Executives: Ramon Fernandez - Deputy CEO, Chief Financial and Strategy Officer Gervais Pellissier - Deputy Chief Executive Officer Pierre Louette - Chief Executive Officer Delegate Fabienne Dulac - Senior Executive Vice President Thierry Bonhomme - Senior Executive Vice President, Orange Business

Services
Analysts: Stéphane Beyazian - Raymond James Nicolas Cote-Colisson - HSBC Bank Jakob Bluestone - Credit Suisse Mandeep Singh - Redburn Daniel Morris - Barclays Frederic Boulan - Bank of America Merrill Lynch Giovanni Montalti - UBS Andrew Lee - Goldman Sachs Jerry Dellis - Jefferies Jacques de Greling - Natixis Dimitri Kallianiotis -

Redburn
Operator: Good morning, ladies and gentlemen, and welcome to Orange’s First Quarter 2016 Results Conference call. This call will be host by Ramon Fernandez, Deputy CEO and Chief Financial and Strategy Officer with members of Orange’s executive committee for the Q&A session that will start after the presentation. Thank you. And let me now hand over to Ramon Fernandez. Please, go ahead.

Ramon Fernandez: Good morning. Thanks for joining our Q1 2016 results conference call. I'm going to present the main highlights from our Q1 performance, and then with my colleagues from the executive committee, we will go through the Q&A session. So let's go to Slide 4, which presents the main results of the quarter. In this first quarter, revenues grew for the third quarter in a row, exceeding €10 billion, up 0.6%.

Restated EBITDA decreased by 1.6% year-on-year at €2.6 billion. However, if we exclude the effect of the employee share plan which was launched in March, restated EBITDA increased by 0.3%. In addition to that, if you also exclude the effect of accounting timing differences related to be pylon tax and the IFRIC 21 implementation in Belgium, group restated EBITDA was up 1.1%. As regards to investments, we continued our efforts in FTTH rollout, particularly in France, which resulted in an increase in our CapEx, in line with Essentiels2020. We moved forward with the operations announced at the end of 2015 with the closing of the disposal of the EE and of the acquisition of Cellcom Liberia and Tigo in DRC.

We further reinforced our presence in Africa through the acquisition of a stake in Africa Internet Group announced at the beginning of the month. We also completed the acquisition of LexSi, a European cyber security leader specialized in Threat Intelligence Services, positioning us as a major player in this field in Europe. And last but not least, we signed last week an agreement to acquire 65% stake in Groupama Banque, which will become Orange Bank. Turning to Slide 5. We continued to reap the benefits of our investments in high-quality networks with solid commercial results, driven by very high broadband and convergence.

The Group's 4G customer base reached 20 million at the end of Q1, a strong growth in all our European countries supported by ever growing customer data appetite. 10 million 4G customers were added year-on-year. The fiber-base increased by 2.1, reaching 2.2 million customers. Spain was the second country after France to reach the 1 million customers milestone. Our IPTV customer base increased by 10%, that's 8.2 million, driven by a strong growth in France and in Spain.

We observed a steady growth of the ratio of convergence customers on total fixed broadband customers in our major markets. This ratio increased by 4 points in France and in Spain, and by 10 points in Poland, contributing to a decreasing trend on mobile services. So this was a quarter of solid commercial performance leading to strong financial results. Page 7. In Q1, Group revenues grew by €59 million year-on-year, thanks to an improving trend in France and growth in Spain, Africa, Middle East and in Enterprise.

In France, the operating trends continued to improve, notably in fixed services with revenues down €34 million against minus €89 million in the first quarter of 2015. Spain, in Enterprise, we're back to growth with respectively plus 1.8% and plus 2.1%. Last, Africa and Middle East continued to fuel Group growth with plus 4.4% in the first quarter, mainly driven by Ivory Coast and Mali. Looking at EBITDA, as usual, the first quarter was subject to seasonality, but the overall trend continued to improve. The better revenue trends contributed positively to the EBITDA for €59 million versus minus €90 million in Q1 2015, but with positive factor was offset by the costs of €50 million linked to the employee share plan.

These additional costs were booked in Q1. Excluding this effect, EBITDA showed another growth of growth at plus 0.3%. Another negative factor was the impact of accounting timing differences related to the pylon tax and the implementation of IFRIC 21 in Belgium that weighted for around €19 million in Q1. Excluding these effects and the employee share plan, EBITDA was in line with the trends seen in the past two quarters, growing by 1.1%. Other costs increased by €32 million, which mainly reflected €16 million linked to the Euro 2016 football championship, Orange is an official partner, as well as higher content costs especially in Spain.

Other costs remained stable reflecting our steady cost control focus. Slide 9. We pursued investments in our networks and in particular on very high broadband. As a result, we had 5.5 million connectable homes in France, up by 39% compared to Q1 2015. In Spain, we reached 7.4 million connectable homes with fiber, up by 85%, and we confirm our target to reach 14 million households by 2020.

In Poland, we accelerated our fiber deployment plan with more than 800,000 connectable homes. In France, offset recent benchmark confirmed via superiority of fiber connection compared to other technologies. This is particularly true when it comes to indicators for upstream throughput which is crucial for applications that involve file sharing and data storage in the cloud, and also for latency, which has a direct impact on customer experience. The Group strengthened its leadership in mobile and in particular in 4G coverage, like in Poland where we cover 89% of population, up by 17 points year-on-year or in Spain with 87% of 4G coverage, up by 13 points year-on-year. In France, we continued the modernization of our mobile network to improve the customer experience.

Paris-Lyon line has been fully covered by 3G and 4G, as well as a 71 as key results in eight highways. Therefore in line with similar studies which all demonstrates Orange’s leadership in mobile network, the last RootMetrics’ survey made in Paris, Lyon and Marseille, shows that Orange has the best network for reliability, speed, internet usage, calls and text. To support this performance, investments reached €1.5 billion in Q1 with a CapEx to sales ratio of 14.6%. Let's now look at our various segments. Looking first at France on Slide #11.

The first quarter confirmed the improvement in operational trends with fixed services revenue back to growth for the first time since Q2 2014, of course driven by our fiber strategy. Fixed broadband revenue growth accelerated with pace picking up at plus 4.2% year-on-year. This strong momentum was mainly driven by volume growth in fiber as 1.1 million customers chose the Orange fiber. The convergent offers discount continued to slightly impact the broadband ARPU, but it was largely compensated by an improvement in the retail customer mix, allowing a slowdown of the ARPU decrease, that’s minus 0.4% year-on-year and even stabilization on a sequential basis. Fixed wholesale revenue increased by 1.5% year-on-year, thanks to growth in ADSL bit stream, to raise the backbone from special needs and increasing speed of copper network in less dense areas.

Fixed narrowband revenue decrease slowed down at minus 9.4%, thanks to an improving trend in customer base erosion and a tariff plan increase in March 2015. Mobile service revenue decreased by 2.4%, in line with the full-year of 2015. In 2015, it was minus 2.2%. And this was mainly impacted by decrease in national roaming. Excluding this impact, the trend improved against the fourth quarter of 2015, driven by an improvement in mobile ARPU that trends, down only 0.7% against minus 1.3% in the last quarter of 2015.

With regards to commercial performance, let's have a look at mobile on page 12. Despite a very competitive environment, our mobile customer base continued to grow with 41,000 net adds supported by our convergent strategy. 49% of the consumer voice contracts were on open offers. We all know that the first quarter was a tough quarter with very aggressive promotions from our competitors. In March, we upgraded our Sosh mobile offers and we did the same for Orange brand a month later to reinforce our competitiveness, while preserving customer value through a targeted and segmented approach of the market.

Promotions impacted mostly low-end segment performance, while our high-end offers continued to be very attractive. The share of retail high-end customers increased by 3 points in a year. As a result, Q1 showed further improvement in contract churn rate now at 13%, the lowest level since 2010. SIM-only offers continued to be predominant in our acquisitions. 55% of our customer base was on SIM-only offers at the end of Q1.

43% of our contract customers now benefit of our 4G network. This is 10 points more compared to Q1 2015, and we now have close to 9 million 4G clients. On fixed broadband, once again a record quarter with 96,000 broadband net adds, the best first quarter since 2011, fully supported by our fiber strategy with 115,000 fiber net adds, of which more than half are new Orange customers. All in all, the broadband customer base increased by plus 3.9% year-on-year with the FTTH adoption rate increasing to 20%, up 4 points year-over-year. Thanks to the superiority of our fiber network, we were not only able to regain broadband market share, but also to improve our customer mix increasing by 4 points the share of premium customers.

As a result, fiber combined with convergence continued to be a strong tool to conquer and upsell customers. 74% of our new convergent customers were either new mobile and/or new fixed customers, an improvement of 4 points compared to the same quarter of 2015. Let's now move to Spain. In Spain, the financial and commercial performance of the first quarter was excellent, thanks to the very good dynamic of 4G and fiber, another confirmation of the benefits from the Jazztel acquisition. Indeed revenues came back to growth after nine quarters of decrease, with an increase in revenues of 1.8%.

Mobile service revenues increased by 4.4%, thanks to service upgrade plans started end of 2015. And the fixed very high broadband revenues continued posting strong growth, plus 9%, driven by FTTH and TV offers. In fiber, we reached 1 million customers with a base multiplied by 3.2 in one year. 7.4 million homes are now eligible for fiber. And we registered a strong growth in our TV customer base multiplied by almost 3 in one year to reach 365,000 customers, driven by the success of football offers.

On average, over 60% of Pay TV sales are now related to football. As you know, we participated in the auction process for the next three seasons of La Liga, and we just signed an agreement with Mediapro to access blocks they had obtained. As a result, we will be offering all football games to Orange customers in Spain for the next three seasons. Regarding 4G, we multiplied our customer base by almost 2 in one year and maintained the leadership in 5.8 million customers. In terms of coverage, we reached close to 90% of population and we have bought additional spectrum for 4G and 5G in the future.

In Poland, overall revenue trends slightly improved at minus 4.2%. It was minus 5.1% in the last quarter, with broadly unchanged trends in mobile and fixed services, but growing mobile equipment sales due to the transition from subsidies to installments. This quarter again, the company posted better net adds compared to the first quarter of last year, thanks to commercial investment targeted on convergence, very high broadband and TV content. Mobile service revenues eroded 2.1% compared to 1.9% last quarter. Meanwhile we had a very strong contract net adds at plus 214,000, growing 4.5x compared to the first quarter of 2015.

Competition from cable kept a strong pressure on fixed revenues, down 8.7%. We pushed ahead, first with all convergence strategy with growing 38% of our broadband base now on convergent offers, and second, with our very high broadband strategy with 18% of our base now on ADSL or FTTH. Out of total footprint of 818,000 homes passed at the end of Q1, we had 27,000 fiber customers, of which around 70% were new customers, and this represents an encouraging ramp up with 10,000 fiber net adds this quarter against 8,000 last quarter. In Q1, fiber net adds already represent 20% of all very high broadband net adds. Last point, in Poland in Q1 other revenues were impacted by the completion of infrastructure projects, already impacting at the end of 2015.

Excluding this effect, Q1 overall revenues were down 3% year-on-year, 3.1%, versus the reported minus 4.2%. In Belgium and Luxembourg, we have consolidated revenues going up by 2.3%. This is the same rate as in the Q4 of 2015. And this quarter growth is driven by mobile service revenues, increasing by 2.9% year-on-year. Belgium posted a very solid contract net add of plus 8,000 excluding M2M after minus 5,000 a year ago.

Another key factor in Belgium is the annual contract ARPU, which is improving by 3.3%, following the increase we had in the past two quarters, and this is partly due to an increase in proportion of subsidized sales. Belgium 4G user base increased by 84% year-on-year reaching approximately 35% of total users, and last but not least, the annual contract churn kept on improving versus last year in both B2B and B2C segments. Building on this very positive momentum, Mobistar unveiled last February and launched in March it's convergent offer based on regulated access to cable. Starting beginning of May, Mobistar will be rebranded into Orange, paving the way for the company being repositioned as a convergent operator in Belgium, and Orange Belgium will then be ready to actively market its convergent offers. Turning to the Central European countries as sub-segments, you also can see a fourth constituting quarter of revenue growth, plus 2.8%.

This is always driven by Romania, which represents close to 60% of the total segment. Romania is growing by 6.5%, so still very good performance. Also in Romania, following the signing of a fixed wholesale access contract with Telekom Romania in December, we are actively preparing to launch fixed services. This is voice, broadband and TV, using the fiber network of Telekom Romania in urban areas, and the first wave of the convergent offers will be launched in May in targeted areas. Our Africa and Middle East operations continued to perform well with revenue growth of 4.4%, mainly driven by Ivory Coast, Mali and Guinea, also by the surge in data usage.

Data revenue increased by 42% year-on-year driven by the increase of our 3G and 4G sites rollout. We now have commercially launched 4G within seven of our 20 African and Middle East countries. Our mobile base went up close to 3%, reflecting significant net adds in Ivory Coast and Cameroon. In Q1, as I said previously, we also moved forward in terms of M&A with - for closing of Cellcom in Liberia and Tigo in DRC, where we were already present. We reinforced our presence also through the acquisition of a stake in Africa Internet Group announced at the beginning of this month, and this is going to give us the capacity to support and participate in the fast-growing e-commerce market in Africa, especially across the 12 countries where we have a joint presence.

Lastly turning to Enterprise. Revenues were back to growth with 2.1% year-on-year, against a negative figure of 0.4% in the fourth quarter of 2015. The good performance is supported by resilience in legacy business; strong growth of IT services and also low Q1 2015 performance, which is inducing a favorable base effect; voice revenues improved, not only thanks to the improving trend of legacy revenues, but also thanks to high growth of voice-over-IP services. Data services trend continued on the good momentum on prices and volumes, mainly driven by strong international performance. And IT and integration services were growing by 8.6%, driven by contract deliveries, mainly in the Americas and Asia-Pacific regions and also by cloud revenue with 20.9% growth.

So I will close with our guidance for 2016. Obviously with these solid results, we confirm our 2016 guidance announced in February. We confirm our guidance, our objective of our restated EBITDA above 2015 on a comparable basis. We will also maintain our net debt to EBITDA ratio around 2x in the medium term. Regarding the dividend for 2016, we will propose to maintain a €0.60 level, paying a €0.20 interim dividend in December 2016, and on June 23 of this year, we will pay the balance of the 2015 dividend for €0.40.

Regarding our portfolio management policy, we will keep our selective approach focused on our existing footprint and on value creation for Orange and its shareholders. Thank you for your attention. We are now all already to answer your questions.

Operator: Thank you, sir. [Operator Instructions].

We will now take our first question from Stéphane Beyazian from Raymond James. Please go ahead.

Stéphane Beyazian: Yes, thank you. I just have two questions, if I may. The first one is, I just want to come back on the 3G roaming agreement.

I think we are starting to see some revenue erosion from this agreement. Do you stick to your indication that you could probably see some €150 million to €200 million, let's say, shortfall from the agreement compared to 2015 so far this year? My second question is to come back on banking. How is the Groupama joint-venture, let's say - sorry, acquisition accelerating or changing your target of €400 million by 2018, and what sort of, let's say, revenue margin that customer do you target. Can you sort of start to give us some details on your plans there? And finally, just to come back on the agreement with Mediapro. Is it possible to have some indication on the impact that this could have on the EBITDA for the Spanish division? Thank you very much.

Unidentified

Company Representative: Okay, so regarding your question on roaming, yes, I think we can absolutely confirm the proportion, the decrease in the revenue is coming from roaming. As you remember, it was supposed to decrease a year ago. It didn't. So now it's bound to decrease at one point or another, but this is completely integrated within the projections of our strategic plan, so absolutely in line with our expectations.

Ramon Fernandez: On Groupama, we are perfectly on track with what we had announced.

We expect - so the closing of this deal. We have signed now. We have to go through the regulatory process with competition authorities and as the payer, the prudential authorities. So we are going to go through this process in the next months with the objective of launching our services in 2017. It does not change our objective that has been set in Essentiels2020 to have on mobile finance as a whole around the €400 million of revenues in 2018, and this is, as you know, both in Africa, Middle East with Orange Money, and in Europe, where we have started already in Poland.

We are also launching Orange Money in Romania, and then in 2017 in France before turning to two other European countries, Spain and Belgium. So this is confirmed. We are once again very well on track and we will disclose more details on the level of revenues expected on this specific Orange Bank project in France when I'm going to disclose more before we give you all the details when we launch the service. We want to keep some information for ourselves when we are preparing for this to be launched. You had also a question on the Mediapro and the football rights in Spain.

Gervais Pellissier: Yes, we have - you know that - Gervais Pellissier speaking - that we have been working on different - the football rights in Spain are owned in three different groups. A big part is still on by Telefónica, but the most interesting football matches are owned by Mediapro, which is now a subsidiary of beIN. And with Vodafone, we have being also winning specific lot for bars and restaurants, which means that in total the football rights will be split amongst the different players with the regulatory rules that play into Telefónica, which means that we will distribute the match that have been bought by Mediapro with the cost which I think - which is cost that emanated by the regulatory authorities and which applied last year on the Telefónica lots. And this is what we have taken into accounts in our forecast for the future. We think that when we look at the profile of the next year that we will have clearly an increase of our football costs, the rights are probably more expensive in total than the initial projections, but we think that on the other hand every player will incorporate those extra costs into the price of their broadband access and they are seemed as first increase of the price of the broadband access in Spain since the beginning of the year.

Stéphane Beyazian: Thank you.

Operator: We will now take our next question from Nicolas Cote-Colisson from HSBC. Please go ahead. Nicolas Cote-Colisson: Thank you. Good morning.

I’d like to an update on co-investment in France. I was wondering if the CapEx hike we have seen in Q1 is driven by a lack of participation from your competitors, and if it is the case, is that an issue for Orange? Don’t you fear that building a loan for too long could get the regulator rejecting the conditions for wholesale fiber? And my second question is on also the French market. How do you account for the promotions in France? Is that through lower sales or lower EBITDA or mix of both? And if you could share your view about the pricing environments, not just in mobile but also in fiber where your prices are currently very low? Thanks.

Ramon Fernandez: So I will share the answer with Pierre Louette and Fabienne Dulac. Just one word before turning to Pierre.

The increase in investments you are seeing in the first quarter is perfectly in line with what we have said and the investment efforts which is going to be done by the Group in all its geographies, and especially in France and also in Spain, where we are rolling out our fiber, also in Poland. So on this ground, there is absolutely no surprise and we have, in the first quarter of the year, the co-financing we were expecting from our competitors to accompany or if it’s in fiber. Pierre?

Pierre Louette: Yes. So regarding co-financing, Ramon was mentioning, last year was a bit of a deception when it comes to what the - our competitors invested, but now this seem to be in line. They better be in line in the way because if they really intend to do what they announced several years ago, for some of them it's really time to start.

For the ones who announced nothing, they stuck to that position and they kind of suffer from it today. We for instance - for those who started even before us, like Illiad, but made wrong technological choices which they now completely accept, they are stuck also behind. And for us, we announced intentions and we realize them, so we are completely in line with what we did. It’s a world in the dense, very dense areas. It's a world of a competition based on the infrastructures.

Everybody is absolutely free to invest and was in the position to decide to invest. This regulatory framework will not change. It will not change. It’s one of the key principles on which everything relies, and I think that the asset regulator has in mind that it would be extremely detrimental for the overall efficiency of the fiber deployment in France to change that framework now. So you will have the competition-based investment in the very dense areas, investments based on co-funding in the less dense areas.

SFR and Numericable has now probably a year or three years of lagging behind in terms of what they had announced and what they had not done. And I think Iliad now has stronger intentions to come to that co-funding. When you look at some of the announcements that our competitors have made regarding what they intend to pay to us in local-loop unbundling in several years like in 2020, again they really should start now doing something because it doesn't look like they will decrease this payment to us, if they stick to the very low and slow proportion of investment in fiber that they have today.

Fabienne Dulac: Good morning. Fabienne Dulac speaking.

As you can see, the French mobile market is and has been and is always very competitive and turbulent in the middle of 2015, and especially in the first quarter may be influenced by the payer and the context of negotiation. During this quarter, we made the choice to preserve value with no records to promotion even on such offers, so there is no impact on the EBITDA. I just want to remind you that sometimes we can use promotions. Sosh has been designed to address low-end customers. These customers are targeted by the promotion of our competitors, so we reserve the rights to adapt our strategy and sometime to use promotion sales, special sales if we need to - and if the market require it because we need to stay in the course all the time.

Nicolas Cote-Colisson: Yes. So if I may just follow-up, because on fiber, there are currently some very high level of promotions. So is that just something to stay for months as it is on the website or is that something that could be pursued in order to get more subscribers in the course of the year?

Fabienne Dulac: On the fiber - your question is on the fiber, yes?
Nicolas Cote-Colisson: Yes.

Fabienne Dulac: On the fiber, we use promotion as an [indiscernible] product and we need that, because we want to advance the fiber on all market to access market through the premium market, especially in very dense area where we are in re-conquest, so we use the promotion as Apple products. I just want to explain you one point.

When we made promotional at around €20, 52% of our sales are materialized on premium offer, Jet and Play. So in the same way, promotions can be an Apple product to realize how strategy, value strategy and customer acquired through promotion. Nicolas Cote-Colisson: Okay. That’s clear. Thank you.

Operator: Our next question comes from Jakob Bluestone from Credit Suisse. Please go ahead. Your line is open.

Jakob Bluestone: Hi, good morning. Just a couple of questions, just maybe staying on French fixed line.

We've obviously seen some price increases from some of your competitors from Bouygues and SFR. Do you see room for putting through price increases on some of your offerings as well? And then just secondly on Spain, obviously there was a big acceleration in mobile service revenue growth. Can you maybe talk through whether you see that as sustainable? Thank you.

Gervais Pellissier: Yes, so Gervais Pellissier speaking. Regarding Spain, we see mobile service revenue increasing for two reasons.

One is still our ability to add net adds. When I look at the profile of the Spanish market, the dynamic between around Spain and Jazztel is still contributing to huge increase of net adds. And the second reason is that prices are slightly increased. We have revised our subscriptions between €1 and €2 with an increase of the data capacity and this has transferred into an improvement in that. We will not hesitate - I think in the market, we not hesitate price increase quarter-after-quarter don’t - that’s not - but at least probably step-by-step, it will be once a year, I don't know how the market will evolve, but we can consider that this will continue.

Fabienne Dulac: For France, we have seen increase in tariff from our competitors as you can see, presented as counterparts of additional or improved service. We remind you that we already increased the price of our bestseller Open Play by €3 in July 2015, and that we already see in fiber open and B2B open offers with a gap of €5 compared to ADSL. So we still have a premium compared to our competitors and we want to stay in this strategy. We are - yes, maybe for the next - for the future, you know we will launch a new box in few weeks with this all new features and innovation, and we will follow the strategy of offer quality of services and in the same time the price premium that we can offer.

Jakob Bluestone: It’s very clear.

Thank you.

Operator: We will now take our next question from Dimitri - from Mandeep Singh from Redburn. Please go ahead. Please go ahead, Mandeep. Your line is open.

Mandeep Singh: Hello. Sorry, you had said Dimitri and Mandeep. We’re both from Redburn, so apologies, some sort of confusion there. I just really had a quick question following up on Spain. Jakob asked partly about that already.

But overall in terms of the revenue growth, you mentioned strong net adds, but sort of across fixed and mobile, how much would you say this is you outperforming the market or how much would you say the market is in much healthier place, and if you could maybe distinguish between some of the dynamics in both the fixed service revenues and the mobile service revenues? Thanks.

Gervais Pellissier: Yes, for the time being we think that we are outperforming the market, maybe we are not alone to outperform the market, it's a sense that when we look at the market dynamics, my view is that when we look at the net adds, it is possible that Vodafone is also on acquisitions track, so which means that on mobile service revenue, we will see how people publish, and so is it to follow and understand, but we shall have probably two players everything. Regarding fixed, we are clearly continuing to outperform the market. When we look at the trend in terms of acquisition plus something which is good for us which is the uptick of the TV services which also increase the ARPU of broadband. And we think that with the new football season that would start in - so no issue - there is uptick of TV service for in the course of summer.

I think Q3 we shall be. We think Q2 will be less favorable because we are at the end of the season but Q3 we should see an uptick again.

Mandeep Singh: Thank you.

Operator: We will now take our next question from Daniel Morris from Barclays. Please go ahead.

Daniel Morris: Good morning. Thanks for taking the question. The first is just a clarification on the co-financing question that was asked earlier. Can you confirm that you are now already seeing two competitors co-financing in the mid dense areas each at a 5% rate, or are we still waiting to get to that point? Second question is on your listed subsidiaries. Mobistar’s cable opportunity certainly looks very interesting.

I just wondered, what are your thoughts on the listed subsidiaries? Could you be interested in taking out the minorities there, or conversely you talked about a potential minority listing in Spain. So any updates on that? Thank you.

Pierre Louette: So to clarify on co-financing, we have seen since the system started one competitor, SFR, which was then SFR before it was acquired by Numericable. They started with a year of delayed co-funding and they did a little less than they were supposed to do but they did some co-funding, and now we see more of Iliad obviously. So yes, I think we can say that there are now two main competitors co-funding.

They have done a little less than expected, and now they seem to be a little more, let's say, 5% more than expected for this first semester in less dense areas, we are talking about less dense areas.

Ramon Fernandez: So in terms of listing subsidiaries or minority shareholders, I think the current situation of the Group and of its subsidiary does not request any change in reality just now. So in Belgium there is no ground to change the situation as it is. In Spain, we are extremely successful and we have no plan short-term to list the company. We are full speed as you have just heard in terms of regaining market share, going back to growth and no plan to list.

I don't know if you had other geographies also in your mind, but I would have the same answer as regards our Africa and Middle East holding company. You know that in Africa, we have some companies which are listed, especially Sonatel, Mobinil which is now Orange Egypt, and also Jordan, but there is no plan of listing the holding company. Now we are working on integrating the four new operations that we are in the process of acquiring. So we have closed Liberia and DRC. We are working on the closing of the two Airtel companies.

We are acquiring the Burkina Faso and Sierra Leone, and this is going to be our priority for the year ahead. But the Group has a very solid balance sheet. You heard that we are sticking to our leverage ratio of around 2x, and so there is no particular need at this stage to imagine further initiatives in terms of a structure of a Group. We would see if at some point there is any good reason to change this.

Daniel Morris: That’s helpful.

Thank you.

Operator: We will now take our next question from Frederic Boulan from Bank of America. Please go ahead.

Frederic Boulan: Hi, good morning. So Fred Boulan from Bank of America Merrill Lynch.

Congratulations firstly on the Q1. Quick question on the cost side, considering you now delivered I think around three quarters of step line growth in a row. To what degree can we expect your $3 billion cost cutting plan you have by 2018 to impact EBITDA this year and in the coming years. So if you could talk a little bit about the main programs and the phasing of the impact? And secondly, on the M&A side. Just wanted to ask whether you would consider taking a stake in another European incumbent in the coming years and come back on and explain what would bring to as a Group, or on the contrary you can actually deliver a lot without any financial stakes? Thank you.

Ramon Fernandez: On costs - this is Ramon, and then I will turn to Pierre who is in charge of leading our cost efficiency program called Chrysalid and now Explore 2020, just to recall that we have given a very clear guidance or indication in the context of our strategic plan Essentiels2020. And this guidance is to say that, in the next years we are going to see some upward pressure on direct costs which will be accompanying the growth in revenues. We are seeing for instance in terms of contents. We are spending a bit more on contents, but this is fueling revenues in Spain for instance, but not only - but we are going to keep this obviously under strict control. And in terms of indirect costs, we are going to deliver a reduction on the ratio of indirect costs to revenues by 2 points by 2018 compared to 2014.

So there is an ongoing work which is being sustained in the Group. We know that going back to growth is not going to allow us to reduce our efforts on costs. At the same time, there are good costs, if I may say so, which are supporting the return to growth. And this is illustrated by the Explore 2020 program that Pierre is going to talk about.

Pierre Louette: Yes, so Explore 2020 is the new name actually or the name of the new program that we are launching now regarding cost-cutting, or if you want, cost avoidance transformation of the way we operate.

You remember that the previous one was called Chrysalid, and we had announced a €2.5 billion target that we actually overcame by €1 billion, so we did way more than we expected. The times are hard also, so we had to push hard on those cost avoidance programs. Explore 2020 goes alongside different lines. We expect €3 billion of cost avoidance and cost diminution. It will address the same pillars, if you want, which are of course typically indirect and direct cost.

On the direct cost side, it's a bit different. It's a different period actually. We have more growth, which is good. In certain regions of the world we have a strong growth, but it's also a growth that comes with certain costs. So it's a different situation than the previous one.

It will thus call for different actions. We will re-interrogate all the ways in which we operate, but I repeatedly tell to the teams is that once you've done a transformation program, then you can start again. If for instance we looked - and Fabienne was very heavily involved in that in the past. We looked that the customer intervention for instance in France and we asked the team how they operate, how they could operate by spending less. They programmed their transformation.

They did it. And let's do it again now. If we look at networks, we buy the same configurations today, 35%, 40% less than we did five years ago four years ago or four years ago, so we are going to start again and we are going to use the power of procurement of buying to do this. So overall we will re-ask all the lines of our costs. We will look again at the customer relationship side also, introduce more and more e-relationship programs.

All of the things, actually nothing I would say completely impossible to imagine. We look at what we've done and we do it again and we save again. Very important also to stress is the fact that our €3 billion goal in OpEx and CapEx does not include the synergies from the Jazztel integration in Spain. So the figure we have announced does not include very good news that are going be coming from Spain, so we will probably be helped by those figures also in making more savings and cost avoidance than we had announced.

Ramon Fernandez: On M&A in Europe, maybe a few words and then Gervais may add something.

I think the real priority in Europe we have is to be convergent in all our operations. And so we have talked about Spain. We have said a few words on Poland during the initial presentation. In Romania, as I said, we have now an agreement with the subsidiary of Deutsche Telekom, Telekom Romania, which is going to give us access to the fixed markets. In Belgium, 2016 is also a year where we become convergent with Orange Belgique, which is going to access the fixed markets through a cable regulation.

So in fact in 2016, Orange in Europe is going to be convergent in all its countries, Slovakia is already convergent. The only one which is not yet convergent is Moldova, but there may be a project here which will also give us access to the fixed markets. So this is really our top priority to be successful and convergent where we stand. Now looking at M&A opportunities, I mean, the starting point for us is to see current landscape which is highly fragmented with as we all know, 28 regulators, 28 different systems. And so there is no single European market today in terms of spectrum, in terms of networks, in terms of internet.

So it's very difficult to make projections of its kind. As far as we are concerned we are not working today on any projects regarding any incumbent, so this is a straight answer to your question. There is absolutely no project we would be working on now regarding any incumbent in Europe.

Frederic Boulan: Thanks. Thank you very much.

Operator: We will now take our next question from Giovanni Montalti from UBS. Please go ahead.

Giovanni Montalti: Hello. Good morning. Can you hear me?

Ramon Fernandez: Yes.

Giovanni Montalti: Sorry, I'm on the mobile so the quality may not be great. Just a couple of questions. Can you provide us some color on the discussions with Iliad and ARCEP for the phase out of the roaming agreement? And also looking at Spain and France, do you think - when do you think the rate of convergence in France or the penetration of convergence in France may approach to the levels that you are seeing in Spain? Thank you.

Ramon Fernandez: Yes, we’ll take ARCEP, Iliad question. On convergence on France and Spain, we are around 45%, 50% of convergence in France compared to more than 80% in Spain.

We think we should go around, let's say, around 60% in the next two years in France. So we are progressively catching up and it is indeed a very strong tool for us when we fight against our competitors on both the mobile and fixed markets because we are, in fact, the best solution for anybody who wants to have the best bundle offer getting access to the best mobile networks, the best fixed and broadband network with TV services which are of top quality. So this is why we are very much supporting this move which is European move towards convergence and this is why I would say that our first priority in on our European countries is to deliver these services that our clients want to get. Pierre?

Pierre Louette: Yes, regarding the extinction of roaming, a couple of things that we can stress today. The first thing is that there will be an extinction of roaming.

This is very, very clear. It's been reaffirmed by the regulatory. It's also more or less programmed in legal frameworks which had been outlined by the government, so this is extremely clear. The second thing is the following, whilst we are working on the consolidation play in France, a lot of the consultations publicized ARCEP were suspended. They had started again now.

So we are now in the new phase. We have made our comments to the ARCEP regarding the proposed extinction plan. And as of today, the perspective is still the same. The 3G roaming will turn out between end of 2018 and end of 2020, and it's between - for the 2G is between 2020 and 2022. So this is the framework and ARCEP has asked the two parties to start negotiating again until summer let's say, find an agreement which will be somewhere between these two brackets that had been outlined.

So the conversations have started again and they are going I think in the good direction. Everybody is conscious that we need to find an agreement and that any rate there won't be an agreement and there won't be an extinction.

Giovanni Montalti: Okay. Thank you.

Operator: Our next question comes from Andrew Lee from Goldman Sachs.

Please go ahead.

Andrew Lee: Yes, thanks for taking my question. Just a couple please. Firstly on the indirect cost-cutting. Could you just give us what your indirect cost-cutting was this quarter? I know you're saying that you’re continuing to push for it, but I think usually you brought the slide that shows what the indirect cost-cutting was.

And if you could give us any kind of guidance to what that indirect cost-cutting should be for the full-year that would be great. And then just second on consolidation, acknowledging the fact you're probably sick of answering questions on it. Reuters is reporting that the EU block, U.K. consolidation. You were clearly really close to doing French consolidations and Orange in particular did a great job of bringing everyone to the table.

Could you talk about any time restrictions that would make you want to try and resurrect a deal sooner rather than later? Thank you.

Ramon Fernandez: Well, on your second question, we are not working on resurrection. We are working on being successful with our operations in France. We have a quality network. We have a commercial success.

We have the financial means to continue on this path. So honestly we are not going to speculate on going back to the table of negotiating the deal which obviously was too complicated to deliver. It will come back probably or maybe at some point in life, but the page has been turned. Now we are back to work with our own tools, our own strengths and we are very comfortable that - as we had said at the beginning, we were the operator which needed this the least even if we felt it would have been good for everybody including us, but it's not going to happen just now. So let's concentrate on our own priorities, our own projects, including where the diversification in the banking industry et cetera.

On indirect costs, well, you have seen that there has been some increase in this first quarter but this is, in fact, essentially due to exceptional personnel human resources costs. There is the impact of the share plan for employees, which is generating €50 million cost and there has been an exceptional intéressement - I don’t know how you say intéressement in English I must say. An employee benefit sharing says Gervais, so this must be correct. And this has incurred the cost of an addition €40 million. So you have in this first quarter €19 million, which is kind of special employee costs which is concentrated on the first quarter.

At the same time, the number of employees are decreasing in France by close to 5%, so you will see at the end of the year obviously the positive impact of these ongoing efforts which is well known by all of you. You also have, in terms of indirect cost, a slight increase of network and IT costs, which is especially in Africa and the Middle East linked to the increase in our network capacity and the extension of our coverage. We have, in Africa for instance, increased by 1,200 sites our coverage in our different countries. Also in France, we have a slightly higher number of interventions due to weather conditions. And if you compare our posts you would see that in terms of advertisement, you are stable, you are decreasing in general costs, and so the general efforts you have seen in the past is going to come back.

You also had, in this quarter, some specific issues with the Euro Football Championship sponsorship and the rebranding that we are seeing this year in Egypt, it was last month. In Belgium, it’s going to be next month. And at the end of the year in Morocco, will also be contributing to put some short-term pressure on the reduction, but we will reduce indirect costs. Yes, I'm not going to give any figure, but we are continuing our efforts on this area.

Andrew Lee: Thanks very much.

That's very clear.

Operator: We will now take our next question from Jerry Dellis from Jefferies. Please go ahead.

Jerry Dellis: Yes. Good morning, everybody.

It’s Jerry Dellis from Jefferies. A couple of questions please. Within French mobile if we sort of look into your contract net adds, we see that the Orange branded base look like it was down about two 43,000 in the first quarter of 2016. Are you confident that you can sort of restore that to grow from the second quarter onwards and what will be the initiatives that drive that? And then the second question relating to your cost momentum. Obviously as you go into the second half of this year some of the sort of group employee share plan costs obviously drop away, but you certainly carry a much higher weight of Spanish football content cost into the second half because of the Mediapro deal and because your deal with Vodafone on distribution in bars and restaurants starts to kick in.

So are you confident that on an underlying basis then you can really sustain Group EBITDA growth into the second half? And then my final question is just really around the dividend. Given the relatively low level of leverage for the Group now Post the EE transaction and with the strong visibility on cost-cutting that you've already talked about, what you need to say what are the conditions that need to be fulfilled before management would consider actually raising dividend per share? Thank you.

Fabienne Dulac: So as you see, the level of net adds is good in France in this first quarter. The key success is different points. The first is the quality of service we offer and the quality of the network I think is the best we can offer on the market now, and we have a good momentum because a lot of customer made the quality before the price in their choice.

You have the strategy on subsidiary, we decide and we maintain on high hand of market. The quality of the customer experience, an asset of Orange and we want to following in this strategy. The retail, the shop which is we redesign currently everywhere in France, so all these points made the difference between the competitors and maybe made the difference with all promotion we can see on the market. So I think I have said everything.

Ramon Fernandez: Merci, Fabienne.

On your question on costs perspectives for EBITDA growth and dividend, I think you know that there is a seasonality. There is a phasing in the fueling of EBITDAR in the Group, and so there is first quarter which is traditionally weaker than the second half of the year. And more generally speaking, there is a second half which is better than the first half. This is for a number of reasons, including this year, some specific elements which are what we just discussed about employee costs and also by what I have just said, on rebranding costs, which are concentrated on the first half on these two countries which are becoming Orange in early 2016, Egypt and Belgium, before Morocco once again at the very end of the year. There is also the Euro 2016 Championship.

So there is a seasonality and you will see this in 2016. You are seeing a part of it in the first quarter, but there is seasonality with the second part of the year which is clearly higher than the first half. There is no surprise. This is exactly what we have expected, and this is why we are perfectly clear when we confirm our guidance that we would have an EBITDA, restated EBITDA in 2016, which is going to be higher than the EBITDA in 2015 on a comparable basis. We are extremely clear on this point.

On the dividend, well, you know we have said that we would maintain a level of €0.60 during period of our strategic plan, Essentiels2020, and we had said in early 2015 when we launched our plan that we did not exclude to increase the dividend depending on the results of the Group. So clearly 2015 has been a good year, even in advance compared to our plan because we had already a slight increase in EBITDA in 2015. This was better than what we had announced and the perspective of return to growth is also there. We have three quarters of increase in revenues. So I think you should be confident and patient, or patient and confident, put it as you want.

We will review the situation once we would have several quarters of growth, and so we will review the situation based on the 2016 results.

Jerry Dellis: Thank you very much for that. Could I just come back on the first question please, a question around sort of the French momentum was really based on the numbers. We seem to show that Orange branded contract net adds actually turned quite strongly negative in the first half - in the first quarter of 2016. So obviously accepting for the quality, advantages that the Orange brand which seem to have relative to the competition does appear to have shown through in the first quarter.

So the question was really around, what can be done between Q1 and the rest of the year to really exert a little bit of momentum back into the Orange brand as opposed to the Sosh brand, which seems to be doing extremely well in the first part of year?

Fabienne Dulac: In the first quarter, the net adds are driven by high-end offers, not by Sosh. Sosh has been very attacked by the aggressivity of the promotion. It’s normal because it's - the offers we have are very competitive and very targeted by the promotion of the competitors. But I would like to specify that the volume of net adds we realized are on high-end market, so that's why we will push you and following the strategy of the value.

Jerry Dellis: Okay.

Thank you very much.

Operator: We will now take our next question from Jacques de Greling from Natixis. Please go ahead. Jacques

de Greling: Thank you. My first question is regarding Spain.

Just a clarification. Now that you have this disagreement with Mediapro, do you believe that you’re roughly on par with what the competitors can offer? Second question, how you hedge your share in BT equity in case of Brexit? And last, an accounting question just to clarify. Regarding the IFRIC 21 effect, that relates only to Belgium or to the whole group? Thank you.

Ramon Fernandez: So IFRIC 21 has been applied in the Group in France, especially last year. So we had the impact last year.

And we have it in Belgium this year. So this is your third question. On the shares of BT, we are hedging towards the currency. We don't have an hedge on the BT share price because this was not foreseen in the agreement, but we have an hedge on for British pound. Jacques

de Greling: Okay.

Ramon Fernandez: On Spain. Unidentified

Company Representative: First, on Spain, I think now that we are clearly at par as regards sports. This is situation of today. For other rights, I think we have done our best taking into our accounts of regulation as it is where in fact Telefónica has an obligation only to sell 50% of what they have acquired through Digital Plus. So which means that each time there will be international rights to be redistributed or reserved, we check where they go, how we can negotiate, whether we have - you know that in France we are directly dealing with HBO.

In Spain, we will see - we understand that there might be discussions or even finalization of discussions between Vodafone and HBO, we’ll see whether there is possibility to be part of the resale agreement. So the fact on the other rights, especially for cinema and series would be a permanent fight to have access to content as like in some other countries. But for sports, we are clearly at par. Jacques

de Greling: Okay.

Operator: We will now take our next question from Dimitri Kallianiotis from Redburn.

Please go ahead.

Dimitri Kallianiotis: Hi. Just a quick follow-up on - just regarding content actually, but more specifically on France. I mean, one of your competitor, Numericable-SFR, is obviously pushing quite hard in terms of content, and I just wanted to ask you if you have a bit of a rethink in terms of your content strategy in France if you think it makes sense for you to basically go little bit more aggressive, spend a little bit more money as you're doing in Spain, potentially for buying football rights on an exclusive basis or more content in general. And my second question was just regarding Enterprise.

Your performance is improving. It's been a lot stronger than some of your peers in Europe in general. So I want to ask you do you see that performance as sustainable or should we expect a little bit more pressure from legacy services in Enterprise? Thank you.

Ramon Fernandez: Well, maybe we will start with the second question. So Thierry Bonhomme, who is heading this is business is going to answer.

Thierry Bonhomme: Thank you. Yes, it’s sort to say that when it comes to the B2B business, we are back to growth with the 2.1% year-on-year growth versus the 0.4% posted in Q4 2015. It is supported. Yes, it is supported by strong resilience within our legacy business, but it is as well supported by a strong growth and good perspective when it comes to international business outside of France and IT services. So what we anticipate is more or less what we had been facing for quite a few years now.

It's still strong competition and pressure on the legacy business, particularly in France, offset by our growth within the international and IT services business. Is it sustainable? Yes, we think it is sustainable, thanks to all the efforts which were launched within the cost management for when it comes to B2B, plans for the labor cost management in the U.S. and Europe two years ago, plans on renegotiation of cost networks around the globe, plan of optimization of our service factory and you probably are not aware that each offshore in low-cost countries and we are still improving, and of course still plans to develop our businesses, thanks to organic growth and new acquisitions, typically which Ramon mentioned with our acquisition of LexSi, which is 200 people company with expertise within remediation when it comes to site management which give us, as Ramon explained, a very strong position in this business. So that's very well embodying the global strategy of our B2B operations around the globe.

Ramon Fernandez: Maybe on content, and I will turn to Fabienne because your question was specifically addressing France.

But generally speaking in terms of content, our strategy is to be a distributor of content and an aggregator. And so our essential aim is to give to all our customers the best access to a very large choice of contents. And so if you are an Orange customer, you have a very broad area of content you can access and we have OCS with specific agreements with HBO, Sony Pictures. We have an Orange Studio, which is contributing to producing contents. We are spending more when it is needed and this is as a case in Spain, where the evolution, as it was explained also by Gervais, has driven us to buy contents and so we are investing more in Spain clearly.

But this situation is not the same in all on the countries where we are also adapting to the different situations in different countries.

Fabienne Dulac: As specified by Ramon, we have a strategy to offer the largest content we can find. It's why we are in a position to made a lot of partnership with the best content we can find, Canal+, OCS, Netflix, and we will follow in this strategy. We want to offer in the same way the different solution you can find VOD, SVOD, and it's the strategy we will follow. Three millions of customers benefit of Hub-self TV [ph] currently, so it's a success strategy.

We have now necessarily to change.

Dimitri Kallianiotis: Thank you.

Ramon Fernandez: Yes, so in France, you know that since 2012 we have significantly decreased our content costs and we didn't see any loss of customers. So once again we are adapting in different countries to different situations and we're absolutely not convinced that there is a case which would drive us to invest more in a vertical way as some of our competitors do.

Dimitri Kallianiotis: Thank you.

Operator: We will now take our final question from Ryan Fox from Tudor Capital. Please go ahead. Please go ahead Mr. Fox. Your line is open.

[Operator Instructions] As there are no further questions at this time, I would like to now turn the call back to Mr. Ramon Fernandez for any additional or closing remarks.

Ramon Fernandez: No, the additional remark is to thank you all for participating. I think you will see that these results are extremely encouraging that the strategy is working and that despite tough competition on the French market especially we have the tools to fight back. And when you will give a very close look also to all the figures you have in the presentation, you will see that, on fixed, we are clearly leading the race, and on mobile, we are doing better than only resisting.

Look closely at the figures and you would see that it's a very good performance. So thank you very much and see you soon probably.

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