Operator: Ladies and gentlemen, welcome to the Bouygues First Quarter 2019 Conference Call. [Operator Instructions] I now hand over to Karine Adam, Head of Bouygues Investor Relations. Karine Adam, 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, and Excel file with historical key figures for the group and each business, and the company financial statements.

Statements made on this call are forward-looking statements. Such statements reflect objectives that are based on management's current expectations or estimates 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 the impact of the application of IFRS 16 on the group results as this is effective since the 1st of January 2019. We already provided full year restated 2018 results at the group level with the year-end announcement. In Q1 2018, the impacts are; first, an increase in net profit attributable to the group of €2 million from €12 million to €14 million; and second, a positive impact of €17 million on the current operating loss which is reduced from €111 million to €94 million, mainly at Bouygues Telecom.

A restatement of the 2018 quarterly results that are fully comparable to 2019 is available in the notes to the consolidated financial statements. The new IFRS 16 presentation in the financial statement splits the lease payments between amortization expense and interest expense. Therefore the application of this new standard leads to a discrepancy between the lease expense accounting treatment and its effective disbursement. To continue to treat lease charges as operational expenses, we have adopted new KPIs. First, EBITDA will be replaced by EBITDA after leases including lease expenses.

Second, we will comment on two new indicators in this presentation; current operating profit after leases and operating profit after leases including both lease expenses. And third, we have changed the definition of net debt and free cash flow. We now exclude lease obligations from net debt and repayment of lease obligation from free cash flow and free cash flow after working cap. These new indicators will more closely align with how we manage our businesses. All definitions are detailed in the glossary of the presentation on slide 50 as well as in the press release published this morning.

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 us 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 earnings are not indicative of the group's full year results. Turning our attention to the key highlights of the quarter. First, all three sectors experienced strong commercial momentum confirming their good positioning in their respective markets.

Second, the group current operating profit improved significantly year-on-year, boosted by strong results at both Bouygues Telecom and TF1. In this context, we can confirm the full year outlook shared with you in February. Turning to group key figures on slide 6, sales were up 16% year-on-year at €7.9 billion. This strong increase reflects the positive impact of the acquisitions including notably Miller McAsphalt, Alpiq Engineering Services, and Aufeminin that were not consolidated in Q1 2018. Like-for-like and at constant exchange rates, sales increased by 8%.

Current operating profit and current operating profit after leases improved sharply in Q1 2019 compared to one year ago. Q1 2019 current operating profit after leases was a loss of €73 million compared to a loss of €108 million in Q1 2018. The sharp improvement in first quarter 2019 was driven by the strong results of both TF1 and Bouygues Telecom despite an unfavorable comparison impact at Colas. Colas indeed recorded losses of €37 million in Q1 2019 from Miller McAsphalt due to the usual business seasonality in Canada whereas no contribution was consolidated in Q1 2018. Operating profit after leases decreased slightly year-on-year by €5 million, mainly due to a decline in non-current income from €61 million in last year's first quarter to €15 million this year.

As anticipated, the decline is mostly due to lower capital gains at Bouygues Telecom with 58 sites transferred to Cellnex in Q1 2019 compared to 331 one year ago. Finally, net profit was down by €73 million from a year ago, notably impacted by Alstom's contribution of €33 million in Q1 2019, a €40 million decrease from last year's first quarter contribution. Let us take a closer look at group current operating profit after leases on slide 7. You can see that the €35 million year-on-year improvement came from; first, Bouygues Telecom bearing solid revenue and EBITDA growth therefore Q1 current operating profit after leases rose from €53 million to €84 million year-on-year. And second, TF1 posting a €24 million increase in profitability in the first quarter 2019 compared to one year ago.

Moving to the construction activities, Q1 2019 current operating profit after leases included Miller McAsphalt seasonal losses of €37 million whereas no contribution was consolidated in Q1 2018. Excluding Miller McAsphalt losses, the construction businesses' current operating profit was at €14 million year-on-year. Let us now turn to slide 8 to review the financial structure of the group. You can see that the group maintains a strong financial position. Net debt was €5.1 billion at end March 2019 compared to €3.6 billion at end December, 2018.

The increase mainly reflects the usual seasonal impact from Colas. Net debt increased €1.3 billion from end March 2018 mainly due to the acquisitions of Alpiq Engineering Services by Bouygues Construction and Colas, Aufeminin by TF1 and Keyyo and Nerim by Bouygues Telecom. I remind you that we expect net debt of approximately €3.7 billion at end 2019 at the group level, stable compared to 2018. Please keep in mind that this amount does not include the payment of a €5.5 per share dividend that will be proposed by Alstom at its shareholders' meeting in July. Owning close to 62.1 million Alstom shares Bouygues should receive €341.5 million in Q3 2019.

As previously mentioned, net debt was €5.1 billion at end March 2019 up €1.5 billion compared to end December 2018. The increase over year-end is mainly explained by the traditional seasonality at Colas and an outflow of €157 million in acquisition and disposal coming mainly from; first, the acquisition of 100% of Nerim shares and the success of the takeover bid of 85% of Keyyo in March 2019 at Bouygues Telecom; and second, the acquisition by TF1 of De Mensen, a leading Belgium audiovisual producer. You can also see that change in operations is stable in the first quarter of 2019 compared to the first quarter of 2018. Turning to the breakdown of operations on slide 10. You can observe that we have highlighted a new box on the graph called repayment of lease obligations.

This new presentation will help you calculate the net cash flow after leases. This indicator is more relevant than the net cash flow as it aligns lease expense accounting treatment with its effective disbursement. At €124 million net cash flow after leases year-on-year was stable. Net CapEx was up €68 million compared to Q1 2018 mainly due to Bouygues Telecom. While gross CapEx year-on-year was steady, proceeds related to the sale of sites to Cellnex were lower than in the same period last year as already explained.

And last, change in working capital requirement was stable in line with our full year expectations. I will now turn the review of operations starting with the construction businesses. Let's begin with the backlog on slide 13. In the first quarter, we maintained good momentum with the backlog at a record level of €34.4 billion at end March 2019 up 9% year-on-year and up 4% at constant exchange rates and restated for major changes in the scope of consolidation. Overall the share of order book in international markets remains unchanged at 61% from end December 2018, but higher than 57% recorded at end March 2018.

The backlog remained stable in France as you can see on slide 14. It reached €14.6 billion at end March 2019 compared to €14.4 billion the previous year after restatement in 2018 of Axione's backlog following the deconsolidation of the business. The backlog at Bouygues Construction was €8.5 billion up 2% excluding Axione. At Colas, the backlog reached €3.8 billion at end March 2019 increasing 7% over the previous year which reflects growth in rails and roads in France in a pre-election year. Looking at Bouygues Immobilier, the backlog was €2.3 billion at the end of the first quarter a decline of 9% compared to last year reflecting as anticipated the decrease of the French residential market as well as the rescheduling of some commercial projects that should be signed in Q4 2019.

Turning to slide 15, you can see that in international markets the construction businesses remained strong. The international backlog was up 19% year-on-year and up 6% at constant exchange rates and after restatement for major changes in the scope of consolidation. Some significant contracts booked in Q1 2019 include the University of Brighton, Moulsecoomb Campus for €181 million and a rail maintenance contract in the UK for €60 million. Now let us turn to the key figures in the construction businesses on slide 16. Sales were up 17% year-on-year and up 8% like-for-like and at constant exchange rates.

As usual first quarter earnings are not indicative of full year's results. Current operating profit after leases was a loss of €213 million in first quarter 2019 a decrease of €22 million compared to the first quarter of last year. Colas current operating profit after leases benefited from growth in road in France and improvement in specialized activities thanks to recovery measures especially in rail in France. This good performance was able to offset the negative contribution from Miller McAsphalt's operation which recorded a loss of €37 million this year, while they were not consolidated in the first quarter of last year. Bouygues Immobilier's performance was negatively impacted by low activity in commercial property development as projects should be finalized in Q4 2019 as mentioned previously.

Furthermore, a buoyant French market related to 2017 peak reservations has strained resources resulting in pressure on margin. Now, let us move to TF1 on slide 18. I will briefly review TF1 since they have already released earnings on the 29th April 2019. Sales were strong in Q1 2019, up 11% to €554 million. More specifically, we can mention first, the acquisitions in 2018 had a positive impact notably in digital with Aufeminin; second, that TF1 had good performance in linear and non-linear broadcast ratings; and third, you can say that premium agreements signed with operators contributed incremental revenue.

On the chart, you can see that current operating profit rose by €24 million. And current operating margin increased 3.6 points to 11.4% as TF1 maintained tight control over costs of programs. For the year, TF1 confirmed its target to double-digit current operating margin. Now let me turn the call over to Christian.

Christian Lecoq: Thank you, Philippe.

Bouygues Telecom published a very good first quarter set of results. Let's start with the commercial performance on slide 20. You can observe that Bouygues Telecom commercial momentum remained very good in both mobile and fixed during the quarter. In mobile, the market was as agitated than one year ago as shown in the recent release of ARCEP postpaid figures. Although there were some promotions in the first quarter 2019, the price of the plans was higher at €10 per month compared to €5 last year.

Therefore, the level of postpaid gross add and churn were significantly lower than in Q1 2018. In this context, we won 459,000 new mobile customers in the first quarter of 2019, of which 149,000 were new plan customers excluding MtoM. At end March 2019, Bouygues Telecom had 11 million customers excluding MtoM, a 26% increase compared to four years ago. This success is the result of our strategy in mobile to differentiate through the quality of our 4G network and through our customer experience. As a matter of fact, we are beginning to see the first positive signs of the core scientific program launched in 2018 for more seamless user experience.

In fixed FTTH net adds have accelerated again this quarter. Bouygues Telecom won 94,000 new FTTH customers in the first quarter of 2019. With 663,000 FTTH customers at end March 2019, our FTTH customer base has doubled compared to one year ago and represents 18% of our fixed customer base. We expect this positive trend to continue supported by an increase in market premises and the success of our offers. Indeed at end March 2019, Bouygues Telecom had a total of eight million marketed premises.

The number of premises marketed will continue to accelerate in 2019 to meet our goal to market 12 million premises by end 2019 and 20 million premises by 2022. Overall, the total customer base reached 3.7 million broadband users at end March 2019. Slide 21, highlights the strong results of Bouygues Telecom in the first quarter of 2019. Revenue growth was solid with total sales up 13% and sales from services, up 6% year-on-year. Sales benefited from the continued growth of our customer base and the ability of Bouygues Telecom to stabilize mobile ABPU at €19.2 per month for two years in a row.

EBITDA after leases rose significantly by €50 million in the first quarter of 2019, compared to the same period last year. The margin of EBITDA after leases on sales from services was up 3.2 points to 27.4%. However, operating profit decreased by €14 million, compared to the same period last year due to lower non-current income, which is mainly related to the transfer of few work sites to Cellnex in Q1 2019, compared to last year as previously explained by Philippe. Gross CapEx is stable at €327 million and we confirm our expectations of less than €1 billion gross CapEx in 2019. I would like now to focus on our B2B segment.

Bouygues Telecom had finalized the acquisitions of Keyyo and Nerim in the first quarter of 2019. The key characteristics of the acquisitions are detailed on Slide 22, including summary financial data defined on market focus. Keyyo provides Bouygues Telecom with simple, reliable and competitive solutions for SME and SOHO while Nerim brings expertise in core network, voice IP and hosting services. Those two acquisitions allow Bouygues Telecom to accelerate its development in the SME market in both mobile and fixed. Keyyo has been fully consolidated by Bouygues Telecom since January 1st of 2019, following the acquisition of 43.6% of its share.

The takeover bid that followed exceeded the 85% holding threshold. As a result, a public tender offer followed by a squeeze-out for all outstanding share is now taking place. Nerim was acquired on March 13 of 2019 and will be fully consolidated in the group's accounts as of the second quarter. The total price base of this acquisition is around €120 million. The first goal of this acquisition is to increase Bouygues Telecom's market share in the SME and fixed markets.

And the second goal is to expand our addressable connectivity market in growing new segments. As of today, Bouygues Telecom is the third operator in the €7.5 billion BtoB connectivity market as shown on slide 23. The global French BtoB market represents an overall value of €30 billion,

and includes: first, hardware supply, for example with Cisco; second connectivity, which is the core market of Bouygues Telecom and where we are the third operator; third, managed services, which is closely related to telecom; fourth, network security; fifth, cloud, for example with AWS or OVH; and sixth, IT applications with Microsoft. Without seeking to directly compete with the big leaders in the sector, Bouygues Telecom is focused on expanding its footprint beyond connectivity to address managed services, network security and cloud services. This represents an additional addressable market of €12 billion.

Slide 24 presents Bouygues Telecom market share in the connectivity market. You can see on the two graphs, how the €7.5 billion market is split between small and middle enterprises and large companies, and between fixed and mobile. Bouygues Telecom has built a strong position in the large companies mobile market, based on the quality of its 4G network with around 30% market share. In the fixed, it has remained a small player so far. In the SME market, Bouygues Telecom's market share is quite low in both mobile and fixed, providing opportunity for growth.

Keyyo and Nerim will help us achieve this target. I will now explain our strategy to address the connectivity market and to expand into services related to connectivity. Going to slide 25, the goal of Bouygues Telecom Enterprises is to provide customer global offer, including connectivity-related services. We planned the acquisitions of Keyyo and Nerim to address the SME segment. And in the large company segment, we will partner with well-known companies.

In the connectivity core market, Bouygues Telecom will continue to develop very high-speed offering, thanks to its best-in-class network. More specifically, for large companies, we will rely on our partnership with Telefonica. To summarize, Bouygues Telecom Enterprises has three strategic priorities for the

coming years: first, to be a leading connectivity operator with enriched service offerings directly or through partnerships; second, to expand in the small and middle enterprises market; and third, to reinforce our positioning in large companies. Thanks to this strategy, we expect Bouygues Telecom Enterprises to contribute to the growth of Bouygues Telecom in the coming years.

Philippe Marien: Thank you, Christian.

I would like to briefly comment on the financial statements. We have already looked at sales on slide 6. The line, other operating income and expenses on slide 27, shows a decrease of €40 million year-on-year. This includes the transfer of fewer sites to Cellnex at Bouygues Telecom with 58 sites transferred in Q1, 2019, compared to 331 in Q1, 2018. Cost of debt is stable year-on-year.

Turning to slide 28, income tax was €25 million compared to €54 million one year ago. As usual, changes in income tax expenses in the first quarter is never relevant, because of the very low level of tax base. The negative change in associates and joint ventures line is explained by Alstom's net contribution. As announced, Alstom contribution was €33 million in the first quarter of 2019 versus €73 million in the same period of last year. As you can read on slide 30, 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] We already have a question from Nicolas Colisson, HSBC. Nicolas Colisson, I give you the floor. Please go ahead.

Nicolas Colisson: Thank you. Hi. I've got two questions. One to start with construction, can you tell us a bit more on the next steps regarding the Grand Paris? And what is the timing on the big next steps, and when you can win new projects? And in telecoms, just going back to your strong fiber net adds, I wonder if you could tell us what is the mix between co-investment and rental in your net adds, but also in the total base? What is also the dynamic between very dense and less dense area? And very last, just to come back on CityFast, your fiber infrastructure operation, can you precise what are the financial flows between CityFast and Bouygues Telecom? Thank you.

Christian Bouygues: Good morning, Nicolas.

First about the mix between co-investment and rentals, we can't discuss this information as this information is moving quarter-after-quarter. So, we do not give any figures on this part. Your third point was about CityFast. So as you know, we are building the infrastructure and the infrastructure is based by CityFast. So we get some revenue coming from CityFast.

But of course, we have a certain OpEx and the margin is quite small, so very small impact on EBITDA. And I can't remember, what is your second point. It was...

Nicolas Colisson: It was the dynamic between very dense and less dense area.

Christian Lecoq: While we are setting FTTH offers on all territories, the dynamic is very good on both.

There is no big difference between very dense area and middle dense area.

Nicolas Colisson: Okay.

Philippe Marien: So, regarding the Grand Paris, in terms of new attribution, new tenders, so mainly the main decision will be on Line 15 East and West to two packages and the result will be probably more beginning of 2020 than before the end of this year. So that's for the two large next packages. On Line 18 you have some smaller lots.

The Lot two will be -- is expected in this year for the Lot 2, so [indiscernible] portion. For the two others so the one and the three all these tenders were in – are in process but we have not the final result. And both of them are for the time being in an old position. So clearly, we don't anticipate big news before end of this year, but more probably beginning 2020.

Nicolas Colisson: Okay.

Thank you.

Operator: We have another question from Josep Pujal, Kepler Cheuvreux. Josep Pujal I give you floor, please go ahead.

Josep Pujal: Josep Pujal. I have three questions please.

The first one is on Colas. In Q1 2018 you had some difficulties in rail and other areas. Do you have a view on how much those losses have been cut? So in the €37 million improvement in Colas EBIT if we exclude the year-end Miller McAsphalt deterioration so this is how you present it how much is the recovery of these sources of losses? I have other questions but you want them all now or one by one?

Philippe Marien: As you want Josep. Good morning. So regarding the difficulty of Colas, clearly, we have taken a series of measures to deal with all these difficulties.

Clearly, the positive impact in the Q1 2019 is very small in fact because the most important difficulty came during Qs 2, 3 and 4 in 2018. So the improvement is mainly due to a very good situation in the roads activity in France.

Josep Pujal: Okay. Still on Colas is the margin improvement the key focus, or is it a combination of top line growth and profitability? Because when I see the order book which is very strong plus 18% part of that is external growth. But even if we look at like-for-like its plus 11% one could say that okay this is not I would say as selective as it could be, yeah? And maybe if you grew your order book by less you could make sure that the margins embedded are even higher.

So is this the right way to think about that or that margin is not only the key focus, or how to – how should I see that?

Philippe Marien: Yeah. You know that in a business with a fixed-cost basis it's a little bit different than a business with a pure viable cost. So clearly in Colas, it's very important to have a certain level of activity, because you have a lot of fixed costs, the asphalt plant, the carry of the equipment and so on. So clearly, we say always that for building and steelwork it's very important to be focused only on the quality of the new order. For Colas, the situation is a little bit different, because you need to have sufficient level of activity to reach at least breakeven.

And when you reach breakeven after that you are in a very good situation to increase your margin. So the way to increase the margin in the Colas business is obviously to manage your cost, but also to have a very good level of activity. It was the reason why in 2018, it was more difficult to have a good level of margin, because of the lower level of activity. It's the contrary this year, probably for the full year thanks to a good level of activity. So we can say that, we focus more on volume than on margin.

In Colas, you need to have a certain level of activity to increase your margin, because it's a fixed-cost business.

Josep Pujal: Okay. Understood. And one on real-estate please. The margin was cut to half in Q1.

I think that the guidance that you give for the full year is a margin drop of around 1%.

Philippe Marien: One point.

Josep Pujal: One point, okay instead of three. So this remains valid no? It's not that the site…

Philippe Marien: Absolutely, absolutely, absolutely, there is no change in our guidance. The fact is that in Q1 2018 we had some significant commercial operation with a very high level of gross margin, which is not the case in Q1 2019, first and these elements will not be for the full year obviously because we hope to get some good contracts before the end of 2019 in commercial – in the commercial activity.

And the second element is for the full year for the first quarter, but also for the full year, a pressure on the cost of works, because of the bouyant situation. And this effect will continue during all the year and it will be the explanation at the end of this year to a degree that's no more than 1% on the margin in related activity.

Josep Pujal: Okay. Thank you very much.

Philippe Marien: Thanks.

Operator: [Operator Instructions] We have another question from Eric Lemarié from Bryan, Garnier. Please go ahead.

Eric Lemarié: Yes. Good morning. Just a couple of questions then, first on, Bouygues Energy & Service, could you maybe give us some rough indication of the profitability of Bouygues Energy in Q1? What about the contribution of Alpiq maybe? And are you happy with the integration of Alpiq Engineering so far? This is my first question.

And, I got a second question on Colas. You mentioned 2020 is the year of election in France. Are you a bit afraid of a slowdown of the roadworks and market in France next year? Thank you.

Philippe Marien: Okay. We are afraid, because it's the usual cycle in terms of road activity.

You have peak of activity the two years before election, then less incentive activity during the election year. And you come back to a good situation, the year plus two or plus three after the election. So, we are not afraid. It's the normal cycle. And we manage that for four years now.

And we will see exactly the same trends in the coming year. Regarding the road activity, on the municipal part of the business, don't forget that. And in top of that, we will have started in 2020 and after, the positive effect of the Grand Paris developments, which will be good for Colas either for rail, but also for road in the future. So clearly, we will consider that we will have obviously a decrease in the road activity regarding, the municipalities activity, but an increase in term of roads around the Grand Paris development.

Eric Lemarié: And do you think the…

Philippe Marien: And which…

Eric Lemarié: …do you think the increase from the Grand Paris will offset the decrease from municipalities?

Philippe Marien: Well, we will see.

It's always very difficult to have a long-term view in Colas, because the backlog is very short. So, we will discuss 2020, beginning of 2020.

Eric Lemarié: Okay. Thank you.

Philippe Marien: Regarding energy and services, obviously, we are -- we consider that we are on the right way, to recover a good situation for this activity within Bouygues Construction.

Clearly in the first quarter, we moved from a negative situation, with a negative margin in Q1 2018, to a positive one in the first quarter of 2019. And the profitability was very low obviously, 1.1%. But positive compared to a negative figure one year ago. And the...

Eric Lemarié: You said 1.1% right?

Philippe Marien: Yes.

Eric Lemarié: Yes. Okay.

Philippe Marien: I said that.

Eric Lemarié: Yes.

Philippe Marien: … which is the right figure.

Regarding integration, nothing specific to say, nothing more than, the beginning of the year. The process is ongoing, with no particular surprise for this integration.

Eric Lemarié: Great, thank you very much Sir. Thank you.

Operator: We have another question from Mathieu Robilliard from Barclays.

Mathieu Robilliard I give you the floor. Please go ahead.

Mathieu Robilliard: Yes. Good morning. Thank you.

I had a question on construction first, about the order intake in France, which if I heard correctly was down 29%. I wondered if you could give us a little bit of color in that number, and how you expect it to develop throughout the year. And second, I had a question on telecoms. If I look at the slide where you show B2B exposure, I mean rough graph, I get to maybe revenues of around €400 million. Is that correct? And can you also give us what kind of growth rate you're experiencing in that segment for the moment? And lastly, if I may very quickly, could you share what was the loss in Canada of McAsphalt in Q1 2018? Just so that I can -- we can see how the performance has developed in that business between Q1 2018, I understand you didn't own the company and now.

Thank you.

Philippe Marien: Okay, so first, telecom?

Christian Lecoq: On telecom on the B2B side, sorry to reconfirm the same thing, but we do not disclose the B2B overview. But I think we gave you some more detailed information as usual today first. And our main goal is to increase our market share in the fixed segment. Our goal is probably to develop our market share in the fixed, to increase our mobile market share for the so-called business and the SME.

And also to get some more revenue from -- as we explained in the presentation from the service linked to the connectivity market.

Philippe Marien: So regarding your construction question, for Miller McAsphalt, we had no figures for the first quarter 2018, because the reporting of Miller McAsphalt, before the acquisition was not on the quarterly basis. So we don't know what was the result for the, first quarter of 2018. But obviously, obviously as usual, in this activity and this is the case for the Colas activity, it's clearly a loss during this period, but in our figures nothing obviously, because we have only consolidated Miller McAsphalt in the second quarter of 2018. Regarding the evolution of the new orders for building and civil work in France, you are right, the figure is decreasing.

Two reasons for that, the first one, as I have mentioned, there is no -- and we don't win any big contracts regarding the Grand Paris program. The big loss will be more for 2020. That's the first explanation. And the second one is the fact that clearly. And we said that previously.

Based on the fact that, we have reached a high level in term of backlog at the Bouygues Construction level, clearly, we are more and more selective in term of new orders. And so, there is no reason to enter into a very harsh competition only to get contract. We don't need a good -- very high level of new order because of the level of our current backlog, which is good in France and very good outside France. So clearly we flagged to selectivity and quality. And clearly to come back to the question of the results clearly we want in building and civil works to be very selective and to prefer margin than revenue.

Mathieu Robilliard: Thank you very much.

Operator: We have another question from Jakob Bluestone from Credit Suisse. Jakob Bluestone, please go ahead. The floor is your.

Jakob Bluestone: Hi.

Good morning. I've got a few questions as well. Firstly, on the telco side, can you maybe comment a little bit on what sort of margins you think you'll generate within the B2B segment? So is it do you think a higher or lower-margin area compared to the consumer side of your business? I guess, if I look at the operating margins for the two acquired assets, they're actually pretty similar to what you do on your current business. So sort of any color you can give on whether you think this will be accretive or dilutive to your margins. That's the first question.

Secondly, on -- can you maybe comment a little bit on the Alstom dividend? What do you intend to do with the proceeds? Do you see yourselves passing them on to shareholders? Is it just going to be for deleveraging? Are you sort of looking at any M&A? Just sort of any thoughts on how you might use those proceeds. And then finally, just on Colas. As mentioned earlier, you obviously have a very strong performance in French roads. I think your French roads revenues were up 17% this quarter as a result of the sort of strong pre-election market. I think typically the local budgets are set around the beginning of the year.

So you've probably got a little bit of additional color now on what the outlook is for this pre-election boom. I mean, should we think of that sort of plus 17% as representative for how big a surge we'll see this year, or how should we think about the French roads business for this year? Thank you.

Philippe Marien: Okay. So regarding your last question, unfortunately, we don't anticipate so huge increase for the full year. In fact, the good figures for 2000 and -- the first quarter of 2019 is linked to first good momentum in term of road activity in France, thanks to municipal election, but also because of a very, very good and smooth weather during the winter, which was not the case in 2018 by far.

So the combination of good weather and good climate condition and a good general trend, the result is a very, very good growth in the first quarter. But definitely, it's not representative of the full year. And it's big growth, but big growth on a relatively small basis. The first quarter is not one quarter of the full year net sales for Colas. But you are right, the trend remains good, and we anticipate not double-digit, but single-digit growth in the road activity in France for 2019.

All the budget are in place and there is -- we have no fear on the level of the growth in the road activity. Second question, regarding the dividend of Alstom. So it's a very good news obviously to receive this more than €300 million. Nevertheless, it's not a massive amount. €300 million it's a big, big amount of money, but not sufficient to think about return to shareholder or share buyback.

And so we will use these proceeds for the refinancing of our existing bonds and for development and some acquisition if we have some good opportunity, which is not the case for the time being on the table. So we will use this money on the regular -- on our regular activity and nothing specific regarding this good amount, but not massive amount.

Christian Lecoq: So about your question about telecom and the B2B, the margin generated by the B2B segment; first, I would say that we do not add an EBITDA for the B2B activity compared to the B2B, as we do not split our fixed assets, for example network of SG&A between B2C or B2B -- and B2B. But excluding this fixed asset, I would say that the gross margin in the B2C and in the B2B are quite comparable and we do not have a big discrepancy between those two activities. About the effect of the two acquisitions, as you can maybe see in the slide, the EBITDA of the operating margin for Keyyo and Nerim is around 10%, because they do not have this -- any network assets.

And so it will be a dilutive impact at the beginning for us. And it will take time to move them from assets to our network or to our own IT and so on. So at the beginning, we'll have dilutive impact due to that and also due to integration cost that will add during this year and maybe a part of next year. And after that the effect will be of course positive.

Jakob Bluestone: That's very helpful.

Thank you.

Operator: [Operator Instructions] We have another question from Remi Adam from ODDO BHF. Please go ahead.

Remi Adam: Hi. I have one question on the construction side.

In Q1, you have organic growth of 1.2%. Could you help us understand what contribution you have from energy and services versus building and civil works and how it is splitting between funds and international markets? And the question on Bouygues Telecom is as one of the actors on the French market is mentioning an EU directive from 2020, which could have a material impact on the subsidized markets. What's your view on this? Thank you very much.

Christian Lecoq: So about the subsidy a judgment was taken on April of this year in the case between far off --Free between against SFR. We weighed carefully the judgment.

And we think it does not imply the end of the subsidy and the judgment confirms that only SFR specific formal offer. So today we are not affected by the decision and we continue to use subsidy to be able to offer to our client’s handsets.

Philippe Marien: So regarding your construction question, for Bouygues Construction, the 1.1% roughly growth same perimeter and same exchange rate, the international is a growth of 7% and saw a decrease in the French activity. And regarding split between energy and services and building and civil, I have not the figures in mind. So Karine will answer later on on your question.

Remi Adam: Thank you.

Operator: We have another question from Frederic Boulan from Bank of America. Please go ahead,

Frederic Boulan: Hi good morning. Firstly on the construction side to follow up on previous comments on the acquisitions you've done on Alpiq and Miller, it was interesting to see the contribution in Q1. If you could just remind us in terms of incremental revenue and EBIT you see for the two assets Miller and Alpiq, I guess in 19 and in 2020.

So, on a normalized basis where you see those investments going once you're done with the integration costs that you're incurring initially. And then secondly, just to come back on the very strong service revenue performance in telecoms. You mentioned your build ARPU remains stable at more than €19 despite very constant promotions at around €10 on 40 gig or so of data. So could you say a little bit what are the actions you are taking in terms of the back book pricing to limit the dilution from the new customers? Thank you.

Christian Lecoq: So I will answer your question on telecoms.

So about the step from service increase, the increase as you said reflects the positive volume effect both in mobile and fixed and second, the stability of mobile ABPU. We have been able to stabilize our mobile ABPU for now two years and we -- I think we already explained that. We had many promotions during two years or more than that. But in the same time, we have been able to increase our prices on our installed base so for our existing clients, mainly notably similarly we're building market, but on the premium offers where we are able to offer -- we are in a -- I would say more and more and more strategy, more for more strategy, so we are able to increase prices by offering more services or opening to the bundle to the client. And we did that last year and so that's why you have in the Q1 2019 you have the full effect of the increase in pricing we made last year.

Philippe Marien: Yes regarding construction, your construction question, Karine if you have some details?

Karine Adam: Yes. So regarding Colas the -- so regarding the sales at Colas in Q1 2019 the contribution itself for Miller, McAsphalt plus Alpiq Engineering is roughly €100 million roughly. And for the construction, I will give you later the numbers for that okay?

Frederic Boulan: Yes, but maybe more broadly...

Karine Adam: Because I don't have it in front of me.

Frederic Boulan: Okay.

Thank you. But maybe more broadly now a couple of quarters after the acquisitions, if you can share versus the initial numbers you shared in terms of annual revenue and EBIT for...

Philippe Marien: Well, for Miller McAsphalt, it's the same. No change. We confirm what we have said at the period of the acquisition, so no change.

And for Alpiq, again no change in term of revenue and clearly in term of margin, we said that we will be able to increase the total margin of energy and services in the coming two, three years to reach the 3.5%.

Frederic Boulan: Okay. Thank you very much.

Operator: The next question is from Jerry Dellis from Jefferies. Jerry, please go ahead.

Jerry Dellis: Yes, good morning. Thank you for taking my questions. I've got two questions please. First question is also in terms of the telecom pricing. You were describing a few weeks ago obviously how the promotional environment in the market was easing off a little bit.

I just wondered if you could clarify what's been happening very recently that we're sort of halfway through Q2. Is that still the situation that you see? And are you confident that you can continue to sort of extend the more for more pricing approach on the main brand into further such list price increases over the next few quarters, or have you essentially done the more for more price increase for 2019 and therefore the next pricing action wouldn't be until we get into next year? And then my second question has to do with the 5G spectrum auction. It looks like the government has drafted a letter to ARCEP, setting out some of the basic parameters for the awards process. And it's reported that that does include within it as expected some fairly robust conditions around geographical network coverage including in some of the more rural areas. With that in mind, perhaps you could clarify for us how much visibility you feel Bouygues Telecom has on its CapEx budget beyond the year 2020? Thank you.

Christian Lecoq: Well your first question is about the level of competition in the market in Q2. So it is the same as in Q1, no change. You always have some tactics offer made by your old competitors, but no big move. And everything is -- you don't have very low prices. Everything -- when you have some promotion everything is around €10 per month, so no big impact.

About the -- our ability to continue to increase our tariffs for our existing customers, well we will see what we'll be able to do this year, but this year, we will we were so adverse, there is a positive impact of what we did last year, so we will see for the coming quarter. Your last question was about the frequencies, the 3.5 frequencies. Well, we have exactly the same information as you. We are working for the ARCEP guidelines; it should be communicated at the end of this month, so maybe beginning of June. Then there will be a public consultation on coverage in June.

So, as we do -- as a result of this coverage, of this consultation coverage it's difficult to know what will be the operators' obligation. And then the allocation process should be at the end of this year. About our CapEx for 2020, we do not give any guidance for CapEx for 2020. Our guidance is on the free cash flow and it is to be at more or less than €300 million, excluding, of course, the cost of [indiscernible] if we have to pay the 3.5 gigahertz in 2020.

Jerry Dellis: Thank you.

Could I ask you a quick follow-up please? The 6% service revenue growth rate that Bouygues Telecom reported this quarter, would you view that as being a, sort of, sustainable level for the balance of 2019? Was there anything particularly exceptional or one-off in nature within the Q1 result, please? Thank you.

Christian Lecoq: Okay. So the 6% service, 6% is not at the same perimeter. So excluding Keyyo, I think, it's only 5.3% and ION use that plus, Q1 last year, it was around 5% so we are quite the same speed as last year. So it's not -- well, it's a good result, but it's not a tremendous result, I would say.

And we do not give any guidance for this year. But, of course, we expect to be at more than the old.

Jerry Dellis: Thank you.

Christian Lecoq: So positive increase for cell phone services.

Jerry Dellis: Thank you.

Christian Lecoq: But I remind you that our goal is to be at €300 million free cash flow. And the cell phone services increase will help us to achieve that.

Jerry Dellis: Thank you very much.

Operator: As a reminder to our participants, please limit yourself to two questions please. We have another question from Andrew Lee from Goldman Sachs.

Madam, please go ahead.

Nicola Gifford: Hello. It's Nicola Gifford from Goldman Sachs. I have one question on your telecom business. You mentioned the lower non-current operating profit in the 1Q, mainly related to the capital gain on the transfer of such to Cellnex.

I was wondering, how tower sales to Cellnex and other players have impacted profitability, especially -- or more specifically, at the EBITDA level. Is this an overall benefit or headwind? And going forward, could you perhaps quantify the overall impact on your EBITDA from tower sales at large? Thank you.

Christian Lecoq: So about the tower sales, the profit, the capital gain is not recorded in the EBITDA. You have that in the non-current income, so between current operating income and operating income, so here I think that the figures are very detailed in the slide. The annex you have the exact profit we get from Cellnex.

And on the EBITDA level, it's more a loss as when we have sold the towers to Cellnex, then we have to pay rental -- rents to Cellnex each month or each quarter recorded in the EBITDA. So negative impact in EBITDA, positive impact in the year, non-current income.

Nicola Gifford: Okay. That's clear. So positive impact for this quarter.

Christian Lecoq: Not in the EBITDA. Positive impact in -- it is a positive -- sorry, compared to last year, it is a negative impact as we sold less towers than the last year. But you have -- in absolute value, you have a positive impact in the non-current income not recorded in the EBITDA.

Nicola Gifford: Yes, very clear. And that negative impact on EBITDA is that something that –

Christian Lecoq: Yes.

Nicola Gifford: -- will continue going forward then, if you've got rental?

Christian Lecoq: Yes. Yes, of course. Of course.

Nicola Gifford: Thank you.

Operator: We have another question from Stephane Beyazian from MainFirst.

Please go ahead.

Stephane Beyazian: Thank you. One question on Colas, if I can. The good weather was quite obvious in the first quarter in Europe. But I can see, as well, that North America pro forma was up by 10%.

So I'm just wondering, is that entirely also due to positive -- good weather conditions? Is this a boost from Miller, or is there also pickup in North American market that we've been expecting to do better for quite some time? And I've got a second question for us on telecoms. We've seen Orange doing quite many acquisitions in cybersecurity, in cloud services. I was just wondering whether you think that with Telefónica Global Services you think you're addressing the full scope of services and that Orange is not trying to increase again the gap in terms of services versus what you're doing and whether that could be a challenge or not in your plan. Thank you.

Christian Lecoq: So, our partnership with Telefónica is mainly to address very big companies, worldwide companies.

Bouygues Telecom is offering to these companies services in France and Telefónica is doing the same abroad. About our strategy in the B2B, we consider that our core business remains telecoms and that's why we decided to invest in -- to acquire Keyyo and Nerim and not acquire more cloud services companies and things like that. And also about -- I think, you had a question about the fiber. We are rolling out our FTTA and FTTO infrastructures to be able first to link our mobile Internet to our core network by fiber; and second to address with our own infrastructures companies with FTTO offers.

Philippe Marien: So regarding Colas in North America, clearly, we are benefiting from good weather condition for sure, which is part of the explanation and also a relatively good structural situation.

But don't forget that the figure of the first quarter, especially for North America is very, very small compared to the full year.

Stephane Beyazian: All right. Thank you.

Philippe Marien: So it's a good news, but clearly we speak about very -- and especially for North America, very small figures.

Stephane Beyazian: Okay.

Okay. Thank you. So you wouldn't extrapolate to North American market growth returning to positive particularly this year, is that so?

Philippe Marien: Yes.

Operator: We have another question from Alexandre Roncier from Exane. Sir, please go ahead.

Alexandre Roncier: Hi. Thanks for taking the question. I would just like to come back on the other revenue line for Bouygues Telecom. And if you can tell us a little bit about the change year-over-year, and more specifically the drop through to margin, and what kind of mix we're seeing in profitability? Secondly, still on telecom, if you could share us a little bit more about the net adds and the fulfillments of your 4G box and how has that evolved over the last few quarters? Thanks.

Christian Lecoq: So your first question was about the sales from services.

Well...

Alexandre Roncier: It's more. Sorry, it's more about the other line of revenue. So ex-services, your revenue in Bouygues Telecom.

Christian Lecoq: So about other revenues, so the difference between the total revenue and the services business?

Alexandre Roncier: Exactly.

Christian Lecoq: We've got two things. The first one is the revenues we had from CityFast for the construction of the FTTH infrastructure in the way that turned around. And second, we had in this quarter an increase in handset revenue due mainly to higher device prices and the catch up effect. I remind you that we had a low Q4 2018 due to weaker short attendance mainly on the other revenue guidance.

Alexandre Roncier: Okay.

If I may just follow-up on that point, as you mentioned I think at the beginning of the call that the margin impact you were seeing from CityFast was very small. And I'm guessing your handset revenue also on low margin we should think about the progression of EBITDA fully reflecting your change in sales and services revenue.

Christian Lecoq: Yes, exactly. Your second question was about net adds?

Alexandre Roncier: On the 4G box.

Christian Lecoq: Oh, sorry, 4G box.

Well we still have some good commercial performance for 4G box. No big change in dynamics with this offer and we are still very happy. The LGBT however is evolving in parallel with our advanced network and now it includes around 10 million arms. Our customers are very satisfied with this offer. So today we're satisfied, very satisfied.

So it's a good thing for us. A good offer.

Alexandre Roncier: That's very clear. Thank you very much.

Operator: [Operator Instructions] We have another question from Thomas Coudry from Bryan Garnier.

Sir, please go ahead.

Thomas Coudry: Yes, hello. Good morning. Just one question on telecoms please. I would like to have your view on the fixed market and where the fixed market might be going.

Because you have been the price leader in the fixed market for several years now. Orange is pushing ahead with its 2P offer and on the other hand of the market, Iliad has launched its delta offer. So I would like to have your point of view, if we can really see a market going into premium. And if there is room for price increases there also on the backlog as you are doing on the mobile side or whether we should stick a low price business as far as you're concerned. Thank you.

Christian Lecoq: So about the fixed market, the main subject is the fixed market is moving from DSL to FTTH. It's a big change from now maybe 18 months. About the two of us, one from Orange the 2P offer and the other from Iliad, we do not have a big impact from [indiscernible] but just because it is a 2P offer, so without NTE. And about the delta box from Iliad, we did not have any impact, mainly because of the price I think which is very high. The fixed market now does not have a big competition in this market as it is still the same kind of offers with a 12-month period of promotion, so one year promotion and then the regular price.

The price is mainly evolving to be more at the up, obviously, evolving up yet. But when we are moving customers from DSL to FTTH, we usually offer them a 12 months pay as a promotion so quite -- at the same time you have increase in prices and more promotions due to the migration of customers to DSL -- from DSL to FTTH. As a result, even if our ABPU, we have a decrease in ABPU the fixed -- this Q1 compared to Q1 last year, if you looked at the figure -- if you look at the figures, we have been able to stabilize this ABPU compared to Q4 2018.

Thomas Coudry: Okay. Thank you.

Operator: [Operator Instructions] We have another question from Giovanni Montalti from UBS. Sir, please go ahead.

Giovanni Montalti: Hello. Thank you. Two quick follow-ups.

Previously in -- among the other revenues, you mentioned fiber and assets. You didn't mention the B2C towers you agreed with Cellnex. Any clarification on this point? Thank you.

Christian Lecoq: Yes. This applies to me.

My comment was on the difference in these clients compared to Q1 last year. Last year, we already had a B2C agreement with Cellnex. We still have it, so there is no big change on this subject at this time.

Giovanni Montalti: Okay, clear. But can you give us a broad indication of what's the breakdown between these three elements in your other revenues?

Christian Lecoq: I'm sorry, I do not have the figures.

Giovanni Montalti: Okay. And sorry a very final follow-up another analyst asked previously about the mix of your fiber net adds between wholesale and proprietary network. I understand you don't want to comment on the points. But maybe if I look at slide 33, looking at your targets in terms of coverage in the different areas, so you took out 4.5 million by the end of 2019 in dense areas, 6.5 million medium dense and 1 million in the PIN area. Can you give us an indication of which share of this coverage would be proprietary and what would be wholesale agreements? Thank you.

Christian Lecoq: So in the very dense area I think we presented that last quarter with a big detail on the CityFast agreement. So I would say that half of the very dense area we would be probably -- proprietary of the infrastructures shared with SFR. And the other half it would be rental fixed costs so not wholesale agreement, but the fixed rental cost. On the medium dense area as you know we are able to buy tranches by 5% or to end the infrastructures. So the percentage of customers we have on the CapEx side compared to the OpEx side, I would say is evolving quarter-after-quarter.

When we buy tranches, we are moving customers from a rental agreement to the CapEx, I would say CapEx side. So that's why it's very difficult to have a precise figure on that because it's evolving each month. And the public-initiative network, we are mainly on the rental agreement basis.

Giovanni Montalti: Okay. Thank you.

Operator: It seems that we don't have any more questions. I give the floor back to the company.

Karine Adam: Okay. So thank you very much for joining us today. We will be announcing first half 2019 sales and earnings on the 29th of August.

Should you have any questions, please contact our Investor Relations team. Thank you very much and have a good day. Bye.

Operator: Ladies and gentlemen, this concludes Bouygues first quarter 2019 results conference call. Thank you all for your participation.

You may now disconnect.