Good morning, ladies and gentlemen, and welcome to Orange's First Quarter 2021 Results Conference Call. The call will be hosted by Mr. Ramon Fernandez, Deputy CEO, Finance, Performance and Development with members of Orange's Executive Committee for the Q and A session that will start after the presentation. Thank you. And let me hand over to Mr.
Ramon Fernandez.
Good morning. Welcome to our Q1 21 results presentation. We will start with Slide 4, which presents the key highlights of the quarter. You can see on this page a number of elements. As a result of our excellent commercial performance this quarter, we now serve more than 11,000,000 convergent customers and close to 10,000,000 fiber customers out of 49,000,000 connectable homes.
We posted strong FTTH net adds, especially in France and Poland. In France, thanks to fiber, we reached the highest broadband quarter in Q1 since 2016. In mobile, 5 gs offers are now available in 5 countries with a strong appetite for 5 gs smartphones. In France, we now cover 239 cities with 5 gs. In Africa and Middle East, the top line grew by 7.1%, the highest first quarter in 10 years.
And fixed broadband, now one of the key engines of growth in Africa, Middle East, posted a customer base growth of 38%. Orange Bank grew its customer base with 1,500,000 customers in Europe, including nearly 300,000 newly integrated B2B customers and Orange Bank Africa has already more than 500,000 customers in Africa. Finally, the group has made critical steps in implementing 3 major infrastructure projects with the creation of Orange Concepcion in France, Totem, our European tower co and recently the Polish Fiber Co, delivering on the commitments made in our Engage 2025 strategic plan. These projects clearly underline the value of our network assets, which have been shown to be so crucial during the ongoing pandemic. By creating these independent structures, we are strengthening our leadership and fostering sustainable value creation through an optimized infrastructure management with a dedicated profit center.
Regarding our financial achievements, Slide number 5, this quarter was fully impacted by COVID compared to only 2 weeks of crisis impact in Q1 2020. Nevertheless, we managed to sustain revenue growth with plus 0.5 percent, reaching €10,300,000,000 despite Spain still negative. Thanks to the excellent performance of Africa, Middle East, the solid trend of other European countries, the upturn of enterprise, while France is resilient. We also managed to stabilize Group's EBITDA at minus 0.3% year on year. This is minus €8,000,000 while the roaming impact was minus €42,000,000 this quarter.
Regarding eCapEx, as initially planned, we will reach between €7,600,000,000 and €7,700,000,000 this year. In line with this full year guidance, eCapEx were up by 12.4 percent, reaching €1,800,000,000 at the end of March. This increase is mainly due to less asset disposals, but also to an acceleration of investments after the COVID slowdown in Q1 2020, notably in France and MEA. Let's now move to the business segment review, starting with France on Slide number 7. France, where this Q1 continues to be impacted by health restriction measures, notably with the closure of around 1 third of our stores, representing 40% of our sales.
In spite of this impact and excluding the negative non recurring effect of digital content offers, we managed to stabilize our total revenues in Q1. As such, regarding retail services excluding digital content offers, our strong performance in fiber and convergent services more than offset both the structural decline on PSTN and the conjectural decline on roaming. And also, our retail service revenues excluding PSTN maintained its solid trend by growing by 1.9%. Turning to equipment sales, they were back to growth boosted by 5 gs main brands handsets launch. Lastly, wholesale revenues decrease was mainly due decline.
Turning to our commercial results, we continue to build on the strong momentum of fiber registering 385,000 net adds, a record for a first quarter, fueling broadband net adds at +94,000. On mobile, we delivered a resilient performance for Q1 with +32,000 net adds excluding M2M and a slightly decreasing churn in a quite competitive environment. This quarter we saw new promotions in the very low end, But in our opinion, they do not jeopardize the global improvement dynamics seen over recent months on the main low end playing field, that is mobile plans above 10 giga for which the entry price point remains stable. Thus, on the value side, our convergent ARPO pursues its growth despite a drop of out of bundle revenues related to roaming and content. Last but not least, we have launched 2 more for more commercial back book actions since the beginning of 2021, which will start to translate into our financials from Q2.
Let's now turn to Europe, where we achieved a solid commercial performance with a clear improvement year over year, despite a quarter being fully impacted by COVID with fixed broadband net adds of +62,000 compared to minus 8000 in Q1 2020 and mobile net adds of +64,000 in Q1 versus minus 99,000 in Q1 2020. However, total Q1 revenues remain under pressure at minus 2.4% due to the situation in Spain. Excluding Spain, other European countries grew by 2.2 percent, notably in Poland, where retail services grew by 2.7%, driven by strong customer volume and better ARPU trends with a clear monetization of fiber as the ARPU in fiber in Q1 is 18% higher than the fixed base only. In order to build on the strong fiber momentum, as said earlier, Orange signed a partnership with APG in Poland to expand our fiber footprint by an additional 1,700,000 households over the next 5 years. The entity was valued at €605,000,000 As a result, Orange Polska will receive €303,000,000 from APG.
Turning to Spain. This quarter, we maintained our positive performance in net adds in convergence, fixed broadband, including FTTH and mobile contracts, thanks to the repositioning of our offers, which helped us improve the convergent churn by more than 4 points and also stabilize the fixed broadband customer base while keeping on increasing fiber penetration. Nevertheless, while allowing us to be more competitive and more active in the low end segments, 4%,
but with an
improving trend quarter on quarter. 4%, but with an improving trend quarter on quarter. Retail services decreased by 10.2%, linked notably to the impact of repricing on existing customers of the customer base in H2 2020, while wholesale revenues decreased by 2.3%, mainly due to a drop in visitor roaming and international traffic. More than ever, let me assure you that all our teams are fully mobilized to implement the new strategy and improve the performance in Spain. Let's now turn to Africa and Middle East, the main contributor to the Group growth, with revenue increasing by 7.1 percent in Q1, driven by 4 fast growth engines: data, reaching 36,000,000 4 with revenue up by 22% fixed broadband with 1,800,000 customers up 38%, which continues to accelerate with revenue growing also by 38% Orange Bonnet with an active customer base up 18%, delivering revenue growth of +19%, and finally B2B with a significant revenue growth of +12%.
The mobile customer base increased by 6%, reaching more than 100 and 30,000,000 customers. From a geographical perspective, this very strong growth was mainly supported by the clusters Sonetel, Cote d'Ivoire and by Egypt. Half of the footprint delivered a double digit growth with strong performance in Guinea, Sierra Leone, Burkina Faso and Mali. Let's now look at the Enterprise segment, with revenues coming back to growth at +0.4 percent, pursuing the improvement trend that we had observed after the drop in the 1st lockdown period in Q2 2020, thanks to an ongoing strong recovery in IT and IS revenue, up by 6.4%, supported by both cybersecurity revenues up by 16% and cloud up by 5%, the latter with service growth of +9%. Today IT and IS revenues exceed 40% of total revenues as we continue increase its weight in our revenue mix, pursuing our strategic plan.
This performance was able to compensate mobile, down by 1.3%, still to a large extent impacted by roaming. Voice, at its usual legacy declining trend at minus 4.9 percent and finally, data at minus 3.2% dragged down by Globcast due to event related business not possible in During this quarter, we pursued our strategy around the development of SD WAN in France and globally, where OBS enjoys the leading position. Getting chose Orange Flexible SD WAN to support and build a resilient, secure cloud based infrastructure with increased agility to transform the health industry. And another example, Orange has been chosen to deploy SD WAN solution for BNP Paribas, comprising more than 1800 sites and bank agencies. Let's now recap our 2021 guidance given in February, which we are confirming despite the ongoing COVID situation.
As we said in February, our guidance include the tax refund allocation effects. Therefore, firstly, we are targeting a 21 EBITDA around flat minus following the use of the tax refund for an employee shareholder plan and CSR projects. 2nd, eCapEx level will be between CHF 7,600,000,000 and CHF 7,600,000,000 completely in line with our prior guidance of between €14,700,000,000 14,800,000,000 for 2020 plus 2021. 3rd, organic cash flow target for 2021 is above €2,200,000,000 The net debt to EBITDA Telecom ratio remains unchanged at around 2 in the medium term. And finally, in regards to the 2021 dividend, we will propose to maintain a €0.70 level while paying a €0.30 interim dividend in December 2021.
And we confirm as well what was said previously regarding the 2020 dividend at $0.70 plus the additional $0.20 coming from the tax refund. This concludes my presentation. And with my colleagues, we are now ready to answer your questions.
Thank Our first question today comes from Nicolas Court Colisson from HSBC. Please go ahead.
Thank you. Good morning. Two questions, please. First one is on Spain. I can see the net adds across the products were positive, but still they were still weaker than in the previous two quarters.
So is there any specific reasons there? Has competition been tougher? Or should we read this as a kind of a seasonal pattern? And any indication on as when the retail revenue trend should improve would be helpful too? And my second question will be for cloud and cyber defense.
Do you see the vertical integration as a net positive? Or do you think there is a case for more independent structures to gain scale faster eventually? Thank you.
Okay. Thank you very much, Nicolas, for your two questions. So we have Jean Francois Falacher, CEO of Spain, with us today. So Jean Francois will take the question on Spain. And Hugues Fulon, who is in charge of cyber defense, will take your question on cyber and then Mutt will also be able to comment on the cloud part.
So Jean Francois?
Hello, everyone. Jean Francois Pelletier speaking. Yes, so on your first question about the commercial results in Q1, yes, indeed, if we compare to the excellent results commercial results of Q3 and Q4, This is a slowdown of the results, indeed, I mean, mainly linked to the fact that if we look at the market in Q1, I would say if we look at the big brands, the 3 big infrastructure brands, the market has been, I think, quite stable, I would say. But if we look at all the other players and even the second brands of the main operators, Just to give you some statistics, we looked at how the offers have been evolving for the 5 main low cost brands, I would say. There were roughly 50 changes of offers.
1 third was a simple price decrease and 2 third was adding more resources for the same price. So you see that this, I would say, low end market in Spain has been more aggressive actually in the Q1. So the slowdown that you see indeed is clearly explained by, I mean, the aggressivity of the low cost player, more aggressivity of the low cost player. As I had the opportunity to comment in actually the previous quarter results, we are very cautious on our side. I mean, you know that we have changed our portfolio over last summer, which basically explains the very strong results we posted in Q3, Q4, and by the way, which explains also the positive net adds we are posting this quarter.
Nonetheless, we are very cautious. We do not take any other measures to be more aggressive because clearly as a strong number 2 of the market, the last thing we want is to fuel further any price war. So this is what I can say. I mean, on the your other question was on the revenue trends. On the revenue trends, clearly, the minus 10% we are posting this semester is again due to 2 facts.
The first is the loss of customers that we had in the first half of twenty twenty, which is still waiting. And the second effect, obviously, is linked to this new portfolio. The new portfolio has clearly allowed us to not only stop the MRG of customers that we had in H1 2022, but again to go back to positive net adds, as you can see. But it has a consequence is that there is obviously a mix effect in our base because as more the orange base or chestel base is taking the new offers. We have a positive effect from the reduction of churn, as it was commented by Ramon.
But also, clearly, a mixed effect, which is waiting on our service revenues. So that's what is currently happening. And we have to be patient because this effect will last. And as I was commenting in previous meetings, we cannot expect, I would say, a better outlook before 2022.
Thank you. Thank you, Jean Francois. Let's start with Helmut on the IT and IS business, which is back to a very nice growth and then we'll go to Helmut.
Thank you, Ramon. Thank you, Nicolas, for the question. I take care of the cloud perspective of your question. As you know, any kind of enterprise digital transformation is comprised of a network transformation, of a cloud transformation and of a security transformation. The 3 go hand in hand.
Cloud is a business per se, but also an enabler across the different functions. If you just think about the collaboration landscape, most of the collaboration solutions, which we are using, you are using, are more and more cloud based. If you think about solutions in the Industry 4.0 perspective, cloud extends into the edge, and edge is negatively the meeting point between network, cloud, enablement and security, of course. So therefore, we very strongly are convinced that the driver for our 9% services growth that also Ramon had highlighted, and by the way, it's driven primarily by Europe and by Asia Pacific, where the growth is even higher, is a good way forward. We noticed that the sensibility in terms of data sovereignty, specifically our European passport and being a trusted player in all of the digital ecosystem is an advantage.
And as we have highlighted for the first time, cloud also goes hand in hand with the data analytics business that also has seen a double digit growth that you could see. I think it was on Page 4 of our presentation. And last but not least, the networks, Ramon has highlighted, software defined networks, are more and more also cloud enabled because networks become the access platforms to cloud services. So we are very confident on this double approach on cloud, which is both an enabler and a business per se.
Maybe if you're on speaking, so maybe to ask a few things about cyber. So we are really working with Elmut to define the best of the 2 worlds for cyber. On one side, to keep and to increase the synergies with the rest of the group and especially on what just Elmut mentioned. And the other side, to have the right level of autonomy and agility to develop this company. And why do we need this autonomy?
This is to have the room of maneuverability on the finance side, but also to define the right model to attract and keep the key talents all over Europe for Cyber. Thank you.
Okay. Thank you.
Thank you. We now move on to our next questioner, which is Akhil Dhatani from JPMorgan. Please go ahead.
Yes. Hi, good morning. I've got 2 questions as well, please. If I can start maybe on Spain and just a follow-up to the prior question. Just any sort of color on how fast through the back book repricing you are would be helpful just to help us understand when that inflection starts to come through.
And I guess linked to that also, any comments you have on the recent Masmeville Yuskatel deal and what you think it means to the market would also be helpful. And then shifting over to enterprise, we've had Bouygues and Iliad both move into the enterprise space recently. So I just thought it'd be helpful to get your thoughts around their price points, their strategies and how you think it plays into the market going forward? Thanks a lot.
Thank you. Thank you very much, Akhil. So Jean Francois will go back for the bank book Spanish question and then I'll ask Fabienne to take the enterprise French question.
Okay. Thank you very much for your question. Jean Francois Pellegier speaking. So on the question on the backlog repricing, I mean, what I can say is that on the Jazztel side, most of it is done. I would say 1 more quarter, we will be done.
So meaning that most of the customer base has been migrating to the new tariffs. However, on Orange, there is still quite a long way to go, which is both sides good news and bad news. The good news is that, obviously, by doing that, we are preserving the value. But this base will migrate to the new pricing, which is also good news because then they will be protected from and we aim to obviously reduce churn in country where churn is excess EBI high in Spain. So as I was saying, the effects of these moves, we still we need to have some patience.
The effects of this move will still last a few quarters. But obviously, as we previously said, we should see some amelioration at the end of this year and next year in 2022. Your second part of your question was about the potential acquisition of a Scalpel by Mass Mobile. I guess your question will be on the impact of these acquisitions, the way we see that. Clearly, first of all, as we said before, this is a consolidation move whereby number 4, the market is by number 5.
And obviously, it's going to grow stronger. So we will have if this operation is finalized, which we believe is very likely, we will have a stronger number 4 in the Spanish market. So as it is consolidation move long term, we believe this is a good thing for the Spanish market. That's the first point. Short term, in terms of potential market repair, because I get a lot of these questions here, we are a bit more cautious because looking at the way Mass Mobile has been integrated its previous acquisitions, and we know that Mass Mobile is having also an excellent growth strategy to fuel its growth.
But what we see is that usually they have acquired companies and they have not specially integrated them nor a reduced number of brands. I think they are probably the operator running in the most number of brands. So here, short term, we don't see we're a bit more cautious and we don't see, let's say, any potential, let's say, market repair. Although looking at the last trend we saw from the Virgin brand, we believe that having this brand, let's say, in the mass mobile environment with a number of other brands, might be a positive news for us and for the market. Now obviously, as you all know, we have 2 major, I would say, operators, which are our wholesale partners.
The first one is Masnovil, both from fiber and mobile because they are using our national roaming deal. And Ozcaltel is the second one. Obviously, these contracts are contracts with very strong confidentiality close. So you will understand that I cannot reveal any of the details of these. We will see what will be the reaction of MasmoVille.
So first of all, we need to see this deal happening. And then I guess they might, but we see want to renegotiate some of the skeletal contracts. So we are preparing ourselves, and we will see in due time what will be the consequences, but we expect there will be consequences on our wholesale business in the short term indeed.
Thank you very much, Jean Francois. Just to say, this is Ramon, that we are all watching this very closely. And I guess this scenario of market consolidation in Spain
is a good news, I would say,
looking ahead. Fabienne, on the enterprise market for France?
Yes. Thank you, Ramon. Good morning. So as expected, we observe more and more competition on the B2B and with the new competitors. And as usual, 3 has entered the pro market by price aggressiveness.
Maybe the most important is the special price difference, since very important, is really reduced when you compare exactly the same offer. And the gap is not different that we had before in the market between Orange and the other competitors. That explains the soft reaction you can observe in the market by competitors. We have some moves. Bouygues launched a new offer yesterday.
But at the end, the market is not stable but with the same kind of competition. Bouygues seems focused the high end market of pro SMA. Free since aim to attract price sensitive growth, maybe more on the low end market. So we have the same kind of competition, the same kind of gap of pricing. In this context, we expected this arrival.
So we prepare it, and we keep developing and reaching our offers by investing new services. It's why we launched 2 weeks ago cyber filter to secure mobile equipment, and we will enrich in the future our offer around cyber security. Maybe the most important is to note that the Q1 at the 2020 year was very active on the B2B, and that sustained all competitors in their growth and specifically our brands because we maintain our market share, and we are really confident we can maintain them in 20 21 with a very with a market more active. The need for connectivity, for website, for fiber is really there in this B2B market and specifically on the Pro and SME. So it's a good news for the future, and I think that will help to have a more peaceful market because a lot of activity for our competitors.
Great. Thank you.
Thank you. We now take our next question from Roshan Ranjit from Deutsche Bank. Please go ahead.
Great. Good morning. Thank you for the questions. Two quick ones from me, focused in France, please. Ramon, you mentioned the slight step up in CapEx this quarter with part of that being focused in France.
Is it possible to get
a sense of the phase in of the tax refund CapEx allocation? So is that a driver this quarter? Or is that going to be more evenly phased out through the year? So that €300,000,000 CapEx for that front, please? And secondly, you mentioned some slight price competition at the lower end in the market.
Have you had to respond with any price adjustments with Sosh on that? I think you did that at one point last year, but then you actually moved pricing higher. Are you seeing any kind of erosion between the high end and the low end? That would just be interesting know there. Thank
you. Thank you, Rochon. So on the I will turn to Fabienne. But on the CapEx part of the question and the phasing of the tax refund, there is only EUR 10,000,000 in Q1, which is coming from this so called tax refund CapEx allocation so far. Most of it is in front of us looking at the EUR 300,000,000 we talked about, which will be essentially split between most of it for France and most of it for co financing in fiber and the rest in Africa, Middle East, where we can see that every euro invested is translating into very fast growth cash.
I'll turn to Fabienne on the pricing question. Just saying that, as I said initially, we are confident that the better environment that we had been witnessing over the past quarters is still with us, which is, of course, an important element. Fabienne, do you want to elaborate on this?
Yes. Yes, you're right. We observe basically in the mobile because in the broadband, it's really stable, no more aggressiveness or no more promotion. In mobile, we observed new promotion appear this quarter, specifically in the very low end market. In our view, these moves are tactical, and they are linked with 2 points: the low levels of sales.
This is a characteristic of the Q1. And above all, the shop closure. So competitors need to animate the market and launch this very low hand market. But the most important is the low hand entry price point remains stable. And this is the more important for the customer.
This is a major activity. So in this context, we decide to pursue our strategy with Sosh to be a smart follower strategy and smart follower and to not respond. As you can observe, we don't launch new offer. We maintain our strategy to try to pacify the market without being out of the market. But we can do that, and we succeed.
And the growth Sosh is sustainable in this Q1. You have another question about, yes, low hand market and high hand market, yes. So Q1 has been impacted by the closure of the shops and specifically, in this case, the Orange brand. We have been impacted. So in Q1, we don't observe a slowdown in the high end markets, but an impact on Orange brand.
But at the end of March, we observed a better increase. So we are confident in the future because we know we can open more closure in the future. Currently, 30% of our shops are closed due to the sanitary restriction. And as explained as mentioned by Ramon, that represents 30% of our sales. But we have good news in the future.
So we are confident that in the future, we can go back growth more than in Q1 on Orange brand. I think I have take all your questions.
No, that's great. Thank you. Just quick follow-up. You talked about a kind of normalization towards the end of the quarter. So is that the kind of 80 high end, 20 low end split, which you previously talked about?
Is that fair?
Yes, exactly. On the on March, as you can see, we launched an offer, a promotion on Orange brand attractive that sustain the dynamic of Orange brand. And so that helps us in the period where the shop will close. So we observe this. And as all year every year, Q1 is not favorable for Orange.
It's because it's a soft activity. And we know that March is a turnaround of the year, and we are very confident for Q2, Q3 and the end of the year that we will be in growth specifically on Orange Brands. We make all we have to do to enrich Orange Brands and to have an attractive plan. So we are really confident in this in the for the future. But March is a turnaround, yes, the term, not turnaround, term.
Great. Thank you very much.
And just maybe to be clear, the search remains 20% of customer base. So there's no change in the equilibrium of the customer base of our range globally.
Perfect.
Thank you. We now move on to Mathieu Robilliard from Barclays for our next question. Please go ahead.
Yes, good morning. I had two questions, please. First, with regards to Belgium and Orange Belgium, I think you made it clear that your final offer price is €22 But I was wondering what you would do if you don't get enough shares, for example, to be able to delist the stock because it's in some shareholders of them, although I'm not satisfied with the price offered. So what would happen in that situation? That's the first question.
And then if I could come back to France. Harmel, I think you mentioned that you did some back book price increases or more for more initiatives by the end of Q1. And I was wondering if this was a bit more pronounced than in previous quarters, trying to understand if that could have a visible impact in terms of the retail trajectory in the coming quarters. Thank you.
Thank you, Mathieu. So on Belgium, the offer is closing tomorrow at 4 o'clock. It was open on the 8th of April. And as you said and clearly understood, the price of EUR 22 is the final price. I just recall that before announcing this operation in December, the price was at EUR 16.
So the price premium of 36% is here and it will not be here forever, right? So if we don't have enough shares to delist, which is most probable because one shareholder, which holds more than 5% of the stock, which is required to you need 95% to delist, said he would not bring his own shares. So Orange Belgium will remain listed. We didn't set any threshold, but I guess everybody will understand that the €22,000,000 will not be there forever. So my personal advice would be to bring these shares table.
On France, I'll go back to Fabienne, but I will just say that in this environment to be in the position to have this bank book repricing is, I think, the best testimony of what Fabienne was saying about the resilience and the pricing power that our France keeps on the French market. So it's a very encouraging move, I would say. Fabienne?
Yes. It's exactly what you explained. We maintain our strategy to push more for more strategy and to push some revamped offer as we made in October, if remember, when we included additional data, 5 gs compatible to SIM card and to sustain pricing power. And we are able at the beginning of the year to pursue our approach of back book repricing. We did it on the mobile only, and we did it on the open plan.
And we will do when it's possible each time we can. We don't observe any impact on the customer base and no refuse because behind this back book repricing, we give more data. We you know our strategy. We are very limited in the data because we want to have the possibility to give more data and to give for more pricing. So we pursue this strategy, and we are really confident that we can do in the future and specifically with the 5 gs arrival.
You have a second question about the dynamic the retail trajectory in coming quarter. We are really confident because our fundamentals are very good in the Q1 and will be very good too in Q2. We observe a real and solid acceleration in access revenue growth, driven by 2 points. The same and positive momentum for fiber. The growth of the customer base is really, really strong, and we observed the same in April.
And I think we observed a real turn in 2020 and in 2021 and a strong appetite for fiber. And the second point, as I explained, we maintain our pricing power strategy and all opportunity we can have to give more for more for customers and back book repricing. And we maybe can rely on the rooming of 2/22 for the revenue.
Sure. Thank you.
Thank you. We now move on to Jacob Bluestone from Credit Suisse. Please go ahead.
Hi, thanks for taking the questions. I have two questions, please. Firstly, can you give an update on the potential entry in Ethiopia? What's the latest there that you can share with us on that potential move? And then just to come back to an earlier point on Enterprise and the new offers from Bouygues and Iliad.
I think you mentioned you expected to keep your market share stable. Just to be clear, do you think you need to revamp your portfolio to achieve that? So is there any risk to the ARPU that you see? Or do you think you can achieve a stable market share in enterprise without on the back of your current offers? Thank you.
Thank you, Jacque. Well, on Ethiopia,
the process is
ongoing. I think that what I said in the full year call, which was if the conditions do not seem good enough, we would not go, is more actual than ever. So let's see. But I guess you have understood that it's an important process, but we would only go if we are convinced that we can create value. So I think it's important to understand.
And this is more generally what is driving our M and A policy. On the French enterprise market, I'm going to turn back to Fabienne. Maybe Helmut also would want to add something. But I would only say that we've said for some time that we do not expect to keep the market share on the enterprise market absolutely stable. We've been saying for some while that we were expecting to see more competition ahead, but that other services coming with 5 gs, with all the IT and IS services we talked about with cyber, with cloud, with data, that the other business that we would generate would help to mitigate any impact on the market share through additional revenues and higher ARPU.
So I think this is how we should see this. But just turning back to Fabienne.
Thank you, Ramon. But it's exactly what you said. We have so high market share on the B2B, specifically on the Pro and SME market that we expect we can have some decrease, small decrease but maybe decrease because we have more competition. But at the same time, we are convinced we can generate more value per customer with more services. And this is exactly what we can observe at the end of 2020, at the beginning of 2021.
So it's why we keep enriching our offers by investing new services, more services and specifically around cybersecurity because it's an important concern for the B2B and for our customers. And we will maintain this strategy to give more services and to enrich our game our plan. To answer your question, we offer a wide range from small to big customers. So we don't need currently to revamp our offers. We have to adapt them, and we did it if necessary, but we have a very wide range.
So we have different solutions for our customers. It's not the case of 3. He has only one offer. So maybe it will be a point for him and for Iliad in the future. So we will adapt as we did on the B2C market and as we did in the B2B market, more to be consistent with the behavior of the consumer and to adapt to the competition.
And maybe there was another you have a third question? I don't remember.
No, no. Just 2.
No, it's okay.
Yes, you answered everything. Thank you very much.
Thank you. We now move on to Sam McHugh from Exane. Please go ahead.
Yes, thank you. Just two questions as well. First one, I wonder if you could just elaborate a bit more on the back book pricing in France, kind of maybe some color on how big the price changes were, What percentage of the base did they apply to? I don't know if you can help us a little bit. And then secondly, just a question on TOTEM.
I understand a number of TOTEM sites in France don't actually have any mobile equipment on them and they're maybe they're empty or only have radio equipment. Can you give us an idea of what sensitive the sites are like that that don't have MNO equipment? And are they capable of hosting antenna? And are these sites in more rural or urban areas? Thanks very much.
Fabienne, do you want to shed more light on the bank book? Or do we want to keep some of our little secrets for ourselves? Your choice.
No. Maybe just two points. The back book repricing with some different stake, 1st of all, generate value. And the second point is for Orange to maintain the difference between Sosh and Orange brand and to offer to our Orange brand customers more value, more data, more services, a real difference between the Sosh and offers. So that's why we all the time revamped our offers or organized some strategy more for more to be as on the B2C, consistent with the customer behavior, consistent with the requirements and to give more, but at the same time, to benefit more pricing.
So this is a simple strategy. And that sustains the revenue, and this is the good news because we are convinced that in France, even if we observe a beginning of market repair, we have we are able, all competitors, to raise and to increase the price in France. We are very far from what the value we can generate. So we will maintain this strategy and sustain the market to be more pacified and to be more reasonable. And we don't want to lose this strategy, and we don't we want to make the job as we did in 2020, and we will do the same in 2021.
Okay. Thank you. Fabienne. On the TOTEM question, we do not disclose the information regarding sites with no MNO equipment. But in any case, these sites are not taken into account when we talk about increasing the tenancy ratio.
But we will have a chance, Sam, to come back to all these issues. We've designated the CEO of Totem Europe, Nicolas Roy, a very experienced guy from the group. And he's going to set a team and we are very well on track with implementing and putting in place operationalizing to them before the end of the year. And I guess at some point, I don't know if it's in Q3 or before the end of the year, we will be back to you with additional info on this orange tower co, which is going to be an important part of the story for the group in the next quarters years.
And that's so just to clarify your tenancy ratio growth targets, don't assume you'll add equipment to these sites. Is that right?
We'll come back to this in details, but the answer is yes. But we'll come back to all these issues later, yes.
Thank you very much.
Thank you. We now move on to Jerry Dellis from Jefferies.
I've got two questions, please. First one is back on enterprise. I suppose in the consumer market, we did see the development of what we call the no frills segment. If we think about the enterprise market, what is there to stop a no frills segment developing? And if we think about the specific offer that Iliad markets into the enterprise base today, It may have fewer features than some of the offers that Orange markets.
But on a like for like basis, how much cheaper than your list price is Iliad's pricing today, please? And then secondly, in Spanish Wholesale, you mentioned that the prospective merger of MasMovol and Uscotel may have some implications for your wholesale business. My understanding is that Uxghtel is committed to minimum guarantees until June of 2024. So could you help us understand where the wholesale revenue risk actually lies? Is it a question that Uskhotel is currently spending above those minimum guarantees?
Or is there some capacity that they have to exit their deal with you early? Thank you.
So obviously, you have a lot of interest today on the answer on this point. So first, Fabienne, then Helmut, and then we'll go back to Madrid.
Yes. Okay. So you're right. The price is a good question, but not only the only one for the B2B market, and I will come back on this point. If you observe the free offer, the fashion price difference is more than 50%, but it's really reduced to less than 30% if you compare exactly the same offer between Orange offer, free offer and the other.
So this gap, around 30%, is exactly the same gap we currently have between Orange and the other competitors, Bouygues and SFR. So it's what I explained. There's no real change in this market. And it's that explains why you can observe a soft reaction from competition. And I don't observe promotion really aggressive in the B2B market since the launch of this new offer Buy Free.
The question is, can we if we can have a better price, I think it's not the question because as I explained, we don't have exactly the same offer. We have more services in Orange brand offer than our competitors. We enrich our offers by new services. So it's maybe a little bit more complicated in the B2B market to compare exactly the same offer with another one. And the second point is the requirement for the B2B is a little bit different for the mass market.
What they require, what how customers require. 1st of all, a really, really strong and solid quality of the network, both on fixed and on mobile. 2nd point, the need sometimes a really strong convergence of telco and IT because they don't have the possibility to have different supplier. So they want some offer packaged and adapted as their requirement. They need a quality of strong and solid customer support, and we have it.
They need the proximity, and it's exactly what we did in 2020 during the crisis, COVID. And maybe one point, we're not a significant improvement if our B2B NPS in 2020 and at the beginning of 2021. So it's not so easy to be to make the same description on the B2B market as they made in the B2C. And the assets we have in Orange Brands are really solid. And I repeat, we maintain in 2020 despite more competition, and we maintain in Q1 our market share because it's not only price, it's not only offers, it's a lot of assets around, and we have them.
And maybe a last point, it's more complicated to address the customer B2B than B2C. So it's another point we have with all the team we have on the all territories in France. So yes, I am sure the market will be diffused. The market will be more competitive, and we have to anticipate and to prepare the future. It is exactly what we do all the day, every day.
But we are not worried about tomorrow by this offer and not by the reaction of Bouygues yesterday. We will we have the ability to adapt our offers. We have the ability to be competitive in this market with all assets we have. So we are still confident. Maybe, Helmut, you want to complete?
Fabienne and thank you, Gerry, for his question. Indeed, to complement Fabienne was highlighting the topics on the Pro PMIER and then the SME segment. So I speak more for the medium sized segment and the upper segment in the French market. In a nutshell, first of all, we have a value strategy, number 1. Number 2, the price elasticity is, of course, much higher in the consumer side.
I think this was also pointed by the question before than it is on the B2B side. And you have observed that we respect very much our tough competitors that Hume have mentioned. But you have observed as well there have been acquisitions made 2 years ago to enter also the SD WAN market to go into those pertinent IT topics. But there's a learning curve to overcome. And so far, I think in the decision making of the customers, even though there are now new offers, I think the positioning is very much a telco only approach versus the customers.
And the problems we are solving for the customers are their digital transformation. And this, as I said, comprises network plus cloud plus cyber defense. And therefore, we are more pertinent. And COVID has simply accelerated this move that the customers are asking telco plus in addition something. And the quality of the network, the relevancy in talking to the customers, I think, is clearly underline.
To give you one example, which we did as well, even on the mobile side, because the churn rate is very, very low on the mobile side, by the way, and it has gone even down in Q1 in France. But even on the mobile side, we introduced last year mobile applications offer, which means for a medium sized enterprise in France, you have the possibility to completely administer via your mobile application that is in our store, your complete reimbursement of expenses of your employees. We are helping them to get more productive. And therefore, the pure price point of a pure mobile offering is one answer, but it does not solve all the issues that enterprises have on the French market. And therefore, I think this is one of the reasons why for years now, we have been defending our good value strategy.
Thank you, Enmute and Fabienne. Jean Francois, sort of on sale.
Yes. So on the on sale and the impacts of the Masovil and Scalpel deal, so I see that you read very well the press release of the Scalpel in 2019 so that this information is public. There are 2 contracts actually we are having with the Scantle. We have one contract, which is MVNO contract, another contract concerning access to fiber. What I can tell you is that, obviously, we expect that MasMovil, once this operation concluded, will very likely want to see how they can optimize these contracts.
So these contracts, obviously, they include minimum guarantees and exit clauses. But you will understand very well that for confidentiality reasons, I cannot comment further. So as Ramon was right to be saying, obviously, we are preparing ourselves for this potential coming negotiation that should occur once again this deal will be completed
by MasMovin.
Thank you very
much.
Thank you. We now move on to Frederic Boulan from Bank of
America. Two questions from my side. First one on pricing in France following the previous discussion. I think, Fabienne, you talked about a turn in the orange brand in March. I'd be interested in the mix because on one hand, you've introduced a premium for 5 gs, about €5, but at the same time, you also have a 10 year offer for 70 gig since March.
So any comments on the type of customers you're adding and how you think it will impact up with the medium term when we compare when we take into consideration the back book, the pricings that you mentioned and the level of the phone book? So that's the first question. And secondly, a follow-up on Totem. Is there any update right now on your thinking, both on the scope perspective beyond France and Spain and target capital structure considering some of the developments in the border European landscape? Thank you.
Thank you, Frederic. I'll so turn to Fabienne, just saying for France that you need and Fabienne was saying so, but I'm just repeating that when you have 1 third of your shops closed, this gives you specific context, which explains the promotion you had on the EUR10 plan. This is very linked to the closure of shops. You need to understand this. But Fabienne?
Yes. It's exactly what you said. The context of the Q1 was a little bit specific with a lot of our shops were closed. It's a soft quarter. So we decided, and as I explained, to maintain smart follower strategy with Sosh and not respond to the market and specifically to the new offer appeared.
But at the same time, we decide to support the Orange brand and specifically because 40% of the sales were out due to the shop closure, and we need on the digital to support and to support the Orange brand. And we launched an attractive promotion, yes, at around €10 But I remember after 1 year, it's €35 This promotion, maybe just to remind you, is not new. This promotion has already existed. It was embedded in plan and open plan. So it's not new.
It was not predatory. And as you can observe in March in the market, there's no reaction. We have not been followed. So it was not a predatory offer. It was an offer to sustain Orange brand when 30% of our shops are closed.
And we don't participate in the predatory market. You can observe it. It's really clear. I think you have a second question about, yes, the 5 gs premium. Yes, we decide in our strategy and in our value strategy to maintain 5 gs only on Orange brand and not to align with the other competitors.
Sosh is not available in 5 gs, and we want to maintain this strategy in 2021. I think it's possible. The 5 gs term will be, I think, in 2022, not in 2021. We observe a strong dynamic in handset sales. 40% of our sales of our handset sales are made on 5 gs handsets.
So it's good. But the real turn will be in 2022. So it's too early to change our strategy, and we will maintain the value strategy and to have a real gap of experience and of offers between Sausch and Orange Brands. So we maintain this strategy.
Thank you, Fabienne. On the TOTEM question, regarding the scope, as we said in February, we are going and we are working on the potential arrival over time of other European Orange countries in Totem. So this is ongoing work and we will be back to you in due time, but you have here a clear perspective. 2nd, on the capital structure, well, on this front, I think we were clear that TOTEM is going to create value building on 2 legs. The first one is the organic leg through increasing the tenancy ratio and looking for additional sources of revenues.
And here, we have a number of ideas and Nicolas Roy is already working on these issues. And the second one is inorganic because we will be watching very closely domestic opportunities and also broader opportunities in the European market, which is on the move with a number of players, and we will be part of this game. This is also why we are setting this independent structure with dedicated management and a clear objective, which is to be a key player on the European landscape. At this stage, I guess there is really nothing more to say, but we said that the capital structure would be a means to an end, if participating to the consolidation of the market requires an evolution in the capital structure of the TEM, this, of course, will be considered.
Okay. Thank you very much.
Thank you. From UBS, we have Giovanni Montalti with our next question. Please go ahead.
Thank you and good morning. Can I ask if you can share some thoughts with us in terms of how do you think about potential further consolidation in Spain following Mas Movil bid on Neu Sculptel? Thank you. Well,
I think I will this is Ramon just repeat what we have said constantly, which is first that the fragmentation of the Spanish market is an important cause of the difficulties that a number of players are seeing on the Spanish market. And so 6 players at least, 20 brands at least, is too much. And the first move of Mattsmobile and Neusschatel is probably a step which would not be the end of the game. If you look at the dynamics of the Spanish market, probably it will not be the end of the story. And so once you've said this, well, then when you are in our shoes, you look at all potential scenarios.
We've been doing so. We will continue to do so. But we've always a view, which is that Spain is a central market for us. We have a very strong asset. I can say because Jean Francois will not say that we have a top CEO in charge of putting the operation in Spain on a better footing with the full support of the group, of course.
And that has started And we will continue to build on the recovery, not hoping to see consolidation making the job for ourselves. We need to do the job at home, and this is what Jean Francois and his team is working on. There are many initiatives which have been taken. Once again, we are seeing some first very encouraging signals of we said we did not expect to go back to EBITDA growth before 2022. But the work is ongoing.
And if at some point there is anything else to do looking at the structure of the market, we are a big player and we will be part of this discussion.
Very clear. Thank you.
Thank you. We now move on to Andrew Lee from Goldman Sachs for our next question. Please go ahead.
Yes, thanks. I have just two quick questions. The first one was on your cost cutting and how that's your cost cutting targets and how they filter into your free cash flow guidance. Apologies, I probably just got confused on it. But I think originally, you said that not all of your €1,000,000,000 cost cutting target was included in your midterm free cash flow guidance.
Like is that the case? Or are you including all of the €1,000,000,000 cost cutting target now in that guidance? And how does the benefits or how are the benefits of the tax rebate restructuring spend incorporated into your free cash flow guidance, if at all? That was question number 1. And then the second question was just a broad one, which you may not want to answer now.
But on the TOTEM strategy, there was some press speculation a couple of weeks ago about you potentially pooling your towers with another large player. And so as a hypothetical question, what is the aim and the benefit of doing that given there's limited overlap in existing markets? Why would you seek to do that? And why specifically would you necessarily want to be a major European tower player?
Okay. Thank you, Andrew. On the cost cutting targets, free cash flow guidance and basically what is where do we stand with our scale up cost efficiency program. First to say that we are on track with our objectives. There is already in Q1 some elements of this scale up program, I would say both the letter and the spirit, very strong discipline at group level, which has been filtering down and which is being discussed on a regular basis, of course, at the Executive Committee and then more broadly across the group.
All the objectives we give are, if I may say so, all included. So when we say that by 2023, we aim at a net indirect cost reduction of EUR 1,000,000,000 on the basis of EUR 14 close to €14,000,000,000 basis of 2019. This is going obviously to contribute to the organic cash flow target for 2020 3, which has been set between EUR 3,500,000,000 at a minimum level up to EUR 4,000,000,000. And we said with Stephane at the full year call that we were optimistic that because of what we were doing with the scale up program and all the other initiatives at group level and the very strong dynamic we see in some areas. I mean, we are spending a lot of time and it's fair enough on the difficult situation in Spain, but we tend to forget that Africa, Middle East, which is now far bigger than Spain, is growing EBITDAAL at a pace of 10%.
And if we were talking about EBITDAAL in Q1, you would see that Africa, Middle East is even able to do more than this. So we need to see that we have other engines for growth, which are going to support these free cash flow objectives, also the other European countries. I mean, when you look at Poland, when you look at Belgium, I mean, Belgium published its results. Also you see there is a nice dynamic here. Romania and Slovakia are also we never talk about Central Europe, but they have also nice performances and they have been improving significantly.
So the cost cutting program is in place. The discipline is here because we just have no choice if we want to make sure that we will be able to absorb some difficult situations, essentially now Spain, which will be better. I mean, this is a tough period, but it's going to get better because of all what we said. And so the guidance is all included. It has a minimum target of 3,500,000,000 euros of organic cash in 2023, and we will be there.
And when you look at the benefits of a tax rebate, I don't like very much the rebate word by the way because it was not a rebate. It was a battle. It was a legal battle that we have been winning. It was not a rebate. It's something we took with our TIF, these EUR 2,200,000,000.
And when you look at how this is incorporated, well, in fact, the incorporation is in the additional spending we have put and we will be putting in the machine in 2021 to prepare through value creative initiatives to prepare for the future. And this is why the organic cash flow, which was continuing to grow with more than $2,600,000,000 is going to more than 2 point 2,000,000,000 because of some additional CapEx with an investment rate of return between 15% 20%. So this is going to be very much supportive of the performance of the group. And we have also some, I would call, investment in transformation in the company. We talked about a number of issues in February, which will also help the group to be more, I would say, cost effective, more agile.
And this is very rewarding, I would say, spending. On I hope it's clear enough. If not, Andrew, please, we will come back to it. And but everything is included. Look at the cash line and be confident that the minimum EUR 3,500,000,000 in 2023 is a very, very strong objective of all the team.
Regarding LATAM, yes, there will be press speculation time and again. When you create such an ambitious new entity such as this Orange Tower Co, obviously, you will read and we will all read some comments about what's going to happen with pure tower companies in Europe and there are some interesting elements regarding some of them currently. I'm not going to be more specific, but a lot of discussions and focus. And you have the tower companies of the telco players. Vantage has been listed, Deutsche Fonthom is there, there is TOTEM.
And I guess that the telco players that have made the decision keep control of their towers and we are in this category. We think it is wrong just to give up these strategic and value creative assets. Well, we will be part of a tower market, which is attracting a lot of attention, which apparently is valued much better than the telco traditional activities. And we are part of this game, and we will look at any opportunity which would help us to secure and accelerate our capacity for growth in the domain. And when you ask what are the benefits in theory of, let's say, cross border consolidation, it is exactly the same question as the one we have when we look at telco cross border consolidation.
So it's a good question. There are some elements of answer to this question. But today, it's premature to enter into more details. But the fundamental point is that we are absolutely determined to make sure that this infrastructure asset that we own is going to support the future of Orange as a group. Look at the latest deals we've
made.
We didn't talk so much about the Polish Fiboco and the CEO of Orange Polsky is also with us online today, Julien. And Jean Francois, now in Madrid, had been preparing this Polish fiberco, but look at the value of this operation with APG. I mean, this is a clear signal that these assets have a very strong value and that we are able to manage them well, if I may say so.
Thank you.
It's very helpful.
Thank you. We now take our next question from Abhilash Mohapatra from Berenberg. Please go ahead.
Yes. Good morning and thanks for taking my questions. I've got a couple of clarifications, please. Firstly, just on the French wholesale business, where you say that on the fixed side fiber to the home compensated for legacy declines. If you could give us some color on what that includes for maybe sort of co financing or pin construction revenue trends during the quarter, that would be helpful.
And then secondly, just on French Enterprise again, I guess lots of focus on that. Just wanted to check, previously you suggested that enterprise EBITDA could start to grow again from end of 2021. Just wanted to check if that's something that you feel confident with still, please? Thank you.
Okay. Thank you, Abhilash. So Jerome Bare is also with us today. So Jerome, can you take the first wholesale question?
Yes, yes. Maybe good morning, everybody, and thanks for the question. So my first comment about wholesale revenue in France is that the forecast that we gave during the December 2019 Capital Market Day for the fixed wholesale revenue in France are unchanged, unchanged, which means a peak in 2020. Well, revenues in 2022 at approximately the same level as in 2019? And no change for the cumulative revenues between 2019 and 2023 as well?
That's my first comment. The second comment is that we expect in the next year decrease compared to 2020 due a few reasons. The decrease of the mobile agreement with Zilliard, even if we have postponed the end of this agreement at the end of 2023 2022, sorry. That's the first point. The second point is that on the fixed market, wholesale market in France, the fiber co financing proceeds will be lower in 2020.
And of course, copper will pursue its structural decline. But there are growth delays. We have growth delays in the infrastructure field. We have growth relays in the fiber revenues, other fiber revenues. You mentioned the APN Construction, which is, of course, a big growth relay.
And so we're working hard on these growth relays. This should help mitigate the decrease of wholesale fixed wholesale revenues in France. And my final comment is that we and back to your question about the growth of these new activities is that we will give some new more colors, some insights regarding this growth release in France in Q3 in order to show and to demonstrate how we mitigate the decrease of legacy business and legacy revenues through this growth related, especially on infrastructure and fiber revenues.
Thank you very much Jerome. And Abilash, we also plan to come back to all of you in Q3 with a kind of deep dive on wholesale because we know we always have questions on the wholesale perspective. We've been discussing this in the past years. So on our work plan with the team, we have a Q3 deadline we set to ourselves to come back to you with additional information on wholesale. On the Entreprise OBS EBITDA trajectory, yes, I am happy to confirm what we have said, which is that we continue to expect to have positive turnaround by the end of the year in terms of EBITDA growth.
And I would add that Q1 was encouraging, very encouraging. We don't talk about EBITDA. Like Q1, we talked only about revenues, but the turnaround you are seeing in revenues is also showing much, much, much, much better trajectory in terms of EBITDAL following a very difficult 2020, which was heavily impacted by vipendemia. But we are clearly on a much better track. And so what we said before is confirmed despite the ongoing COVID impacts like roaming.
So full confirmation.
That's great. Thank you. Thanks, everyone.
Thank you. Our last question today comes from Thomas Codry from Bryan Garnier. Please go ahead.
Yes, good morning. Thank you. I have 2 questions, please. One is a follow-up on 5 gs. Could you give us more color on the cities where you have launched 5 gs?
You have now a few months in experience. Do you see a change sorry? And how is the take up of 5 gs there? And also, I just wanted, please, to have an update on Orange Bank on your plans and on the status of your discussion with a potential new partner. Thank you very much.
Okay. I guess for 5 gs France was the question, even if we have launched 5 gs in 5 countries. But I guess when you're talking about cities and the 2 39 cities, maybe Fabienne, if you can give a few big names and then we'll turn to the Orange Bank question before closing.
Yes. We launched 5 gs in 2 40 cities, specifically big cities as Paris, Bordeaux, Lyon, Marseille, Clermont Ferrand, Renault. I think we will be able to launch in Lille because it was the last one of the big cities in France, and I think we will be able to launch, I think, in May. So all the discussion we have with local authorities allow us to launch in France in all the big cities, and we can reach more than 20 4% of the population coverage. So it's a good thing.
We don't observe a change in the competitive landscape. I think it's too early. This Q1, and I think it will be the same for 2021, the fiber will be the real element of the battle because all majority of the population in France is confined, is in a kind of lockdown. So the priority is given to the home connectivity, and fiber is the real turn of this year, and it was the case in 2020. So I think for the 5 gs, we will I think we will have to wait for 2022 to see some real change.
We observe quarter after quarter more appetite for 5 gs and specifically, as I explained a few minutes ago, for new offers we launched in October, and we are very satisfied by this launch. And by the equipment, 43% of the handset sales in Q1 were 5 gs compatible. So we observe that French consumer prefer as operator the arrival of 5 gs quarter after quarter and that sustain the equipment revenue in the Q1 that you can observe too.
Thank you. Thank you. Thank you very much, Fabienne. So I'll maybe answer now to the Orange Bank question on what is the evolution of the process looking for potential partners and then we'll close. Just to say and Paul Delus is with us
that
the change towards value compared to volume is very well on track. So I'm not going back to it, but we may take at some point with Paul more time to discuss the overall strategy in terms of mobile banking. I think it could be interesting. And as far as discussion with potential new partners, the point is that, as we've said, Groupama, who's our partner today with 22% of the equity of Orange Bank, has said that they were willing to change this position in terms of being a shareholder, even if a commercial partner is very much here. And so we have opened a process to find a new partner.
This process is ongoing. And I must say that we have seen very interesting marks of interest, which clearly show that Orange Bank is an interesting partner for these interested parties. So once again, we'll have a chance to come back to it. Maybe it's time to conclude. I would like, in the name of all of us to thank you for being with us for your question.
I would just like to stress in closing that we talked a lot of France. And in France, despite this COVID period with the closure of a number of shops, we have very solid net adds, a very good commercial dynamic with a decrease in churn. And so we are extremely confident, as Sabine was saying, about the improving trend for retail services over the period, thanks to the more formal strategy and a number of initiatives, including the bank book price increases we discussed. So this is point 1. I think we talked a lot about Spain, which is an area of focus, well understood by everybody.
Important to note the turnaround, which has been engaged. So we are extremely determined to follow-up on the first positive signals here. Wholesale will be part of what we will talk again in Q3, but I think Jerome did already give you a nice flavor on this. And when you look at the financials, well, we spent a lot of time and it's normal on some issues which raise questions. But don't forget Africa, Middle East.
We had no questions of on the Africa, Middle East. But it's EUR 2,000,000,000 EBITDA growing by 10%. So I would say it's worth giving a look. Maybe we should do more to with Alune. Alune is with us also, I think, and maybe we'll have a dedicated session at some point.
The other European countries are growing. IT is fast growing. We talked about cyber at 16% growth. I mean, we have also to look at all these issues, which put us in a very confident situation when we look at the EBITDA perspective for the year, the finance minus figure is clearly at least what we will be delivering. And the organic cash, which is really the cornerstone of our story because the end of the game is cash, Well, the cash target is very strong and will be where we have committed to
be.