Executives: Ramon Fernandez - Deputy CEO and Chief Financial and Strategy Officer Fabienne Dulac - Senior Executive Laurent Paillassot - CEO Spain Pierre Louette - Chief Executive Officer

Delegate
Analysts: Stephane Beyazian - Raymond James Dimitri Kallianiotis - Redburn Giovanni Montalti - UBS Nawar Cristini - J.P. Morgan Frederic Boulan - Bank of America Vincent Maulay - Oddo Securities Jerry Dellis - Jeffrey Simon Weeden - Citigroup Jakob Bluestone - Credit Suisse Guy Peddy -

Macquarie
Operator: Good morning, ladies and gentlemen, and welcome to the Orange’s Third Quarter 2016 Results Conference call. The call will be hosted by Ramon Fernandez, Deputy CEO and Chief Financial and Strategy, with members of Orange executive committee for the Q&A session that will start after the presentation. Thank you. And let me hand over to Ramon Fernandez.

Ramon Fernandez: Good morning. Thank you for joining our Q3 2016 results conference call. As just introduced, I would present the main highlights from our quarterly 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. You can see here that revenue growth accelerated in Q3 at plus 0.8%.

Thanks to a better trend in France and in Europe especially in Spain and the continuous growth of Africa, Middle East and Enterprise. A very high broadband that’s close to plus 6% remained the key driver of growth this quarter. With positive revenue trend contributed to EBITDA growth with a plus 1.6% growth in Q3 after minus 0.6% in H1 confirming the better trend expected for H2 and fully consistent with our guidance of a restated EBITDA 2016 above 2015 on a comparable basis. CapEx in Q3 stood at EUR1.6 billion equivalent to a CapEx to sales ratio of 15.2% as we continue our efforts in fiber in France and in Europe. Let’s now turn to our commercial performance.

In line with our convergent strategy and following the recent closing of Sun Communication acquisition in Moldova, we are now convergent in all our European countries. This strategy is bearing fruits with an increase by 11% of our convergent customer base which is now at 9.8 million. This is also the result of ongoing investments in very high broadband networks. Our 4G and FTTH customer base showed strong growth of 1.7 and 1.9 times respectively year-on-year supported by the increase in data usage in all our countries and thanks to the quality of our content offers. In France, we just launched a new offer with [indiscernible] available to our fiber customers, one in Spain we secured competitive content offers in market driver by football.

In Africa and Middle East, we now consolidate in our accounts Cellcom in Liberia and Tigo in DRC. And we closed the acquisitions of Airtel subsidiaries in Burkina Faso and in Sierra Leone. These two acquisitions will be consolidated in Q3 in our accounts - in Q4, sorry. In France, we closed the acquisition of 65% of Groupama Banque and we will launch the commercialization of the Orange Bank in H1 2017. Turning to Slide number 7, let’s look our financial results.

In Q3, revenue increased by EUR82 million. France posted a better trend with minus 0.6% in Q3 after minus 1.2% in H1. Thanks to very good commercial momentum despite an environment means very competitive, despite also with increase of national roaming in some regulatory in banks such as European roaming and special numbers, we will come back to these points later. Europe performed well with plus 2.8% year-on-year especially driven by Spain with a close to 8% growth. Africa and Middle East reported a plus 2.5% growth and Enterprise plus 0.7%.

Turning to EBITDA, Q3 was up by 1.6% and EBITDA margin grew by 0.3 point including EUR13 million revenues received at the end of the Euro 2016 Football Championship contract. Excluding this effect, underlying EBITDA improved at plus 1.2% year-on-year. The 58 million restate EBITDA growth was mainly driven by revenue growth. Commercial costs and content costs increased to support growth, while in the meantime we continued our effort on other costs which decreased by 33 million. Full-time equivalent employees decreased by 3.4% in Q3 and we continue to improve operational efficiency through the implementation of our Explore2020 program.

We are on track, we’ve all target to deliver EUR3 billion of growth savings between 2015 and 2018 through four levels, digitalization, virtualization, simplification and green efficiency. And we will provide you with more details on all four initiatives and our achievements in full year 2016. This performance fully supports our 2016 restated EBITDA guidance. As already announced, H2 will show a better trend than H1 and Q4 will be better than Q3. Slide number 9, on our investments.

CapEx stood at EUR4.7 billion for the first nine months of 2016. Our CapEx to sales ratio of 15.6% and year-on-year increase of EUR237 million mostly concentrated in France and in Europe. In France, the plus 227 million growth in CapEx was mainly the result of an acceleration in fiber investment with a total of 6.3 million connectable homes and also a significant increase in customer equipments following the launch of new Livebox in May. 4G population coverage now reached 84%. In Europe, the largest CapEx increase occurred in Spain in connection with the integration of Jazztel.

Altogether in Spain, we now have 9 million connectable homes and 89% population coverage in 4G. In Poland, we tripled in one year of fiber footprint to 1.2 million connectable homes with commercial availability now extended to 27 cities. Investments slightly decreased in Africa, Middle East and remained focused on extending mobile coverage and launching 4G in new countries, bringing the total number of EMEA 4G countries to 10. Let’s now turn to the business review, starting with Page 11. In France, the third quarter confirmed the improvement in operational trends with total revenues close to stabilization at minus 0.6% despite some expected adverse effects.

This is the result of our successful strategy focused on very high broadband and convergence. Convergence remained a strong retention and acquisition tool supporting our performance both in fixed and mobile. 79% of new convergent customers were net fixed and/or mobile customers. Also in line with previous quarters, broadband churn rate for convergent customers with close to seven points lower than the churn rate for broadband non-convergent customers. Fixed broadband revenues showed steady growth at close to 6% in Q3 nearly offsetting with increase in mobile services revenues with fiber acting as a key driver with now 1.3 customers.

Broadband ARPU recorded sequential growth for the second quarter in a row. Year-on-year it was back to growth for the first time since 2011, up 0.5%. It was supported by our recent price increases combined with an improvement of our customer mix. Our value oriented strategy is working well. We managed to achieve strong fiber net adds as you would see on the next slide, while the limiting the level of promotion and despite a very competitive environment.

In Q3 less than one quarter of our fiber growth adds were made through the EUR19.99 promotion. As expected mobile ARPU and mobile service revenues continued to be penalized by the decrease in European roaming prices especially during summer months and the end of a surcharge on special service numbers. Mobile service revenues were also impacted by the decrease in national roaming. However, the trend improved at minus 3.8% versus minus 5.2% in Q2. Excluding the effect just mentioned as well as a positive one off linked to rent sharing.

The underlying revenue trend was a similar to the trend seen in Q2 as close to minus 1%. This shows the resilience of our model both into the low and high end markets, despite a very competitive environment. Let's look at the commercial performance, first on mobile, Page 12. In mobile, we recorded a strong commercial performance with 187,000 net adds supported by our market segmentation strategy and the superiority of our network. While we managed to maintain a price premium versus our competitors with no promotion during the quarter, we successfully posted positive net adds both on the orange co-brand and on Sosh with respectively plus 114,000 on the Orange and plus 73,000 net adds on Sosh.

More than 60% of our net adds where through the Orange brand in Q3. In August, we increased prices on our premium mobile offers as we increased data bundles and we already see a positive effect on our retail customer mix. Compared to Q3 2015 visual [ph] high end customers increased by one point for the quarter also showed further improvement in the contract churn rate now at 12.6% were lowest level since 2010. On fixed broadband, we now have more than 11 million customers. Thanks once again to a record quarter with 134,000 broadband net adds the best third quarter since 2009, while we increased prices in May with the launch of the new box proving our capacity to monetize our investments especially on fiber.

This solid performance was fully supported by our fiber strategy with 160,000 net adds of which more than 60% on new Orange customers. Fiber adoption rate was at 21%, this is three points more year-on-year. Thanks to this strong commercial performance. We also improved our broadband customer mix increasing by two points the share of high end customers. All in all, momentum in France was good in Q3 with good commercial results, a strong broadband performance nearly offsetting the mobile service revenue decline.

Our strategy focused on convergence and very high broadband is being up. Let’s now turn to Spain where growth is picking up. In Spain, overall revenue growth improved for the six quarter in a row to 7.8% confirming the solid 6.2% growth achieved last quarter. This came as the result of better trends in mobile and solid growth in fixed broadband. Mobile revenue increased by close to 10% plus 9.8% driven by the 5.4% year-on-year growth in the contract base and supported by both service upgrades initiated in Q4 2015 and Q1 2016 and a better value mix.

Fixed broadband revenues increased by 7.8% driven by a 5.3% growth in subscribers and 2.6% growth in broadband ARPU fueled by fiber and TV penetration. Leveraging our extensive fiber rollouts, fiber customers multiplied by 2.5 over 12 months now reaching 1.4 million. We expect to lead the market in Spain in Q3. TV subscribers multiplied by 2.1 over 12 months supported by the usual back to school promotions and the beginning of the football season. Finally, earlier this month, Orange Spain reached a global agreement with Masmovil on national roaming, site sharing and FTTH, supporting our ambition to become a clear number two player on the market.

In Poland, revenue trend is unchanged versus last semester at minus 3.9%. Mobile service revenue deteriorated to minus 3.1% compared to 1.7% last quarter because of further progress in the shift towards installment offers and because of the growing popularity of family offers which increased SIM-only share in the customer mix. Mobile equipment sales grew strongly due to the transition from subsidies to installments. This quarter, we posted plus 309,000 mobile postpaid net adds which was the highest growth in many years leading to plus 14% growth of mobile contract base. Decrease of PSTN legacy revenues kept pressure on fixed revenue down 8.6% year-on-year.

In order to improve our position on the fixed market, we pushed ahead first with our convergence strategy with 42% of our broadband base now on convergent offers and second with our very high broadband strategy with 22% of our base now on video sale or FTTH. This quarter, the company posted 44,000 net adds in the very high broadband compared to 39,000 a year ago. Out of a total footprint of 1.2 million homes past end of Q3, we had 57,000 FTTH customs. In Q3, we posted 18,000 net adds on FTTH of which 76% were new customers. Let’s now turn to Belgium and Luxembourg.

Where in Q3, consolidated revenues increased by 1.7%, thanks to growing data usage. Mobile service revenue was almost stable as after growth compensated the negative effect of EU roaming. Excluding regulation effect, mobile service revenue grew by 5.2% in Q3 against 3.5% in Q2. Orange Belgium also pursued its transition process with the successful rebranding and the nationwide launch of its convergent offer. Orange Belgium posted 7,000 net adds of convergent customers reaching 18,000 customers in Q3.

Lastly, in October, our Orange Belgium reshaped and simplified its mobile tariff portfolio with simplification from nine to six tariffs. Such new segmentation based on more for more strategy will facilitate upsetting customers to enriched mobile data buckets. Let’s now turn to the Central European countries, which registered a six consecutive quarter of revenue growth despite a slowdown mainly because of EU roaming impact and the decrease of revenues in Slovakia and Moldova. The contract based reached 8 million customers, up 4%, also the 4GB basis standing at 2.8 million with an increase of 400,000 customers over Q3. We pursued our full convergent strategy in all three countries; in Romania, we launched a national convergent offer in September; and in Moldova, we just closed the acquisition of Sun Communications.

In Africa and Middle East, revenue grew by 2.5% in Q3 including the newly acquired assets in Liberia and DRC. Excluding these two operations, revenue grew by 3.1% after 2.3% in Q2. The mobile customer base is back to growth as the customer identification process is nearly completed. Egypt, Ivory Coast, Guinea and Mali, we have the largest contributors to revenue growth. We moved forward with our cluster approach as we recently launched attractive international voice offers for instance from Senegal towards Mali and Guinea Bissau or from Jordan to Egypt to increase international traffic consumption and better compete with OTT services.

We now operate 11 of these corridors and we will open soon new ones including dedicated offers between France and some of these countries. For new business drivers also support growth, mobile data is up 34% in revenue, our Orange Money plus 48% with 20 million customers and B to B revenues up 12%. Lastly, Orange Egypt recently signed a 4G license agreement for two times 10 megahertz of spectrum. This would enable Orange to offer its more than 43 million Egyptian customers an excellent quality of 4G services. Turning to Enterprise, revenues grew for the third quarter in a row with plus 0.7% year-on-year, supported by a better trend and voice services, stabilization of data services and still a good performance of IT services.

Voice revenues improved not only thanks to the improving trend of legacy revenues, but also thanks to the strong growth of voice-over-IP services and repricing. Data services stabilized, thanks to good value management in France and solid international performance. And IT and integration services grew by 4.1%, driven by security services and cloud plus 8% and plus 16% respectively supported by the integration of two new acquisition Log’in and Lexsi. So with these solid results, we can confirm all the elements of our 2016 guidance announced in February. We reiterate our guidance of a restated EBITDA above 2015 on a comparable basis.

We will also maintain our net debt to restated EBITDA ratio around 2x in the medium term. Regarding the dividend for 2016, we confirm our proposal to maintain a level of EUR0.60, being a EUR0.20 interim dividend on December 7. Regarding our portfolio management policy, we will keep our selective approach focused on our existing footprints and on value creation. Thank you for your attention. We are now with my colleagues ready to answer your questions.

Operator: [Operator Instructions] We will now take our first question from Stephane Beyazian from Raymond James. Please go ahead. Your line is now open.

Stephane Beyazian: Thank you. Two questions if I may.

To start with on costs, can you update us on where you stand in terms of the cost efficiencies plan and what are the possible steps going forward and now this could help in 2017 your EBITDA growth? And one question on the media, can you come back on Canal offer, is it a directly profitable product or is it something that you need to subsidize in a context of growing competition for telecoms and media? And finally one third - sorry question on Spain, you’re singed over the large agreement for fiber coverage with the Masmovil which was surprise to me, so is it regulatory driven or also without the pros and cons that you’re assuming in making this decision? Thank you.

Ramon Fernandez: Okay. So I think the third question can be taken by Laurent Paillassot, CEO of Spain, who’s also in line with us and it would third question. Stephane will take the question on Canal. On costs, we have I think demonstrated over the past years that we were able and willing to work on our cost base and this is what we are going to do so.

The best proof of this of course is what happens on EBITDA and you see that we have a mix which is now driven by some elements of costs which are going to be growing for instance when we look at content. This is supporting growth in revenues and this is going to be an element which is different from what we had seen in the past, but this is positive for growth and it has a positive impact on EBITDA. So we are going to continue the efforts on all the elements of costs of course in terms of people, we will continue our assisting of it which you know are being supported by the things and the number of our people are retiring due to the retirement age and so we are continuing these efforts. We have all the efficiency cost programs under what was called before Explore2020. And as a said in my presentation, we have four key drivers around the simplification, virtualization et cetera.

And what we proposed to do is to give you a very detailed presentation on these programs in the full year of 2016. I think it’s more interesting then to go piece by piece on a quarterly result. So this is what we had been planning. And in 2016, when you will look at the overall picture in terms of costs, of course you will have to take into account that we had a number of exceptional costs which had been weighing on the EBITDA essentially the first half. I’m thinking of the rebranding in Egypt and Belgium of the Football European Championship, obviously the operation for employee shares et cetera.

But this is - we are absolutely sticking to what we had said in the - in our Essentiels2020 plan, basically that we would reduce the ratio of in direct costs to sales by two points between 2015 and 2018. And this is fully confirmed. And you had the declination of this in terms of HR, in terms of what would happen also in France, this is also confirmed. So well, there is really, nothing is changed compared to what we had said in the past quarters and the company is sticking to its efforts to work on its cost base quarter after quarter. Fabienne, on Canal?

Fabienne Dulac: Good morning.

The aim of the agreement with the Canal is to offer to fiber customer the best content in line with our content strategy. We aim to sustain our fiber strategy and increase the number of fiber customer. It’s a win-win agreement for Canal and for us. For the rentability, it’s a wholesales offer - sorry wholesale offer based on variable cost. So the new offer priced at EUR5 you know, after the 12 months promotion period, we’ll have a positive impact on our EBITDA.

Ramon Fernandez: Thank you very much. Laurent, are you with us.

Laurent Paillassot: Yes. Just on the Masmovil agreement, as you know it is full fold, we have a national rooming agreement, which obviously is additional revenues for us. We have sharing - tower sharing agreements which is basically helping us on the cost efficiency of our mobile network.

Regarding fiber, we had two elements, the first one is bitstream offer which is basically offering what the incoming would have offer to anyone, similar access to enable offering Spain and we know that it is limiting the capacity to compete there because the price of such offers are quite expensive. And the second element is co-investment strategy which we always maintained and we have agreements with Vodafone which is basically for us. The idea is to expand as fast and as much as we can the footprint of the Orange fiber. And the agreement with Masmovil is in this strategy. We are basically trying to compete with Telefonica Network and having other to co-invest with us is interesting in terms of the P&L impact and the CapEx required.

And the impact in term of volumes will totally depend on the capacity of Masmovil to invest. And that’s the name of the game. They have to invest and deploy their own fiber for us to also co-invest. So it is a very I think very positive for the whole market because everyone has to go into investment. Masmovil will have to invest on this 4G and this mobile network and we have to provide coverage as well as they will have to invest on fiber.

And it’s on invest, we will co-invest and we’ll reduce our costs, so it's very positive for I think the whole dynamic on the market.

Stephane Beyazian: Thank you very much.

Operator: We’ll now take our next question from Dimitri Kallianiotis. Please go ahead sir, your line is now open.

Dimitri Kallianiotis: Good morning, thank you.

My first question is just regarding going back a bit on the Canal side offer. I just wanted to ask you a little bit your view on the need now to really own a pretty small content, I mean we saw the Time Warner, HNT deal just announced. I mean do you feel you need to invest more in content rather and just rely on wholesale deals a bit like with Canal? And then my other question regarding next year, just wanted to know if you could help us quantify the impact of the new roaming regulation in the EU, what sort of the impact do you expect at the group level on revenues on EBITDA? And my last question is regarding fiber in France, obviously reported another very strong performance. I am wondering if you could tell us how many of those new fiber customers come on the low end than offer at 20 years by month rather than on sort of on the other higher bundles? Thank you.

Ramon Fernandez: So maybe a few elements and maybe my colleagues will also come back to it.

On the third question on fiber, I think I gave the answer in my presentation. It’s less than one quarter of total growth net adds in fiber which come to the let’s say EUR20 price for EUR19.99. So less than one quarter in the third quarter. This is the answer. So it's nothing like what I think some of our competitors imagine.

And of course nothing comparable with what they do. On the second question which is on the impact of the European roaming, the impact in 2017 is expected to be around one EUR150 million around maybe slightly more maybe EUR150, EUR170. It's difficult to have a final figure, because some elements have to be clarified on the exact terms of the regulation especially in order to have the adequate limits in terms of making sure the fair use is going to be respected. So we have some details that you need to have, but it’s obvious order of magnitude EUR150 million, EUR170 million maximum. Your first question on Canal and is anything changing into the world following what we are seeing in the U.S.

or anywhere else. First, I would like to recall that in fact we do invest quite a lot and spend quite a lot in at group level on content. This year, we will spend around EUR550 million and this is you know quite significant. You know that’s our strategy is not only to distribute, but also to aggregate and in some cases to produce when we think there is space in Mississippi to do so, it was a case for instance in Spain where football rights were a key driver to be very powerful in terms of a TV penetration and it is working very well, we now have close to 460,000 TV clients in Spain, and we’ve have also football rights I guess, this would have been more difficult. When you look at what's happening in the U.S.

probably it's as much diversification than Jazztel integration that we are seeing as a motive for the ATT move and we will need to see how the competition it is. Look at - so all cases are different, we are in the position in the group and in France to offer very broad area of services and contents to our clients. This is the key we can - the recent deal is one example, but we also have secured to be in contract renewal and you know we have Orange Studio, you know we have OCS, you know we have our agreements with HBO, with Game of Thrones et cetera, you know all this. And so this a strategy which puts us in a good position where we don't overspend if overspending is not helpful, and we're going to stick to this still watching of course what's happening in the world. Pierre, you would like to add something?

Pierre Louette: Yes, just to mention, you’ve mentioned the Time Warner situation, it is really very American base situations.

First of all there is a different approach with regard to the valuation of data and all of those deals that you see and you probably have noticed a month ago from the Yahoo deal. All of those deals are based on how you're going to be able to value profiles data by crossing those approaches. And the law and privacy is different. The valuation in the U.S. and data is different.

If you look at other companies like Palantir and others it all goes around how you monetize the profiles which is not completely prevailing in Europe today. So it really is a different approach. And again as Ramon mentioned, the regulatory approaches will be very important in that deal. You know that Comcast tried to buy Time Warner and it couldn't succeed, so there's going to be about a year of examination before you receive anything goes through. So it's a sort of middle term prospect.

And we still completely stick, has been described to our strategy which is aggregate used distributors of good contents and this is what we do and has proven really efficient until now, so now we don't feel that we have to change anything.

Dimitri Kallianiotis: Thank you.

Operator: We will now take our next question from Giovanni Montalti from UBS. Please go ahead sir. Your line is now open.

Giovanni Montalti: Thank you. Good morning. So, going back to the roaming point, when you say under 50 million for next year, what’s - this is for revenues or also for EBITDA and also what kind of assumptions are you start to gain in terms of cap for the wholesale roaming tariff? Thank you.

Ramon Fernandez: So the cap on wholesale is still under discussion and in terms of 150 million, 170 million figure this is in fact revenues which translates essentially into EBITDA, so you can assume that is roughly the same, of course, once again it's complicated to have figure which is final, because you have for instance some elasticity of traffic to tariffs which can be seen in some at least some countries. So we will - but this figure I think will be - we should not be far from this final figure.

And then we will have more details with the finalization of regulation in the next months. But I think with this figure, you have I think a good view on what will happen.

Giovanni Montalti: Sorry, if I may just say quick follow-up, there is some debate in the market about the risk of potential margin squeeze for the Nordic operator, so in any case the operators let's say have a negative balance of roamers, because of the cancellation of the retailer, let's say roaming fee, they would still end up paying some I’ll say fees obviously to the host. So there's some debate among investors about the ricks or margins for these operators. And obviously I mean I think this is something that is currently discussed by the European Council to decide the final point of wholesale cap.

I know if you can share some thoughts, some comments with us on this point? And on a very different topic, if you can comment about, I know this is a very recurring question, but if you can share some comments with us about the outlook for stabilization of the competitive dynamics in France and potential consolidation? Thank you.

Pierre Louette: Pierre speaking, Just an additional point, our range is in a particular situation especially with the rate of France which means that in terms of traffic received and traffic sent, we are more or less neutral which means that if there is a chance of wholesale price for group, that’s relatively neutral for group as a whole. I don't say it will be neutral for all the operations of the group, because one of the big issues with this wholesale price change is that it’s not a burden for the countries of the sales operators. At the profit of the operators this is more or less what will happen, but for Orange in total now is a debate for the European commission is again whether they will favor Nordic countries, or whether they will support south countries, okay and you have to keep that in mind.

Ramon Fernandez: Okay.

So I think we will come back to this, but once again I think you have a broad view on this and this has there is no relevant additional impact on what you have on our financial targets for the following quarters and years. On your second question on the French markets in the perspective of seeing or not consideration I think everybody has a view on this and probably at some point in time it will come back, but we are implementing our strategy whatever the environment would be. So we know what we have to do. We are very much focused on customer experience, getting the best service to our clients, investing in order to have the best network, convergence, which is more and more important in France and we will also in 2017 come back to you with some additional KPIs which will help you probably also to better understand with when you see the difference of churn for instance between convergence customers and non-convergent customers the difference is extremely significant. And it's going to be more and more the key of success.

So we are investing on fiber, continuing to invest on the 4G network, focusing very much on the quality of a service we give to our clients and for a best customer experience we want to deliver is really a huge focus. And so if the market is a full market players, we will be the best player on this full market player. If at some point it becomes a free market player because conditions are right. It would be probably better for everybody. But once again we're not the one who is the most in need to see this happening.

So let's not speak relates on what could happen, let's focus on the performance of what we are doing. Competition is tough. It is clear, competition is tough. But I think that when you look at the performance group on fixed and mobile in France this year, I think we can pay tribute to all our people on the ground, because when you see that more than 60% of our net adds on mobile are on the premium services when you look at non-public offers, retail offers, it's quite very impressive and always without any promotion. So yes, it's tough, but Orange machine in France is really delivering very good results.

Giovanni Montalti: But it looks like it's improving a bit or I mean looking at your result, it looks like competition is intense it is going to be down or would you agree with that or not?

Fabienne Dulac: Okay, Fabienne Dulac speaking. You're right, the French mobile market and in the same time, the French ADSL market are very competitive and turbulence since in the middle of 2015. We expect the same level of competition in the next month and the hands where we have in France for around is the convergence, is a tool of acquisition of retention and of up sell. So is the strategy where we pursue during the future, because I think this is only one way and the best way we have with the strategy we have on the premium and fiber. But we don't expect a chance.

And we're ready for that.

Giovanni Montalti: Thank you.

Operator: We’ll now take our next question from Nawar Cristini from J.P. Morgan. Please go ahead sir.

Your line is now open.

Nawar Cristini: Thank you very much. I have two questions please. So firstly on the domestic fixed business, broadband TPIs were robust both from the net adds and ARPU standpoint. So I wanted to ask how should we think about the growth trajectories going forward for broadband service revenues, is the mid-single digit growth that we are seeing this year so far is a good proxy going from here? And secondly on the dividend, the balance sheet is strong, EBITDA is growing and the payout ratio is low, so it’s looks like we’ve got all the ingredients for dividend increase.

Could you elaborate on this and perhaps walk us through the thinking process to set the dividend going forward? Thank you very much.

Fabienne Dulac: The fixed service revenue you saw is back to growth driving by the trend and the good performance of broadband revenue plus 5.8% in this Q3, it’s a very good performance and we are very proud of it, and then confident in the future, because this results, thanks to the growing of the customer base and the improvement of the ARPU trend. The ARPU is supported by the results and the commercial dynamics by the improvement of the customer mix and it's not volatile activity, it's very strong and another way, it's supported by the price increase of year in the future. So we are confident in the future to push through this trend, because it's not as a mobile very volatile and Orange is the really strong in these activities since the long time.

Ramon Fernandez: On the dividend, you know I think we said very clearly in 2015 when we launched our essentials 2020 plan that the current level of dividend was absolutely secured, EUR0.60 would be the minimum paid of years of the plan.

And that depending on the performance of the group, we could be in a position to increase the dividend that we did not exclude doing so. So this is still absolutely true and I think what we need to do is to consider this question about the dividend looking at EBITDA growth. I think we need to check that EBITDA is going to regularly grow quarter-after-quarter and this is what we are - this is what we have in view. We are absolutely in line with the objectives we had for 2016. We have a very clear increase of EBITDA compared to 2015.

And so we are confident that we are very well on track with what we had in mind two years ago. So this is a question we will have to look at with the full year results. We will come back with in early 2017 and I’ll give you what at this time.

Nawar Cristini: Okay, thank you very much.

Operator: We’ll now take our next question from Frederic Boulan from Bank of America.

Please go ahead sir. Your line is now open.

Frederic Boulan: Hi good morning. If I could come back on the pure partnership on the AT&T, Time Warner for Europe, do you see specifically virtual contenting rate integration as an issue for regulators on this side as a world? And second point on the CapEx side, if you could share with us where you see CapEx evolving in the coming years and when specifically we should start to see a decline considering your EUR20 million FTTH plan by 2022? And lastly on the cost cutting, so I understand you will give us more detail in early 2017, but it is fair to say that considering this plan was going on between 2015 and 2018, we still have about two years in the program. Where are we in terms of execution on the EUR3 billion group cost cutting plan, when you look up in that number is right now the OpEx base is still up a bit year-on-year.

So can you help us understand where, what you have done so far in terms of execution on this plan? Thank you very much.

Ramon Fernandez: Okay, Pierre Louette.

Pierre Louette: So maybe starting with the last point on the cost cutting, I Ramon described it previously we will disclose full numbers for the full year, so we're not completely ready yet to describe this. What I can tell you from the operational execution of our Explore2020 plan is that all the workshops and the streams are delivering well now, there are always address factors that you need to fight against and those have happened this semester to some extent, but we will deliver the overall figure. You may remember we over delivered quite heavily on the last program preceding on and I think we can expect the same kind of performs this time even the adverse wins are different, even if there are sometimes elements that you have to fight against that we’re not completely anticipated.

But we have a good plan started stream and we will give you the figures when they're ready for the full year. So going on the previous point which is the Time Warner issue, again from a regulatory point of view, nothing comparable to that has been examined in Europe and so now we haven't seen that kind of deals going forward. The elements of comparison would be the following. In the United States as you remember the Comcast Time Warner deal did not go through, because it was a horizontal consolidation some extent. Putting together people who were producers of content and already people delivering television services, as Comcast as a cable operator.

In this situation where AT&T is different, it's a telecommunications provider, so they're not falling under the same titles of SEC regulation and the FTC regulation in the United States. So it's a bit of a different animal. So they're going to look into those elements. As you may remember also competition laws in the United States or in Europe do not completely - have not completely upgraded their software if I may say, which means that it's still not so easy for them to do add profiles, eyeballs, data, they know exactly how to add turnover revenues and market shares, but not complete those new elements. So they're going to have a new examination to go to do forward with.

And that's also the reason why it's going to take some time. But again it's - this one is looking more as a vertical integration. You remember also that AT&T just acquired DIRECTV recently which is another element, which will also fall into the examination, because it's a lot now AT&T, DIRECTV plus Time Warner, we're talking about the big time full vertical integration, so it's going to take some time. In Europe just to end the answer, we haven't had the opportunities to look into those elements maybe one of the things that we have witnessed is the survey of our own distribution efforts when we were considering distributing exclusively for our subscribers exclusive rights we had acquired in football and that sometimes ago, the competition authority privileges from this, but then we won in appeal. So even from that point of view, I can’t tell you exactly what would happen.

So it's a great new world and again for me it's really, really data driven, profile driven and it's really about this supposed the kind of data and we’re going to look very closely to the way the Americans handle it.

Ramon Fernandez: Okay. So you know once again on costs as Pierre said, we'll come back on the cost efficiency program in 2016, but you should not be worried. We are close to 45% of implementation of the targets on the 3 billion gross efforts at the end of H1. So there is really once again fully on track with what we had said and the revenue increase and the EBITDA increase that you have on your table should be the best proven two year global balance is the right one.

On CapEx, the consensus expects that we would have a 2016, 2018 CapEx close to EUR21 billion with CapEx in with 2016 to 2018 close to or around 17% of sales and this is what we have in mind, so we are very much comfortable with these estimates. They are a little higher than the outlook we had been providing 18 months ago with Essentials2020, but this is linked to the inclusion of Morocco in just tell in Spain in our footprint where the investment effort is significative. So there is a footprint extension here, there is also an acceleration of our network investments. Of course, it's the fiber story in France in Spain, also now starting in Poland. And what is key is of course and these investment translate into commercial success, and MSCs also very much encouraged by the recent EU policy shifts towards the supporting very high broadband and fiber investment.

So this is what we had been discussing in the previous quarter. Around 17% of sales up to 2018 then it should go - it should go down from 2019 and we will be for these peak years slightly below or around EUR7 billion per year. So peak in 2018, then going down towards closer to 15 something percent of CapEx to sales also peak at 2017 in the three years including 2016.

Frederic Boulan: Thank you. And may be the last one if I may on Spain, can you share with us whether you think you're actually winning share from the others or you just benefiting from the more favorable pricing environment? Thank you.

Ramon Fernandez: Laurent?

Laurent Paillassot: Can you please repeat the question we didn't hear it correctly here?

Frederic Boulan: Yeah, the question is on Spain whether you think you are gaining share from local test, whether you think the performance primarily driven by pricing?

Laurent Paillassot: Well the performance is driven by both pricing and customer base, we are in term of net adds we've been performing in term of customer base better than most of the players. In fact if we look at the recent figures from CNMSC [ph] which compares the performance of Telefonica and other on the market, we are number one both in fixed broadband and in fiber. So we have a strong dynamic in net adds and we also have it mobile, so that's one driver. The second one is as fiber is being rolled out in Spain; we have needs for higher packages of convergence with more abundance in data. So we do have service upgrades which are being done regularly in the markets.

For instance we've just done one in October in Jazztel. So we do think that the dynamic will remain, so we have both volumes and ARPU which are going in the right directions.

Frederic Boulan: Thank you very much.

Operator: We will take our next question from Vincent Maulay from Oddo. Please go ahead sir.

Your line is now open.

Vincent Maulay: Yeah, morning. Two questions, the first one on the fiber regulation in France. We still have some buds on offset prompting Orange to this access to fiber in some specific cases and if without any change after the paradigm. So could you elaborate on what could concurrently change in the quarters coming? And the second question on the France mobile pricing; what kind of feedback do you have on the churn ARPU increase, the month after the price increase and without any promotion for the three months in a row?

Laurent Paillassot: Okay, Laurent speaking.

On the fiber regulations, the perspective is as following, there is a review which is ongoing now in France on three different markets, market 3A, 3B, 3C. So our SIP is basically reviewing a lot of the fixed markets. This has started a couple of months ago and there are consultations all of the players can contribute. This consultation phase would probably end at the end of November last at last mid-December. And then SIP will send a perspective on the change of regulation or not change of regulation to the computational authorities.

And all of this should be published next June. So this is the agenda overall. On this topic, we feel actually the things are pretty much moving in the good direction. What we understand now is that assets knowledge of the market and perception of the market is that there are so many ways actually for people who really want to invest, to be able to invest and there are so many ways for people who want to access to be able to access. This has been outlaid and described to them and think in a very complete way and it speaks for us and for them also.

We can access some of our distribution system in fiber if they want they have a contract with us. They can also access cable and actually as if I proposing them to give them access to cable. Iliad is now once again could easily confirmed that Iliad is investing very heavily now in fiber. Iliad is co-investing with us as much as they can, actually we feel that the sooner we roll on to the fiber network, they will co-fund and co-funding is one of the key principles in this fiber deployment in France and actually it's going to be adopted on the European level is if you've seen the European package recently, just as in Spain and in France co-funding will prevail. And so this has been I think a demonstration which has started convincing offset, so we don't feel very much that with this European package saying that if there is a fiber roll out, if there is a possibility of co-funding, there will be no ex anti-regulation asymmetrical regulation on fiber.

This has been published by the European authorities. So how could we so possibly go in that direction? It seems impossible. And this makes us feel that gives more comfortable now. We will never be 100% comfortable because the future is long, and so we don't know everything about the future, but we feel much comfortable and much more comfortable than we did actually a couple of months ago.

Ramon Fernandez: Yeah.

And obviously this is extremely critical, because we all know that we invest in a regulatory environment on fiber which is clear, which is context which has been said for all payers and everybody understands this clearly. So - and the European position recently has been also helpful. Reminder to all that’s those who invests should earn their living with their investments and this is why we do invest, and we will continue to invest. Fabienne, on mobile?

Fabienne Dulac: Yes, as you can see this morning our 2Q results on the mobile demonstrate, the attract activity of our offers even if we were in the price. You remember this August, we gave more data, but more price in the same time there is two impact volume and value and two positive effect, a positive effect on the mix, because Ramon said 60% of net add are made on high end.

So the mix of customer based growth in the high end offer. And we haven't a positive effect on convergence in the same way. So it's very important for us because you know the convergence is the key success for the mobile tomorrow too. There's no impact on the churn, we have the lower churn rate from 2010 so all the figures are very well oriented.

Vincent Molly: Thank you.

Ramon Fernandez: I think really when you look at all the figures this is what Fabienne was saying, it's striking to see that in this such a competitive environment, the fact science we were able to have such a big number of net adds and with such a mix with premium offers and also search is no promotion…

Fabienne Dulac: No promotion.

Ramon Fernandez: …with absolutely no promotion, this is quite an outstanding insight. Don't forget also what we were talking about looking at convergence, for instance the thing that we have seven points of churn decrease in fixed broadband, thanks to convergence also has a positive impact on mobile, so it both on mobile and on fixed. And more importantly when you have a broader picture looking at the progressive impact of convergence on the French market, if you are interested in the future, I think this is really a critical element.

Operator: We will now take our next question from Jerry Dellis of Jeffrey.

Pease go ahead, sir. Your line is now.

Jerry Dellis: Good morning, thank you for taking my questions. The first question is on French mobile please, was the decline in national roaming income less in the third quarter than in the second quarter you've previously given us mobile service revenue trends excluding national roaming. So I wondered whether we would be able to get that again please.

Second question in mobile, you only saw six weeks of benefit from the new list price increases that you implemented in the middle of August. So as those come through with the full quarter effect in the fourth quarter, should that all allows equal strength in the mobile service revenue trend? And then finally in Spain related to fiber, would it be possible please to give us an indication of the mix between high speed and low speed within your fiber net adds, and also all your fiber connections on your own network, are there any that use the hotel need but connections in a way that you might count as fiber?

Ramon Fernandez: On the Iliad roaming I think you know we have given a number of information already, I do know how much new information you would like to get, but the consensus sees your revenues in 2016 going down by your 150 to 160 and this assumption from consensus seems accurate. So I think you know enough probably looking at the quarters, you have seen already on. Maybe I have been would want to come back on what can happen on mobile in Q4, but I think we are in - we are in Q3, we have seen September as you said the six weeks of the new prices. So I don't know if you want to talk now much more about the next quarter, maybe you need to be a bit more patient, but Fabienne will…

Fabienne Dulac: The next quarter is very important, because you have the Christmas period with very big activity, very important activity.

I don't get a chance, so as I say, we will have a lot of promotion and we are already in this way. I just want to remind excluding the adverse factors, the MSR decrease is very limited as we explained as before close to minus 1% year-on-year and we will be in the same trend in Q4. As I said we raised the price, we have a very good trend on the high end offers in mobile, we have the convergence to sustain. So we are very confident, we have solid - very solid fundamentals leadership in the mobile, the capacity to have excellent commercial specimens. I am confident and there nothing to say.

Ramon Fernandez: Thank you, Fabienne. Laurent Paillassot?

Laurent Paillassot: Yeah, so in term of technology, we only have FTTH, so it's a very high broadband. I think the questions what's related to the neighbor versus our own fiber, if we look at the 1.4 million customers, we have over 82% which are our own fiber and the rest is indirect offer. And we use the neighbor for only in the regions and mainly on the regions where we intend to rule out and extend our footprint in term of fiber. So that's really - so we are mainly on fiber network.

Jerry Dellis: Thank you. Can I just follow-up my question on the high speed versus low speed that wasn't very clear, but your market offers a 50 megabit per second and 300 megabit per second, I think it was previously 30 and 300. So I just interested in whether the split is fairly even between those two or how the retail split is distributed please?

Ramon Fernandez: We have roughly I would say 30% higher speed premium as we speak, but we do see as the extension of the speed is going up. We do see additional demand from the higher value package and there is a general trend on the market for higher throughputs and higher content as well. So that's a general trend is very positive in the value creation.

Jerry Dellis: Thank

you
Operator: We will now take our next question from Simon Weeden from Citigroup. Please go ahead sir. Your line is now open.

Simon Weeden:
. :

Ramon Fernandez: No, I think you know - and Fabienne made the point, the minus 3.8% we have on mobile service revenues, which compared to the minus 5.2% we had in Q2 is the result of the impact of European roaming prices, the end of the surcharge of special service numbers.

There is also a positive one off I think we have explained this which is linked to rent sharing in this by the way has absolutely no impact on the EBITDA. And then you have an underlying revenue trend which is similar to the one we had in Q2 close to minus 1%. So the underlying is roughly was same is slightly better in fact, slightly better in Q3 than in Q2, and then you have a number of one offs in many directions which contributes to its final figure of minus 3.8%, but so I think curious the best picture we can give, we cannot go into growing into any extra detail because this could take us all day. But the essential part is that we have a kind of let’s say clean minus 1% underlying revenue trend on mobile services in this quarter, a bit better even in the previous one and very close to what we should see in the fourth quarter. So I think you have a quite clear picture of what we can see and expect into the following months on the mobile service revenues.

And once again I know and I understand that all of you are fascinated way of what happens on the mobile market and you’re right, it’s very important and there is a lot of work being done there and once again the strategy we are delivering is paying off. But don’t forget also if I may to look at in France the broad picture which is including the impact of a broadband strategy which is including the impact of the progressive penetration of convergence on the French market and you will see that all our engines are working in the right direction.

Simon Weeden: Okay. So particularly MBNA [ph] is a network sharing are doing a little bit better with that it must be a fair comment, it’s come out of your results, is that specific to Iliad or is that a general change in channel use, so why would be we see the MBNA network sharing component improved versus last quarter?

Ramon Fernandez: I think maybe we should have a one to one meeting at some point, but I think you have enough information to know.

Simon Weeden: Okay.

Thank you.

Operator: We will now take our next question from Jakob Bluestone from Credit Suisse. Please go ahead, sir. Your line is now open.

Jakob Bluestone: Hi, good morning.

I’ve got a question on French mobile. Can you talk a little bit about how you intend to protect your 4G network superiority, if we look at the statistics from ANFr, I think we now has more 4G sites that you do and SFR is in far behind and building up very rapidly. Obviously there is more to 4G network advantage than just a number of sites, but did you comment a little bit about how you can ensure that you have a superior network going forward, and also whether you perhaps need to step up your 4G deployment a little bit, which it just fits into the earlier comments on CapEx? Thank you.

Fabienne Dulac: Okay. I think your question is relay on announce of big telecom, so first of all, I would like to precise the advance in number of site announced is just punctual and linking to rent sharing between we and SFR.

Orange remain largely there in 4G and 3G, and in coverage, we are currently around 48% of population covered by [indiscernible] in France and we intend to keep this leadership. The question is not only a question of mechanical calculation of a number of sites, it’s more complicated and we have a real advantage in the existing infrastructure. We have in France; we have the best spectrum markets shares especially on a low frequency. We have our rollout approach very relevant. We want to be where customer are to have the best network and for the last, we all the time adjust and optimize the implementation of our network.

So I understand your question, but it’s not a question for Orange. We have the ability to remain leader on 4G. We have the experience. We are the people ready to be. So there’s no risk on this the superiority.

Jakob Bluestone: Thank you.

Operator: We will now take our last question from Guy Peddy from Macquarie. Please go ahead, sir. Your line is now open.

Guy Peddy: Yeah, good morning all.

Just a quick question you mentioned about the fact that your conversion shown is seven points lower. Was that a Q3 number or was it like a 12 month rolling number? And can you give us a still of where you think convergent churn actually is in absolute terms? And following on from that, do you take the fact that this churn is so much better as a very positive leading indicator for the ability to put through more price increases in 2017? Thank you.

Ramon Fernandez: So for the figure of delta of seven points is not - is not a quarterly punctual figure, it’s a figure which reflects the progressive shift of the base, and so we will be able to shrink this, but it’s not - we’re not giving you figure now, because it would be nice in Q3 better than previous number, it’s something which is now seen over a number of quarters. So it’s of course extremely encouraging. Convergence is making progress and once again we will - you have some figures in the elements that we are delivered now, we will continue to monitor this.

It is by the way an element which is more and more relevant in all our European geographies, we’ve Spain of course leading the race in terms of convergence rate, but it’s something that is a key driver for us in all our European countries. And in fact we have a number one European operator in terms of convergence. And we are going to build on this. And obviously in terms of pricing power, in terms of capacity to monetize our services, it is going to be a very good help for us. So it has been seen in late spring.

You have seen that we were able to improve to increase our prices with the new box and the price increase was quite significative because it was up to plus EUR10, when you took the high end and fiber markets, otherwise it would be - the fiber price increase in sales EUR5 and when if you take the more expensive contracts, you would get plus EUR10. And we are going to be continuing our work to be in the position to monetize the quality of our services both on fix and mobile and the quality of the network once again is absolutely key. Thank you. Thank you, everybody. I guess we will have to end this call now, but we will have a number of occasions to continue these discussions.

Thank you very much.

Operator: Ladies and gentlemen, this concludes the conference call. You may now disconnect.