Operator: Hello, and welcome to the Bouygues Nine Months 2022 Results Call. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Pascal Grange, Deputy CEO and CFO of Bouygues to begin today's conference. Thank you.

Pascal Grange: Good morning to all of you, and thank you for joining us to discuss Bouygues' nine months 2022 results. With me in the room are Christian Lecoq, CFO of Bouygues Telecom; and Arnaud Godard, Head of Investor Relations. Following our presentation, we will be answering your questions. Let's start with a few recent highlights on Slide 4. On the 4th of October, we completed the acquisition of Equans, a key milestone in the history of Bouygues.

This acquisition closed after we obtained all necessary authorizations under competition and foreign investment laws. Please note that we had already fulfilled the European Commission requirement with the disposal of Colas Rail Belgium on 30th of September, 2022. The acquisition of Equans is a very significant move in the promising energies and services market. Bouygues becomes a world leader in the multi-technical services market, which is at the heart of the environmental, industrial and digital transitions. More specifically, these services offer solutions to optimize energy consumption, a key strategic issue in the current environment.

This new business segment, which combines both Equans and Bouygues' Energy & Services, becomes the largest business segment of the group. Based on 2021 figures, it generates around €17 billion in sales, employs around 97,000 people in over 20 countries and enjoys increased capacity to design and roll out innovative and sustainable solutions and services. I would like to remind you that Bouygues has acquired 100% of the shares of Equans for the final price of €6.1 billion. Equans' net debt at the acquisition date was estimated at €0.4 billion, below the November 2021 estimate. Therefore, the total impact of this acquisition on the group's net debt was assessed at €6.5 billion of which €130 million had been paid to Engie on 12th of May, 2022 upon signature of the share purchase agreement.

On Slide 5, you can see that the Together integration process started from day 1 with a global internal communication campaign. On 18th of October, Equans' top managers met Bouygues' top managers at Bouygues at quarters. The CEOs of each business segment presented their strategy. Immediately after closing, we started the integration process of the Equans and Bouygues Energy & Services team. Our first executive committee meeting took place on 7th of October.

A 2-day workshop was also organized, bringing together the top 120 managers from both business segments to drive an action plan. Jerome Stubler, CEO of Equans and Pierre Vanstoflegatte, CEO of Bouygues Energies & Services, held 8 live chats with staff around the world. Subsequently, Jerome Stubler began his world tour to personally meet the teams. As already described, since the signing of the agreement with Engie in November 2021, everything that could be done within the regulatory constraints have been done in order to move forward faster once the closing was complete. Therefore, from day 1 workstreams between Bouygues Energies & Services and the Equans started by analyzing business segment development, procurement, IT, finance, HR, et cetera.

We were able to start the first actions very quickly, especially the one dedicated to procurement. Indeed, procurement is a key area to improve performance through initiatives such as the alignment of commercial conditions and renegotiation, catalog implementations and bulk purchasing. In France, the process already started with the first set of tangible results expected by end 2022. Other countries have started their review and first actions will begin soon. As explained on Slide 6, on 24th of October, Bouygues completed a new major milestone in refinancing the 2-year syndicated loan used for the acquisition of Equans.

Indeed, Bouygues successfully completed a bond issue totaling €2.25 billion in 2 separate tranches. The first tranche of €1.25 billion for 10 years has a coupon of 4.625%. The economic cost for the group after factoring in pre-hedging amounts to slightly below 2.05%. The second tranche of €1 billion for 20 years has a coupon of 5.375%. The economic cost for the group, after factoring in pre-hedging amounts to slightly below 3.15%.

The strong demand for this issue from bond investors confirms the market's confidence in the group's creditworthiness. Bouygues' credit rating is A3 with a stable outlook with Moody's and A- with a CreditWatch Negative with Standard & Poor's. Therefore, overall, Bouygues have already secured the financing of most of the Equans acquisition. Since May 2022, Bouygues issued a total of €4.25 billion of bonds for an average economic cost of around 2%. Besides this, €869 million were received upon the settlement of pre-hedging instruments associated with those €4.25 billion.

Lastly, we still have some pre-hedging instruments available to cover €700 million dedicated for future financing. The fair value of these instruments amounts to €130 million as of 15th of November, 2022. Let's now turn to the group's 9 months key figures on Slide 7. The group demonstrated once again its resilience in a very difficult environment and confirms its 2022 outlook. The strong backlog in the construction and services businesses offers us good visibility on activity.

Total group sales were up 8% in the first 9 months 2022. Sales were up in almost all business segments and were notably very strong at Colas. Like-for-like and at constant exchange rate, group sales increased by 4%. The 9 months 2022 current operating profit increased by €66 million compared to 9 months 2021. And the current operating margin reached 4.1%, a stable and robust level compared to the level of first 9 months 2021.

Bouygues Construction, TF1 and Bouygues Telecom improved their profitability compared to last year. As already explained, inflation has a dilutive effect on Colas margin, and we will detail this later in the presentation. Net profit attributable to the group was €537 million. Here, I would like to outline 2 things. First, Alstom no longer contribute to this number, while the first 9 months of 2021 included a positive contribution from Alstom of €219 million.

Second, this figure includes net non-current charges of €106 million, mainly related to the 2 major M&A projects we managed this year and therefore, is not representative of our business. In comparison, the first 9 months of 2021 net profit attributable to the group including €90 million of net non-current income, essentially related to capital gains linked to the disposal of data centers at Bouygues Telecom. I would like to reaffirm the group's commitment to its employees. People have already been at the heart of the Bouygues Group. They are our greatest resource and their expertise and dedication drives our performance.

Considering the challenges of the current environment, Bouygues has decided to act in favor of the lowest earning employees in its business segments, both in France and abroad, in order to ease the impact of inflation on the cost of living of its employees. In France, in addition to the annual pay review, several increases in wages have been undertaken in the past 12 months -- in December 2021, March 2022 and September 2022. Furthermore, Bouygues has decided to pay a special one-off bonus to its employees. This bonus is paid to more than 36,000 employees earning less than twice the annual French minimum wage. It represents an amount of around €25 million recorded in current charges and impacting current operating profit.

In the international businesses, measures have been taken case by case and based on the local context, especially in countries experiencing extremely high inflation. Let's now turn to the review of operations on Slide 12. Let's begin with the backlog in the construction and services businesses. The overall backlog at September 2022 was at a high level of €34.2 billion, up 7% year-on-year. This increase in the backlog was driven by Colas.

Bouygues Construction backlog was nearly stable at €20.2 billion, offering a good visibility on future activity with order intake up 9%, of which international markets were up 12%. This momentum was driven by both the normal course of business and the large €475 million contract won in Switzerland in Q3. Colas' backlog was up 30% and up 19% at constant exchange rate and excluding principal disposals and acquisitions. The order intake of Colas increased by 28%. Colas achieved a good commercial performance in roads activity, particularly in North America and Europe.

This was also enhanced by inflation. Furthermore, Colas Rail continued its positive momentum with the award of a new contract for the Birmingham tramline in the U.K. in Q3 for €192 million. This comes after large contracts were already awarded in Q1 and Q2. At Bouygues Immobilier the general market conditions in housing are tightening.

We continue to see a catch-up in building permit issuance in the residential property market compared to the first 9 months of 2021. However, we observed longer timetables for negotiating construction work tenders due to inflation and such delays impact inventory of housing units available for sale, the level of reservations on the backlog. Conversely, clients in commercial activity are still in a wait-and-see mode. As a result, Bouygues Immobilier's backlog was down 16% year-on-year. Let's now look at the construction and services activities key figures on Slide 13.

The construction and services businesses recorded solid figures. Sales were up 9% year-on-year and 4% like-for-like and at constant exchange rates. First, at Bouygues Construction, sales were up 3% in building and civil works. They were slightly down in Energies & Services, but they were stable, excluding activities transferred to the Building & Civil Works segment. Also, please keep in mind that Energies & Services sales growth is impacted by contract selectivity.

Second, at Bouygues Immobilier, sales were down 5% due to a low inventory of housing units for sale. One main commercial project was sold in Q3 2022. And third, at Colas level, sales were up by 18%, driven by Colas' international sales, which were up 30%, led by North America as well as Europe. Of note, in the 9 months, Destia contributed €430 million to Colas sales. Current operating profit of the construction and services businesses reached €517 million stable, compared to the same period of 2021.

First, Bouygues Immobilier's Bouygues Construction margin improved by 3% versus 2.7% in 9 months 2021. This was mainly led by Bouygues Energies & Services, whose current operating margin reached 3.2% in 9 months 2022. Building & Civil Works has also slightly improved to 2.9%. Second, the current operating results of Bouygues Immobilier reflects the low level of activity in residential property market and the limited interest for customers for commercial property. And third, in Q3 2022 Colas had €373 million in current operating profit above the third quarter of 2021, helping the 9 months current operating profit and current operating margin to catch-up compared to the situation in H1 2022.

Nonetheless, inflation still have a dilutive effect on margin. As already explained several times, inflation has dilutive impact on Colas' current operating margin. Therefore, Colas decided to replace its 2023 guidance. Sales in 2022 will be significantly higher than in 2021, boosted by the contribution of Destia higher unit prices for products and services sold by Colas against a very inflationary economic background and an exchange rate effect caused by euro to U.S. dollar variations.

In a complex environment like this, Colas had put in place action plans to offset the impact of cost increases and safeguard its financial performance. Colas expect its 2022 current operating profit to be higher than in 2021. Given the inflationary environment, particularly in countries bordering Ukraine and its dilutive impact on the current operating margin, especially in the bitumen trading business, it is no longer relevant to set profitability targets for 2023 in terms of the current operating margin rate. For this reason, Colas is replacing its target of 4% current operating margin in 2023 with a target for an increase in 2023 current operating profit compared to 2022. Nonetheless, thanks to buoyant fundamentals and the positive impact of a series of transformation projects that have been undertaken, Colas is confident in its ability to reach going forward, the current operating margin rate target it set.

Turning to Slide 16. Let's talk briefly about TF1's results, which were released at the end of October. First, TF1 had a good set of results. The 5% sales increase was particularly driven by Newen. Revenues for the media segment were up 1% year-on-year with advertising revenue down 2%.

This was due to a strong basis of comparison after a solid growth both in Q3 2020 post-COVID and Q3 2021 with a broadcast of the men's football Euro cup. Furthermore, Newen Studios posted revenues up 35% for the first 9 months of 2022 with an excellent performance in Q3, led by the delivery of programs. Newen also benefited from the contribution of studios acquired in Spain and Germany in 2021. Current operating profit showed improvement, reaching €239 million in the first 9 months. Cost of programs remained under control in the media segment and demonstrated the ability of the business to monitor spending and achieve savings when necessary.

Newen reported current operating profit slightly up on margin at 10.1%, taking into account the costs related to the end of broadcasting the daily soap, Plus belle la Vie. As a result, TF1's current operating margin reached 13.7% and was up 0.2 points versus end September 2021. On 27th of October, TF1 announced -- the Board of TF1 appointed Rodolphe Belmer as CEO; and Gilles Pelisson as Chairman of the Board of Directors. With a solid track record and the head of several leading French multinationals and the strong experience in media and streaming, Rodolphe Belmer is ideally prepared to meet the challenges faced by TF1 and well positioned to steer the long-term development of the TF1 Group. To conclude with TF1 on Slide 17, I will be brief, as the TF1 team already commented on its 2022 outlook.

TF1 needs to accelerate its transformation to meet changing consumption use. It also must develop partnerships with platforms and continued its expansion in the buoyant markets. I now leave the floor to Christian Lecoq for Bouygues Telecom performance.

Christian Lecoq: Thank you, Pascal, and good morning, everyone. Before discussing figures, I would like to say a few words on our "Donate a Gigabyte" campaign.

As a committed operator and citizen, Bouygues Telecom has teamed up with 4 associations for the "Donate a Gigabyte" campaign. Everyone can give 1 gigabyte to one of these associations. Bouygues Telecom converts collected gigabytes into mobile plans and smartphones given to associations, which distributes them to disadvantaged beneficiaries. This is the second edition of this operation and through it we want to raise awareness among our employees and our customers to act against digital vulnerability and exclusion. On Slide 19, I would also like to highlight some strategies that demonstrate Bouygues Telecom's excellence in quality networks.

First, the ARCEP survey published in October 2022, recognized once again, the quality of our mobile network. Bouygues Telecom has been recognized as second operator for 9 years now, #1 or #1 excellent score in voice in subways and #1 excellent score in voice and text is very dense area. Second, we entered in 2 major projects in B2B in the last few months. The first one is with the French Interior Ministry where we will contribute to the modernization of the national communication system for the police, military police, fire departments and emergency services system. It shows that Bouygues Telecom is recognized for the quality of its network and its ability to innovate.

The second one, named Numspot is an alliance for the development of a reliable cloud computing service. This new cloud will offer the highest market standard and is an answer to market challenges of data sovereignty, security of digital architectures and data portability. Let's now have a look at figures on Slide 20. Once again, you can see that commercial performance in mobile and fixed were solid in the first 9 months. At September 2022, Bouygues Telecom had 15.1 million mobile plan customers excluding MtoM.

Commercial activity remained dynamic during the quarter as Bouygues Telecom won 175,000 new customers in Q3 and 368,000 new customers in the beginning of the year. Now let's just turn our attention to our fixed customer base. As you can see on the right side of the slide, we had 4.6 million fixed customers at end September 2022. FTTH continued to experience strong growth with 157,000 net adds during the third quarter and 473,000 net adds since the beginning of the year. With a total of 2.8 million subscribers, FTTH customers represented over 60% of our fixed customer base compared to 48% 1 year ago.

Having already more than 28 million FTTH premises marketed, we are ahead of our schedule to reach our target of 35 million by 2026. Let's have a look at key figures on Slide 21. First, we achieved good performance both in volume and in value over the past 12 months, leading to a 6% growth in sales billed to customers. Mobile ABPU, now including BTBD and restated for roaming impact, was up €0.3 year-on-year at €20.1 and fixed APBU was up €1 year-on-year at €29. This good performance was partially offset by the continued decrease in incoming sales, leading to a 3% increase in cell phone services.

Other sales were up 12%, notably led by built-to-suit revenues. EBITDA after leases grew by 9% in 9 months 2022 and reached €1.308 billion. Consequently, margin improved compared to last year, which is consistent with our goal to progressively increase it. The current operating profit of €500 million was higher than in 9 months of 2021. Operating profit was €507 million and take into account a non-current income of €7 million, mainly due to the gain on the disposal of data centers.

Please note that 9 months 2021 non-current income was €107 million, also mainly related to the disposal of data center. Last, you can notice that growth CapEx reached €1.232 billion in 9 months 2022, a higher level than in 9 months 2021. Investments were also lower than 1 year ago. We are on the way to achieve all of our 2022 targets, including our growth CapEx guidance of €1.5 billion, excluding frequencies. And now Pascal, I'm giving you back the floor.

Pascal Grange: Thank you, Christian. I would like to briefly comment on the financial statements on Slide 23. We have already discussed 9 months revenues and current operating profit at the beginning of this call. Other operating income and expenses were negative at €106 million in the first 9 months. This amount includes non-current charges, mainly related to our M&A projects.

As a reminder in 9 months 2021, the other operating income and expenses were positive at €90 million. This amount included, in particular, non-current income of €107 million at Bouygues Telecom, mainly that Christian has already talked about. Regarding the share of net profit on joint ventures and associates level, I just want to remind you that Alstom is no longer contributing to our figures, contrary to last year. We'll now turn our attention to the group financial structure. Moving to Slide 24.

Net debt was €3.7 billion at the end of September 2022. Compared to end September last year, net debt was up €1 billion. Net gearing is at a low level of 27%. As such, the group benefits from a particularly strong financial position. Aside from the change in operations at September 2022 net debt position was positively affected by the interest rate swap mark-to-market that I will explain to you later.

Let's now turn to Slide 25 to describe the net debt evolution between end December 2021 and end of September 2022. Net debt increased by €2.7 billion since the end of last year. This change is mostly explained by the following items. First, acquisitions net of disposal totaling €140 million, of which €130 million is a payment to Engie in connection with the signature of the share purchase agreement on 12th of May. Also included is the TF1 share buyback.

Second, Bouygues share buyback for €183 million. Third, the payment of dividends totaling €776 million; fourth, positive fair value adjustment on interest rate swaps contracted for the Equans acquisition, totaling €935 million; and lastly, €2.6 billion from operations that I will comment in the next slide. Regarding the fair value adjustment on interest rate swaps, let me remind you that between November 2021 and January 2022 to be protected against interest rate increases, the group entered into pre-hedging contracts in view of refinancing the bond issue maturing in 2023 and the syndicated loan signed for the acquisition of Equans. At 30th of September, 2022, the fair value of this pre-hedging swap totaled €931 million versus €38 million at end December 2021. The €931 million included the value of contingent swaps for €245 million locked in at the time of the bond issued on 17th of May, 2022.

If we include the €42 million received as part of the May 2022 bond issues in respect of non-contingent swaps, the total impact of swaps over this period amounts to €973 million. I now suggest looking at the details on the change in operations on Page 26. Turning to the breakdown of operations for the first 9 months of 2022 on Slide 26, you can observe that. First, net cash flow, including lease expenses remained comparable to last year. Second, net CapEx was up €272 million, largely due to higher growth CapEx and lower disposals at Bouygues Telecom.

As you know, the phasing of CapEx is not linear over the course of the year. And third, you can see on the chart that working capital requirement related to operating activities and others increased by €1.4 billion compared to the same period of last year. With a strong increase in activity in 2022, mainly driven by inflation, some items like inventories and customer receivables have increased. As we do every year, we will manage this situation as much as we can by the end of the year. Furthermore, I remind you that we started 2022 with an optimized level of working capital related to operations by business segment.

Moving to Slide 27, I would like to share with you our decision to release a new financial indicator. As you may know, Equans acquisition will lead to the recognition of an amortization of intangible assets, what is called an amortization of purchase price allocation. To provide an accurate view of the operational activity and performance of the group and its business segments, we will implement a new financial indicator that will be the current operating profit before amortization of intangible assets recognized from acquisitions. This new indicator will be called the current operating profit from activities and will be implemented from the start of Equans' PPA amortization from 2023 financial year at the latest. Of course, we will continue to provide the current operating profit in our financial statement, but in our financial communication, we will replace current operating profit with current operating profit from activities also called COPA.

Please note that end September 2022, this COPA would amount to €1.240 billion before amortization of PPA at Bouygues Telecom, Colas and TF1 for a total of €33 million. Lastly, on Slide 28, I would like to add that from October 2022, Equans will be consolidated in Bouygues Group's accounts with a new business segment. At the beginning of 2023, Bouygues Energy & Services will join this new business segment. Regarding Equans' contribution to Bouygues' nonfinancial performance, some data on human resources will be available and disclosed in the 2022 Universal Registration Document. The full non-financial data will be available in the 2023 Universal Registration Document.

I will now conclude this presentation on Slide 30. The 2022 group outlook is confirmed. In 2022, we expect a further increase in sales and current operating profit versus 2021. And after SBTi endorsement of Colas greenhouse gas emission reduction targets in 2021, the other business segments are now aiming to receive SBTi endorsement for their own decarbonization target. Lastly, we remain very vigilant regarding any changes in the macroeconomic situation and their direct or indirect consequences on the group's activities and reports.

Thank you for your attention. Operator, please open the floor for questions.

Operator: [Operator Instructions] We'll now take our first question from Nicolas of HSBC. Nicolas Cote-Colisson: I'll start with some questions on free cash flow because we still have lower contribution year-on-year from Bouygues Telecom and Colas. So if you could give us more color on the moving parts here and what the full year could look like? And obviously, a follow-up question would be on the working cap, because I understand you don't guide on this, but is it right to expect a big reversal in Q4 as we have seen in the previous years? And then I've got a second question on Bouygues Energy & Services because you mentioned contract selectivity impacting revenue growth.

But does it mean there is more price competition right now because this activity is often described as having some sort of pricing power? So if you could give us more indications, that would be great.

Christian Lecoq: Hi, Nicolas Cote-Colisson, this is Christian. I will answer the -- on your free cash flow question on Bouygues Telecom. So the free cash flow for Bouygues Telecom is around €200 million below the level it was last year. If you look at the 3 components, first, this is plus €100 million in EBITDA.

Second, minus €150 million in CapEx. And as we will have the same level of CapEx than last year at the end of this year, you can be sure that this should be -- this figure will be 0 at the end of the year. And second, around minus €170 million on disposals. And we will have less disposal than last year. So of course, it will have a negative impact at the end of the year.

But this is not, I would say, current free cash flow. It is only due to disposal of data centers.

Pascal Grange: For your first question, 2 parts, free cash flow and working capital requirement. For free cash flow, obviously, we have at Colas and Bouygues Telecom, a lower level of net cash flow during the first 9 months and the reasons are fairly different for the 2 businesses. For Bouygues Telecom there Christian answered you.

And for Colas, we had a result which is under pressure during the first half of the year. So we see at the end of September, what we saw at the end of June with the pressure on net cash flow for Colas, but this will -- we'll cover part of it during the end of the year. And for working capital requirement, let's say, that we have -- we started with a high point at end of 2021. So it is normal, in particular, in construction to have a deterioration, which is either cyclical and either starting from a high point. But it is fair to consider that during the last quarter of the year, we will recover an important part of this working capital deterioration.

And now concerning Bouygues Energy & Services, I would like to say that it is fair to consider that the market is a growing market. And in this market, the Bouygues Energy & Services has decided to improve profitability. And you have seen that we have year-after-year, we are increasing the profitability of this business segment. And for that, we prefer to have a lower level of growth and to improve profitability, and this is precisely what we see during the 9 first months of this year. Nicolas Cote-Colisson: Okay.

So if I understand, so it's more for the new contract, but you don't see much pressure on the existing contracts when you --

Pascal Grange: Frankly speaking, the demand remains strong because the environmental transition needs to develop the equipment in terms of Energy & Services. So the market is a strong market and the megatrend in this market is a growth. And if you consider our competitor, they have some growth rates, which are quite significant. So the market is growing. So if we have decided to stabilize our turnover, it is to improve the profitability, which was expected.

Operator: [Operator Instructions] We'll now move on to our next question from Nicolas Mora of Morgan Stanley.

Nicolas Mora: So first question on disposals. There have been a few articles in the press on -- especially on Bloomberg that you are looking to dispose some specific business within Equans, some EV charging station business, some business in the U.K. as well. Do you see the opportunity in the short term to finetune the scope of the Equans business? And what would that lead you to in terms of underlying margin for the remaining business within Equans? That would be helpful.

That would be the first question. Second one is on Colas. So we understand you're dropping the guidance for the margin for next year. Can you help us understand a little bit the wiggle room on the margin? You will be below 4%, but will you be at 3%, 3.5%. I mean we're talking about -- the growth guidance on EBIT is not particularly challenging.

But just trying to understand, to put a bit of color and granularity on where a suitable margin for Colas is in an inflationary environment. Can we go back up to 3.4%, 3.5% and then built up on that? Or is it going to still be challenging in the low 3%?

Pascal Grange: Sorry, 2 questions and answer. It's a bit early for each of it. I will -- for the first question, considering Equans, it's -- we know perfectly that we have -- when Engie decided to constitute the Equans' perimeter, they decided to sell activity -- subsidiaries where the asset-light activities was in majority. So that means that in certain circumstances, there are some asset-based activities in the Equans' perimeter, and we will consider how to sell it.

It's quite too early to say what will be the calendar or what will be the amount. We don't see any major impact on profitability for the moment, but it's very early to speak about that. We have promised you to have a Capital Market Day beginning of next year, and we will develop that in due time. Concerning Colas, as you have understood, our margin rate is under pressure because our turnover is increasing due to inflation and over inflation in certain perimeters. I mean, for instance, North America or countries just around Ukraine.

And for this reason, it's very difficult to know what will be our turnover because it will depend on what will be inflation in those countries in the next -- during the next year for 2023. And frankly speaking, no specific guidance from anyone on that respect. So it's very difficult to know what will be our turnover. So as we don't know -- we know that it will increase certainly, globally, but we don't know in what extent it will be. And for this reason, it is very difficult to know what is -- what will be the turnover of Colas.

And you are seeing that during the 9 first months of 2022, we have a very important increase. But the part which is related to inflation is major. And this is the reason why we prefer to guide not on a rate -- on a margin rate, but on a figure of current operating profit. And this is the reason why we have said to the market, for 2022, we expect an increase compared to 2021. And for 2023, we expect an increase compared to this year.

And it's too early to give you any further information in that respect.

Nicolas Mora: Okay. Understood. But if I may come back just on Colas, when we look a bit data, the profitability, the building blocks, for example, in the first half, you got a hit on the spike in raw materials. You had signed contracts on lower raw mats assumptions.

Then you've got the higher bitumen cost, okay? That clearly has an impact on margin. But getting into '23, at least one of these 2 elements should go, which is the, let's say, the margin losses in North America. Is that enough to bring back the margins in the higher end of the 3% to 4% range or not enough? We're just trying to understand basically if there's anything else struggling at -- within Colas, if it's potentially Colas Rail, which has been struggling or if it's just really an inflation issue?

Pascal Grange: We have essentially an inflation issue.

Operator: We'll move on to our next question from Mathieu of Barclays.

Mathieu Robilliard: The first question was on the telecom market competitive environment.

Different players have characterized the competitive environment differently over the past few weeks, so it would be great to hear how you view the competitive environment today and what you expect? The second question was about the order book at Bouygues Construction business, which remains kind of flattish. And I don't know if you can add a bit of color. Are you being more selective? Or is it just the market trends? And lastly, on Equans, I understand that until now, you did not communicate it about the numbers that Equans was publishing because you did not own it. But now that you own it, can you give us a sense as to how the COP, current operating profit, developed throughout 2022?

Christian Lecoq: So first, on the telecom business. In the mobile, I remind you that the market is still growing.

And this quarter, we observed less aggressive promotional offers compared especially to last year. And we observed also a trend of increasing tariffs in the mobile business, especially for the low end part of the market. And in the fixed business, thanks to FTTH, we had 18 very dynamic months boosted by the pandemic effect, and now the market is returning to a more normal volume growth level as before COVID. And about tariffs, we also saw slightly growing in the fixed business. In the medium term, I would say that we think that as the customers' need for connectivity remains high and data usage will continue to increase, we will have the opportunity to continue to increase tariffs and so revenue.

And if you look at the cost side, we need also to -- we have the opportunity to increase prices, but we also need to do that because the cost of the network will increase with more sites and so more technology, more -- higher energy costs in the medium term and so on. And so that's why we will continue and we need to pursue our more for more strategy.

Pascal Grange: As far as your question related to Equans, in fact, I remind you that the closing took place a month ago. So in 1 month, we didn't have the time to analyzeEquans' figures and because we have to understand what the Equans performance is related to the constitution of Equans perimeter and what are the results and to compare it to -- with methodology, which are equivalent to ours. So it's too early.

We will give you all Equans dataset when we will do the Capital Market Day beginning of next year. As far as the order book is concerned for Bouygues Construction, the order book is effectively flattish in a context where -- the order book of Bouygues Construction is always variable when we have very important contracts, which are signed. During the period, we didn't have any contract or that kind except the Quai des Vernets project that I mentioned in Switzerland. And so we are quite confident with our level of activity at Bouygues construction level. We see that our 2023 activity is covered in a ratio, which is very satisfactory compared to the previous years.

Operator: [Operator Instructions] We'll now move on to our next question from Virginie at ODDO.

Virginie Rousseau: Virginie Rousseau from ODDO BHF. I have 2 of them. First, on inflation, could you update us on the inflation you expect for 2023 in terms of energy, but also in terms of salaries? And question -- follow-up questions on construction and demand in construction. We begin to see some comments from associations, et cetera, stating that local authorities in France are looking carefully at their spending budget and that demand for construction could be impacted.

Do you already notice anything in that field? Or do you continue to see a quite solid trend?

Pascal Grange: As far as your first question is concerning inflation, precisely, we don't -- and this is at the heart of my answer concerning our guidance for Colas, we precisely don't know what will be the inflation next year. And this is precisely the reason why it's very difficult to know what will be our margin rate next year. And we would prefer to guide saying that Colas margin will be increasing -- Colas result, current operating profit will increase next year. So, we didn't guide. This is part of the uncertainties I was mentioning previously.

As far as construction demand, for the moment, we don't see any movement in that respect, either at Colas or Bouygues Construction level in France, for instance. It doesn't mean that it will not happen, but we have a very important order book. So we will see that and we will have -- if this event occurs, we'll have the ability to adapt our structure, but it's not the case of the moment.

Operator: We'll now move on to our next question from Nicolas, again at HSBC. Nicolas Cote-Colisson: Short question on the construction activity, especially the U.K.

because it's probably one of the most challenging markets at present. So I wonder what is your activity doing in the U.K.? I wonder if you're able to manage your margin? And can you afford to be selective in such a market? And the reason I'm asking this question is to see if the U.K. could give an indication of what could happen to your business in other countries if the macro trends were to deteriorate further?

Pascal Grange: As far as our construction business is concerned in the U.K., let's say, for -- we have some long-term contracts, which are -- for which allows us to obtain a certain level of activity. I mean, for instance, our Hinkley Point project where, first, it is a long-term contract. And secondly, we are on a cost price basis.

So we are not impacted by the inflation, which is very important. And we have the ability to pay what we need in order to have people to do the work. So obviously, margin is pretty under pressure in the U.K. But we don't see an important movement in terms of volume in the next year.

Operator: We'll now take our next question from Nuno of Societe Generale.

Nuno Vaz: I had 2 quick questions. One was on Bouygues Telecom. In the press release, you mentioned that other sales have risen 12% year-on-year, and they have been driven mainly by the build-to-suit sales of towers. So I was wondering if the sales will start contributing to your EBITDA margin? And if so, if you could let us know what has been the EBITDA growth over the 9 months, excluding these? And then a question on Equans, I'm sorry to go back on Equans. You've mentioned that you probably saving this information for the Capital Markets Day.

I was wondering from a perspective of integration costs because the last time we spoke on Equans, you mentioned there you have about €150 million CapEx cost for IT systems migration and some €60 million OpEx cost for integration. Are you still seeing these sort of short-term costs in terms of integration or is this slightly changed? And a final point, you also mentioned at the time that the latest contracts signed on Equans over the last 18 months had margins of 4%. Is that still true? Or have these margins fallen a little bit?

Christian Lecoq: First, on telecommunication, the growth in other sales up 12% year-on-year, is notably coming from Saint-Malo project, which is not to work cost but more, the fiber to the office and fiber to the antenna network that we are rolling out with Cellnex. This is a big project, around €1 billion spread over 6 or 7 years. And we more work on this project this year than last year.

The margin of this project is very, very small and so there is no impact on EBITA.

Pascal Grange: As far as your question, your question concerning Equans. First, I don't remember we have said that the order book was at 4%. One thing is sure, Jerome Stubler and Pierre Vanstoflegatte have a policy to increase margin in the order book. So they are increasing this margin gradually.

But I don't recognize your 4% figure. As far as CapEx concerning integration, part of this CapEx were related to Equans and related to what they have to do in order to constitute Equans. As you may remember, Equans constituted by subsidiary which were splitted in the Engie organization, and they have to build an IT system. And this process is already started. And this is the reason why it's partly integrated in the figures we have given to you concerning the impact of the Equans acquisition on Bouygues debt.

I mean, included in the €6.5 billion impact on that Bouygues debt. But for more details, I would suggest to wait on the Capital Market Day that we'll have beginning of next year.

Operator: We'll now move on to our next question from Jeremy Dellis at Jefferies.

Jeremy Dellis: I've got 3 questions, please. Firstly, in relation to Bouygues Telecom.

Christian, I was wondering if you could indicate to us how important the effect of back book repricing has been so far and whether you feel sufficiently confident about the scope for continued price increases to formalize it within customer contracts as we have seen in some other markets? My second question, please, is related to the Colas margin guidance today. When wholesale gas prices started to increase this time last year, you explained to us that Colas is characterized by short-cycle contracts, making it easier to pass cost inflation through to customers. So I'm simply sort of interested in what's changed on that front now? And then finally, in relation to Equans, you mentioned that there will be disclosure in the 2022 registration document. I just wanted to clarify, will we be getting pro forma Equans financials for 2021 in the 2022 registration document at the Capital Markets Day?

Christian Lecoq: So first, on telecommunication, you're right, back book repricing is a big part of the goal in -- in our new bill to customers. And we are very confident to our ability to continue this strategy for 3 reasons, I will say.

First, as I said before, the customers' need for connectivity remains high and data usage continues to increase. First, the fact that we observed the trend of increasing ties in the mobile for new customers, especially in the low-end market, and it helps us, of course, to continue to increase ties also for the existing customers because when you have, for example, an offer at €12, and the lowest offer on the market is at €15 or €16, you can exchange the price for the existing customer. And he has no choice to go to find another at the same price. So he will stay with you. And third point, inflation is also a help for us to continue ties because the customers now understand that prices in telecommunication, but also in energy and other things, of course, are increasing.

And so it is good for us, and it will help us to continue to increase ties.

Pascal Grange: As far as your question concerning Colas, let's say that when we have seen the inflation impact during the beginning of this year, we have asked people to Colas, ask people to adapt and not speculate. So let's say, that probably we have a more accurate indexation formulas. We have more accurate contracts in order to transfer that risk to our clients, but we couldn't expect any extra margin related to the fact that energy costs could decrease, if I properly understood your question. For Equans, we will provide some pro forma figures for the entire 2022 year, which is already not an easy thing to do because I remind you that the perimeter has been finally constituted end of June this year, the Equans perimeter.

So we will give you some 2022 pro forma figures, but not, I don't think so 2021 figures, too complicated to organize and to make sure that the figures are comparable.

Jeremy Dellis: Could I just follow up on that? In relation to Equans, presumably, when you were doing due diligence prior to making an offer, you had visibility on what numbers look like. So I'm just interested in why it is so hard to constitute the backward-looking perimeter?

Pascal Grange: Because we have aggregated figures and not consolidated figures.

Operator: Now we will take the last question of Eric Ravary of CIC.

Eric Ravary: Three questions from my side.

First one is on Bouygues Construction EBITDA figures. So if you look at the 9 months figures, the EBITDA is decreasing by 45%, while the operating profit is increasing by 13%. So I would like to understand the difference. And if you look at free cash flow, which is increasing for Bouygues Construction over 9 months. So a big cost on those figures for EBITDA? Second question is on Bouygues Telecom.

Could you give us some visibility on the energy cost for next year and is the part of your energy costs, which are hedged for 2023? And based on this hedging on kind of increase you expect for energy cost in Bouygues Telecom for next year? And last question is on Energy & Services. Could we have the 9 months revenue figure, please?

Christian Lecoq: Yes. For energy for Bouygues Telecom, I remind you that we are totally hedged until the end of 2024 so that we'll have no impact coming from energy costs under the Bouygues Telecom results for 2023 and 2024. And we are now working on 2025 energy hedging position.

Pascal Grange: For the Energy & Services revenue for the 9 plus months of 2022, it is €2.818 billion, which represents a decrease of 1.5%, and this is stable if you exclude the fact that we have transferred a few activities from Energy & Services to Bouygues building and civil works.

This is for the first question. The second question was related to EBITDA. Generally speaking, in terms of construction, there is no reason to -- the EBITDA is not an indicator because the results is done with contingencies and provisions which are fluctuating, but there is no reason to integrate this indicator. The proper indicator which is relevant for construction is EBIT. So there are some movement of provision due to the fact that we anticipate some expenses at one time.

And when we spend the money, which was anticipated, we will have the EBITDA decreasing. So there is no real impact on the global performance of this activity.

Operator: Thank you. There are no further questions in queue. So I will now hand you back to your host, Pascal Grange, to conclude today's conference.

Pascal Grange: Thank you for joining us today. We will be announcing full year 2022 results on 23rd of February next year. Should you have any questions, please contact our Investor Relations team. Their contact information is on the press release on our website. Thank you for your attention.

Operator: Thank you all. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.