still have the same phenomenon as the last quarter. So, first, impact of promotions in the low end part of the market; second, a mix effect with more low-end subscribers; and third, increase in prices Germany [ph], also in ABPU from the high-end customers.

Thomas Coudry: Okay, thank you.

Operator: Next question, Jonathan Dann.

Jonathan Dann: Hi, there. Thank you for taking - or thanking for taking the question. There is two. One, with the build-to-suit towers you've awarded to Cellnex, does that include already plans for any 5G expansion or do you think you would sort of need more sites for 5G? And then second, it's a clarification on the 4.7 million fiber plugs. Could you just confirm if you were to - of that 4.7, I guess, that's sort of - that's a coverage area, how many of those - how many customers could you connect of that 4.7 million, so I guess there's how many 5 percents?

Philippe Marien: So, about your last question, we have many ways to connect customers.

First, we can buy tranches of 5%. And today we are buying tranches - one tranche is a 5% tranche. But we can also rent the vertical part of the fiber to connect the customers and in this case we don't have to buy the tranches. So we can - on one way, you can buy or we can rent, depending on our market share in each area. Your first question is about the build-to-suit.

Well, we will see if we need more sites, but we are deploying more sites for 5G. So we said, I think it was one year ago, that we are adding 2,000 more sites in the very dense area to cope with 5G need for them. Part of them will be done by build-to-suit, and we are also in the argument with Cellnex with next possibility to add some, and then add some 5G Internet [ph] on our sites without paying more fees to Cellnex.

Jonathan Dann: Okay. Can I ask a Miller McAsphalt question? In the first quarter, is the first quarter loss-making from an EBIT perspective, so that in 2019, we will sort of bolt on an extra loss-making quarter to arrive at the full year impact for 2019?

Christian Lecoq: Yes, Miller McAsphalt has exactly the same seasonality as the Colas business.

So it's not a business with four equal quarters. So definitely we will increase the seasonality of the Colas group because of the acquisition of Miller McAsphalt.

Jonathan Dann: Thank you very much.

Operator: We have no more questions in the line. [Operator Instructions] No questions on the phone.

Philippe Marien: Okay. So, thank you for joining us today. We will be announcing first-half 2018 sales and earnings on August 30th. Should you have any question, please contact our Investor Relation team. Thank you very much and have a good day.

Bye.

Operator: Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.