Good morning, ladies and gentlemen, and welcome to Orange's full year 2024 results conference call. The call will be hosted by Ms. Christel Heydemann, CEO, and Mr. Laurent Martinez, Chief Financial Officer, with other members of Orange's Executive Committee for the Q&A session that will start after the presentation. Thank you, and let me hand over the call to Ms. Christel Heydemann. Please go ahead, ma'am.
Good morning, and thank you for joining our full year results presentation. We are pleased to present today's strong 2024 results with the guidance fully achieved. After two years, our Lead the Future strategy is delivering results on the four pillars of our plan. We have accelerated our transformation and reinforced our leadership. This is clearly reflected in our cash generation. The incremental Free Cash Flow all-i n after over two years amounted to EUR 1.4 billion. In France, our solid commercial strategy has further reinforced our leadership position, and we are back to growth in revenues and EBITDA. In all our countries, we remain focused on efficiency, and we have implemented new initiatives to accelerate, particularly through artificial intelligence. These outstanding results give us great confidence to raise our 2025 guidance for organic cash flow. Let's start with our 2024 results fully achieving our guidance.
Over the year, the group delivered EUR 40.3 billion in revenues, reflecting a plus 1.2% increase driven by growth in retail and Middle East and Africa. EBITDA performance continued to accelerate across the year, reaching + 3.2% in Q4 and + 2.7% for the full year. France is back to growth. Europe growth remains solid. Middle East and Africa recorded outstanding momentum, and Orange Business met its target. We maintained discipline on eCAPEX, with eCAPEX to sales at around 15% in line with our target. Organic cash flow reached EUR 3.4 billion, rising by almost 6% and exceeding our annual goal of at least EUR 3.3 billion. Our balance sheet remains robust, with a net debt to EBITDA ratio of 1.8 times, benefiting from the cash upstream related to the creation of MasOrange. Finally, our carbon reduction efforts continue. We have reduced emissions on all scopes.
We are accelerating on Lead the Future execution. We have achieved an average retail growth of over 3% at group level over the past two years, benefiting from the quality of our network, the excellence of our customer service, and the leading position in terms of NPS net promoter score in 15 countries. We have been actively pursuing in-market consolidation in Europe, particularly in Spain, where MasOrange is delivering synergies at full speed. We continue to urge Europe to review its regulatory framework, as we believe a strong digital and telecom ecosystem is essential for enhancing competitiveness in the region. In terms of infrastructure, we fully benefit from our strong fiber footprint, and we drive the monetization and optimization of our fiber networks.
The monetization rate has increased by more than three points in France and five points in Europe in two years, while in Spain, we are creating a FiberCo with Zegona. Orange Business pursues its transformation and is delivering a sequential EBITDA improvement, leveraging continued double-digit revenue growth from Orange Cyberdefense. Middle East and Africa delivered an outstanding double-digit growth, demonstrating our leading position and operational efficiency. I take this opportunity to highlight the strengths of our position. The growth of Middle East and Africa is based on 16 countries benefiting from leadership positions, 160 million mobile customers, solid growth engines, and a strong untapped potential. The risk inherent to the continent is mitigated thanks to a well-diversified country portfolio, with no country representing more than 15% of Middle East and Africa revenues and a solid local anchorage.
We definitely believe in the strength and the potential of our business. Our Lead the Future plan focuses on value creation, and we delivered on our main indicators in the last two years. Firstly, Free Cash Flow all- in has significantly grown, almost doubling compared to where it was two years ago. Secondly, our return on capital employed increased to 6.9%, achieving a total increase of 100 points over two years. EPS increased by 12% to EUR 0.82 per share.
The improvement in Free Cash Flow all- in , ROCE, and EPS supports our dividend growth. Dividend set at EUR 0.75 for 2024, payable in 2025, is fully covered by our Free Cash Flow all- in generation. Lead the Future is also innovation at the forefront. The AI Summit in France earlier this week was an opportunity to reaffirm our strong position on artificial intelligence.
We have notably communicated on a new strategic partnership with Mistral AI, combining research collaboration, AI integration to optimize our network's operations, and the distribution of AI-enriched offers for our B2B customers in France and in Europe. AI is also a great enabler for efficiency, a top priority for the group. At year two out of three, we have reached two-thirds of our EUR 600 million savings ambition, and we have accelerated key initiatives to deliver cost savings in the midterm.
In France, we have signed an anonymous agreement with trade unions' representatives for a new senior part-time plan for 25-28. This will enable us to adapt our workforce to the evolving challenges of our business and will contribute positively to EBITDA, with progressive effects starting from 2025. We are as well accelerating our operational efficiency projects across the group.
Procurement will also be a key source of additional savings thanks to accelerated group synergies. Our purchasing base represents EUR 18 billion every year, and we aim to generate around EUR 700 million in procurement savings in the midterm. Needless to say that AI has a huge potential to create value and improve our cost base. We delivered EUR 200 million value thanks to AI in 2024 through more than 150 use cases in networks and operational efficiencies, and we are targeting above EUR 300 million of value in 2025.
Let's move to our ESG commitments, which are at the heart of our strategy, with remarkable achievements in 2024. Most of our 2025 objectives have already been met a year ahead of schedule, including the reduction of Scope 1 and 2 CO2 emissions, the number of beneficiaries of training to digital, and enhanced representation of women in management networks. We are also making significant progress on Scope 3.
Let's now move to France. In 2024, we remained the strong leader in France in a dynamic market. Competition in the fixed-only and convergent markets, which represents more than 50% of our domestic revenues, remained healthy. The low end of the mobile market was competitive. Our mobile-only revenues account for 13% of Orange France's total revenues. In that context, we can leverage our strong customer base and leading position with best-in-class churn and NPS, well above the market. Indeed, our NPS reached a second level, record level, of more than 30 at the end of 2024, and our mobile churn is seven points better than market average. We focus on our commercial playbook execution, which is based on three axes.
First, we are driving increased segmentation to address all market segments, offering solutions that range from 2P offers to bundle offers with content. Second, we enhance customer loyalty by capitalizing on our top positions in churn, NPS, mobile customer services, and FTTH network quality. Finally, we increase value through upsell and cross-sell initiatives, such as value-added services and migrating our base from ADSL to fiber with a premium.
This commercial strategy is fueling retail revenue growth in line with our CMD ambition. This commercial strategy has proven successful. We delivered on our commitments in 2024. We master our market. At the beginning of last year, we committed to get back to positive net adds on broadband, and we successfully achieved this from Q2, and we also stabilized, as targeted, the convergent base in Q4.
Convergence remains the cornerstone of our strategy, accounting for 30% of total revenues in France and 80% of annual retail growth, excluding PSTN. In Q4, the convergent ARPO reached EUR 78, up almost 4% year- on- year. Fiber kept driving fixed broadband commercial performance with the best quarter in two years, leading to 1.1 million net adds in 2024, and fixed broadband ARPO is up by almost 5%. Mobile remained strong this quarter with close to 120,000 net adds. This efficient commercial performance resulted in a full year growth of 2.6% in retail revenue, excluding PSTN. With that, I hand over to you, Laurent.
Thank you, Christel. Good morning, everyone. Let's start with our group revenues, up 1.2% in 2024 and exceeding EUR 40 billion. The solid growth was driven by retail services, up 2.6% in the quarters and 2.7% for the year, more than offsetting the expected wholesale decline. From a division perspective, France is up 0.4%, and Middle East and Africa contributed the most to revenue growth in the group, achieving a remarkable double-digit growth. Europe revenues declined due to a reduction in low-margin activities, despite retail accelerating during the year.
Finally, in a challenging IT market, Orange Business decreased slightly. Moving to EBITDA, growth accelerated across the year to reach 3.2% in Q4. This strong result was driven by an outstanding double-digit performance from Middle East and Africa, a continued solid growth in Europe, and we are very pleased to be back to EBITDA growth in France.
As expected, Orange Business continued the sequential trend improvement of EBITDA, halving the decrease compared to the previous year as per target. Lastly, ICSS EBITDA was impacted by one-off and the base effect related to a submarine cable sale last year. Moving to net income, net income is stable in 2024, driven by higher EBITDA in 2024 and positive base effect related to 2023 French pension reform. Income tax reflected improved earnings in France and Middle East and Africa, as well as the base effect of deferred tax asset in 2023. Lastly, the net result related to MasOrange was impacted by one-off costs related to integration, procurement plan, and financial expense. Moving to eCAPEX , we maintained our disciplined policy. We pursued our investment in Middle East and Africa to support our strong revenues, while the limited increase in eCAPEX in France is related to lease buyback of equipment.
Organic cash flow is up by almost EUR 200 million, reaching EUR 3.4 billion, well in line with our guidance. The strong cash improvement of 6% is fueled by an uplift of EBITDA and lower tax income payment. Free Cash Flow all- in reached around EUR 3 billion, almost up EUR 500 million driven by organic cash flow growth and a phasing toward 2025 in license payment. On net debt, so our net debt reduced by EUR 4.5 billion, driven by the EUR 4.3 billion net proceeds that we received from the creation of MasOrange in the first half.
This led to a leverage ratio of 1.8 times, well in line with our guidance and reflecting our very strong balance sheet. Let's move to review by segment, starting, of course, with France. In France, revenues and EBITDA are back to growth in 2024, with retail services revenues up 2.6% during the year.
Wholesale decline has been mitigated by unbundling and civil work tariff increase in 2024, as expected. For 2025, we are expecting a slightly better EBITDA growth than in 2024. Moving to Europe, revenues are down 2.3% this quarter due to a decrease in low-margin activities, while retail accelerated by nearly 2%. Retail growth in Q4 is driven by our volume value strategy. Strong mobile net adds, notably in Belgium, and ARPU growth in Poland with as well churn improvement.
This quarter represents the best commercial performance for broadband and FTTH since 2021. Convergent services maintain a solid momentum with almost 8% year-on-year growth. All together, Europe posted a very strong 3.9% EBITDA full-year growth, supported by price increase, operational efficiencies, and synergies related to in-market consolidation, leading to an EBITDA margin uplift of 1.6 points. Looking ahead, we expect Europe to deliver a low single-digit EBITDA growth in 2025.
Let's move to Middle East and Africa with an outstanding double-digit growth both in revenues and EBITDA. In Q4, revenues growth accelerated to 12.6%, fueled by double-digit growth on our four key drivers: Orange Money, fixed broadband, B2B, and 3G/4G, which is up 22% on a year-on-year basis. This performance is driven by both mobile customer growth and ARPU, up 4%. The 4G customer base increased only this year by 16 million customers. We are also very proud of the success of our Max it super app launched in November 2023, which has already attracted over 17 million users. Thanks to revenue growth, strict cost control, we delivered double-digit EBITDA growth in 2024 for the fifth consecutive year, increasing the EBITDA margin to almost 39%.
EBITDA minus CapEx is up by more than 11% on a historical basis, leading to cash generation, which is our top priority for Middle East and Africa. Moving forward, we target at least high single-digit EBITDA growth in 2025. Turning to Orange Business, revenues for the quarters decreased by 4.1% due to the expected decline in voice services and a challenging IT market. In that context, we are pleased to report a 4-point increase in the NPS, highlighting Orange Business recognition as a trusted player. Cyberdefense is moving full steam with double-digit growth this year. Our transformation plan, which includes a voluntary departure plan in France, has allowed us to achieve our goal of reducing the EBITDA decline by 50% this year. Our transformation action will continue to unfold in the coming years and support the ongoing EBITDA improvement with a decrease halved in 2025.
We now target EBITDA stabilization in 2026 in the context of a more complex IT market. Let's move to conclude on MasOrange. MasOrange retained its leadership on gross adds and on value management with continued growth of convergent ARPU. The market remains competitive, but worth noting that the three main operators, including MasOrange, of course, have increased their tariff in January of this year.
Total revenues increased by nearly 5% this quarter, fueled by strong retail performance. Adjusted EBITDA is up 11%, benefiting from strong synergy implementation. We delivered this year no less than EUR 120 million in synergies over nine months, exceeding nicely our target of EUR 100 million. We reached an agreement as well to create a FiberCo with Vodafone Spain, and we target to close the transaction by the end of H1 2025 after the selection process of financial investors.
The proceeds will be, as communicated, fully devoted to debt repayment. For 2025, we target a slight revenue growth, cumulated synergies above EUR 300 million, and double-digit growth of adjusted EBITDA minus CapEx. With that, I'll hand over back to you, Christel, for the conclusion.
Thank you, Laurent. In light of our strong achievements in 2024, especially in cash generation, we have decided to upgrade the 2025 guidance initially provided at our Capital Market Day. We now expect an EBITDA increase of around 3% in 2025 and an organic cash flow of at least EUR 3.6 billion. eCAPEX will remain disciplined with circa 15% eCAPEX to sales ratio, while maintaining our leverage guidance of around two times. Our dividend policy is unchanged, with a dividend floor of EUR 0.75 for 2025, paid in 2026. Thank you for your attention. Laurent, the Orange Executive Committee, the MasOrange management, and I are now ready for your questions.
Thank you very much for the presentation. We'll now be moving to the Q&A part of the call. If you have a question, please press star two on your keypad. That's star two on your keypad and wait for your name to be called. Okay, our first question comes from Mr. Ondřej Cabejšek from UBS. Please go ahead, sir.
Hi, good morning, everyone, and congratulations on these results, and thank you for the presentation. I have two questions, please. One, just zooming in on France. So clearly, you expect trends to actually improve in 2025 on the EBITDA line, despite some noise around competition. So I just wanted to focus on the drivers of this improving momentum. So clearly, obviously, like I said, the cost cutting is set to improve, I guess, the profitability. But then what are your kind of latest thoughts around the competitive dynamics and pricing, especially in mobile, which we've seen, I guess, improve since the price cuts that we saw in the second quarter? But then more specifically, and what's more important for you, the convergence competition, where we saw a lot of noise towards the end of the year. That's one question, please.
And then the second question on your dividend. You are now upgrading the Free Cash Flow guidance for 2025. You are at 1.8 net EBITDA, so quite below your leverage target. I guess investors will want to hear a commitment that the dividend per share will continue to grow in 2026 and beyond. Is this something that you can already communicate? Thank you.
Thank you. So on the France dynamic, indeed, we expect a slightly better EBITDA growth than in 2024, with continuous efforts on costs. So first and foremost, we plan to continue to benefit from retail growth, low single-digit retail growth, driven by, as we've done so far, volume and value. As you know, we've been already doing that in 2024, maintaining our best-in-class churn, leveraging, of course, our solid convergent segment. So we will have tactical price increases and, as we've said, continue to upsell from copper to fiber.
On the competitive environment, actually, as we've said, stable environment on broadband and convergence. And of course, the core focus for us, as we've said, is churn reduction and best-in-class churn. And you see convergent customer churn is much better than non-convergent customers. We expect to see a continued good momentum on the convergent ARPU.
As you know, and as we've said, I mean, the convergent segment is 30% of our total revenues in France, and it's 80% of our retail growth in 2024, if we exclude the PSTN. Of course, this is a mix of tactical price increases and, as we've said, the upsell and cross-sell strategy. On the mobile market, we expect, as we've seen and commented on 2024, the mobile-only market, especially in the low end, remains very competitive, even though we've seen since the beginning of the year some price increases of a few euros for actually all operators.
On the mobile, the entry price point on B-brand has moved on average from EUR 8 for slightly above 100 gig 5G packages to EUR 10 now. This is true from all players, so increases from EUR 1 to EUR 5 on most tariffs, with some differences depending on the data buckets.
From that standpoint, we are confident that, and we see no change. Actually, it's pretty reassuring. On the EBITDA, of course, it's all the efficiencies and the cost drivers, as we've highlighted. We plan to accelerate our net cost reduction. We mentioned procurement. This is, of course, all the operational efficiencies that Jean-François is driving with his team, optimizing subcontracting schemes, advertisement, and promotion. We will get a bit of tailwind on the energy side. And on workforce, as we've said, we have agreed with our employee representatives on this new early retirement scheme, which we will start to benefit in 2025 toward the end of the year. But we will see progressive effect toward the end of 2025 and, of course, increasing until 2028. And we mentioned AI. And of course, as you know, we continue on EBITDA to get the wholesale headwind.
As per the Capital Market Day, wholesale headwind in 2025 is expected to be circa EUR 100 million. On the dividend, as you know, we have an attractive dividend yield above 7%. Our capital allocation policy is unchanged. So that's why we communicate on this floor at EUR 0.75. And of course, it's unchanged until our next Capital Market Day. And so we will revise it at the next Capital Market Day, so end of this year, early 2026, with no taboos, as we've been saying several times.
Thank you, Christel. Just on this last point at the dividend, so there's a floor, right, which investors might view as insufficient given what I said in terms of the leverage and the free cash flow. So is there an ambition, at least, to continue growing this number with the specifics, obviously, as you say, communicated later in the year or early next year? But is there an ambition to actually grow this?
Well, I mean, as I've just said, we know we have a very attractive dividend yield. When we talk to investors, we also know, and we want the share price as well to increase. So that will be linked. So at this time, of course, we're not making any announcement on our capital allocation, but of course, we know this is a key expectation from all investors, and this is something we will tackle as part of our next Capital Market Day, which at the latest, I would say, should be when we publish our 2025 results.
Thank you very much.
Thank you very much. Our next question comes from Mr. Nicolas Côté-Colisson from HSBC. Please go ahead. Sir, your line is open.
Oh, hi. Thank you. Two short questions, please. The first one is on the labor costs in France, because I think you are planning to recruit 6,000 employees in the next few years. But if you were to take into account the senior plan in line with what happened in the past years and the natural attritions, how should we see the headcount evolving in the coming years? And also, if you can remind us, when are the next wage negotiations all in France again?
And my second question is on cross-selling in France. I was wondering how big the business opportunity is at this stage in terms of revenue and EBITDA, and if you are intending to sell more products, maybe outside telecoms, in order to keep the churn very low in the convergent packages. Thank you.
So on the labor cost in France and on the headcount, as I mentioned, actually, it's not just an early retirement program that we renewed or that we extended with our employee representatives. We signed a new workforce planning agreement, which includes, indeed, a plan on hiring especially young talents in some of the areas, and I have in mind, of course, in our stores, in Orange Business, in our AI initiatives. But this is part of, and this is, I would say, consistent with the hiring we have been doing in the past years as Orange.
As part of the workforce, of course, we have, as you know, also an aging workforce, and that's why we have this early retirement plan, which we think will have EBITDA impact, roughly EUR 400 million at the end of the plan, so 2028.
Now, let me remind you that this plan is, of course, fully based on voluntary departure. So that's taking into account the assumptions that we've made based on the previous plans. As you know, this is the scheme that we have been using for a long time and that our employees are used to. When it comes to wages negotiation, it's too early to comment because we just started, actually, the negotiation with our employees. We expect it to be lower than last year, knowing that, of course, the inflation has decreased significantly, but it's really too early to comment further, given I want to leave the negotiation to go to its end.
On the cross-selling opportunity in France, actually not just in France, because this is something that, as you know, as part of our churn reduction initiative and also leveraging, I would say, the huge portfolio of customers that we have, indeed we are selling new offers to customers. You've seen the launch of our cybersecurity offers for customers.
We've been selling insurances for quite some time. We are selling, so cybersecurity insurances, of course, devices. That's been for quite some time in the industry, and we continue, and content is also a core upsell opportunity for us, especially linked to our broadband packages. This is definitely; we also have agreements on music, entertainment. So there's all type. This is part of us being distributors for players. This is not new, but we will continue to do so.
But I was just wondering, so beyond the benefits at the churn level, all these initiatives, do they contribute in terms of gross profit margin positively, or is that really just a churn tool?
No, this is not just a churn tool. This is contributing. And as you know, we have also tried to upsell new services. I have in mind, of course, the banking activity with Orange Bank in Europe, which we decided to stop because it was neither contributing on the churn nor contributing on the margin. So, of course, we are very disciplined when we launch and when we upsell on making sure that this contributes positively, of course.
Okay. Perfect. Thank you. Okay. Thank you very much. Next question comes from Mr. Akhil Dattani from JP Morgan. Please go ahead, sir.
Yeah. Hi, good morning. Thanks for taking the questions. Can I just start with a quick clarification on the French EBITDA? Christel, you mentioned, obviously, a number of drivers, but one of the things you've highlighted in the results today is that you've spent some CapEx in 2024 buying out some of the routers that consumers were leased in France. So if you could just maybe help clarify whether that's a meaningful impact on all the EBITDA. So that's just a very quick clarification.
And in terms of my main questions, it's really two. One is, on MasOrange, Laurent mentioned the fiber deal that you're hoping to close through Q1. I just wondered if you could comment in terms of how we think that should high-level work. There's obviously a lot of speculation around proceeds, which the press is saying could be about EUR 3.5 billion.
Could you just talk us through, without going to specific numbers, what that means for the deleveraging of that asset, and then what that could mean for the timing of when you consider reconsolidating the business? And then the second one was just on the CMD. Christel, you mentioned a few points around timing and things we're thinking about. But I guess high-level, as you're planning for that event, can you sort of talk us through what are your main priorities? Sorry.
Yes, Akhil. I think you got cut, but your question was on the CMD, and then I heard what would be your main priorities.
Yeah, exactly. I'm trying to understand what you think the main priorities for that event would be. You talked about a few things around AI, the dividend, but just high-level, what are you thinking about as you plan as a management team? Thanks a lot.
Thank you, Akhil. So on the French EBITDA, indeed, the CapEx lease, which was done in Q4 and slightly impacting our CapEx in France, has a beneficial impact, but it's very limited in our trajectory. So it was really more tactical, but it's not something that's driving. Really, the EBITDA trajectory is driven by what I was explaining before: cost reduction and strong focus on our commercial performance. On Spain and the FiberCo, we still expect we're in the process of negotiating. We signed the binding agreements with Zegona in December, and we expect to close it by the end of H1. At this stage, and the proceeds from this transaction will, of course, mean cash proceeds for MasOrange, and we expect those proceeds to fully be used for deleveraging the MasOrange company. There's some echo on the line, but I hope you can hear me.
On the Capital Market Day, I would say, as usual, I mean, we will, of course, highlight what will be our strategic priorities for the midterm and providing an update on the trajectory for different businesses, and as well as capital allocation, of course, for the next years. And no doubt that AI will be a driver. I mean, we're just at the beginning of a real revolution thanks to AI. So this is not just short-term or midterm.
This is a really long-term driver. So no doubt that this is something that we will accelerate on. And I would say innovation in general, that's a strong asset for us. We have teams working, and this is the core DNA of the company. So we will have a strong focus on this.
Great. Thank you. Can I just ask one clarification? What will dictate the timing of the event? You obviously mentioned it will be latest by your full results next year. Is it a function of closing the Spain deal, or are there any other variables that dictate timing?
No, I won't provide you any guidance on moving, I would say, on MasOrange. No, it's fully a function of we haven't really set a date. So I would say it's going to be between the end of 2025, and I would say logically at the latest for the results of 2025, which means early 2026 if we come to capital allocation, especially focusing on our 2025 results and consequential dividend payment.
Great. Thank you.
Okay. Thank you very much. Next question comes from Mr. Roshan Ranjit from Deutsche Bank. Please go ahead, sir. Your line is open.
Oh, great. Good morning, everyone. Thanks for the questions. Got two, please. Going back to France, Christel, you mentioned the scope for tactical price increases. If I look at the, I guess, Q4 trend, we saw a slight slowdown in the convergent ARPU growth. So how should we think about this targeted price increase through 2025, and how does that reconcile with your, I guess, we're now at the end of the 2%-4% growth CAGR? So what should we expect for 2025, please? And the second question is just around Totem.
You are still guiding to a 1.5 x tenancy ratio target in 2026, up from 1.4. Could we get a sense of how that is driven? Is that more from the kind of Orange buildout? Are you expecting to try and maybe win some other customers, and how are discussions with the MNOs in the Spanish market evolving there? Thank you.
So on France, as I was mentioning, we see already some moves on the low end of the mobile market. And when it comes to price increases and ARPU for convergent offers, it's really driven as well from the copper to fiber, so DSL to fiber migration. And we've also done some tactical price increases, including backbook on copper offers, as we've done, but very tactical. I don't know if Jean-François, you want to comment further?
Yes, I can slightly comment. I mean, we will have, as you explained, Christel, a balanced strategy on value and volume. And basically, we are really expecting retail to continue to grow low single digit in 2025. We are very confident with our commercial strategy. As you saw, the market is moving. We were in the right direction on mobile in the months of January. So we are confirming the ambition of + 2%, + 4% growth over 2022, 2025, as was guided in the CMD. So very confident on 2025's commercial strategy.
When it comes to Totem, so we have successfully, I would say, increased our tenancy ratio already, and we continue to drive it. This is true in France, and this is true in Spain. Of course, this is not just based on the Orange or MasOrange footprint, even though, of course, in Spain, MasOrange is driving its network synergies, and this is impacting all the TowerCos, I would say, supplying to MasOrange. We've also extended the footprint and the tenancy ratio of Totem with other players in Spain, and we will continue to do so. As you know, Spain is an interesting market where there are more TowerCos than there are MNOs.
That's great. Thank you, and just on that point, I mean, do you see the Towerco market evolving in Spain in the near term?
That's an interesting question. As you know, we've been very active to drive evolution in this market with MasOrange. Meinrad, you're on the line, so actually, maybe you're closer than I am to, you're actually based in Madrid now, so do you want to comment on the Spanish dynamic, so maybe Mein is not plugged in, but no, we know the market is still very competitive, and actually, we see, and that's what we have been arguing with Brussels, actually, during the antitrust process.
Of course, we talk about the MNOs and the large ones, and MasOrange is a leader in Spain, but there are still a lot of small players, mostly MVNOs, but also have some fiber footprint, and many of them are very active discussing and tactically trying to consolidate the market, so there's no doubt that Spain will continue to evolve in the near term.
That's helpful. Thank you.
Okay. Thank you very much. Our next question comes from Mr. Paul Smith from Citi. Please go ahead, sir.
Oh, that's great. Thanks very much for the questions. Two, please. Firstly, kind of following up slightly on some of the previous questions about labor costs and requirements, but thinking slightly longer term. Some companies in the sector have put out fairly aggressive headcount reduction targets, whether in the short term or by kind of end of decade. Just thinking in terms of particularly how much you're talking about AI today and the changes to employee terms and these kind of things.
Just can you talk slightly about your headcount requirements in the medium term from your current footprint? I think of around 70,000 employees in France and around 130,000 employees worldwide. And then secondly, you've talked a lot about the consumer competitive environment.
I was wondering if you could also talk about the business competitive environment and expand slightly on the challenging IT market conditions that you referenced on Orange Business? Thank you very much.
On labor costs and headcounts, I think I've said it before, but as a company and given our history, you don't expect me to announce, I would say, a big headcount target reduction because at least it proved in history of the company that it's actually counterproductive. Now, if you look at our track record, and I think that's true for any telecom incumbent in Europe, we have been massively reducing headcount over the past 20 years, and this has been driven mostly, of course, through retirement and, of course, embracing new technologies. And so that's why the early retirement scheme that we have in place will continue to have impact.
If we take the assumptions that, again, we've discussed with our employee representative, knowing that this is only on a voluntary basis, so this is absolutely not a target, but we can estimate that it's roughly 6,000 employees who could be eligible and voluntary to adopt this scheme.
Now, this is over the next years, and this means that those employees will remain employees of Orange for actually a longer period of time, but they would be on a temporary basis, which means that we would have immediate cash benefit from this scheme. So really no headline on headcount reduction because we really want to be responsible in the way we manage our employee workforce. When it comes to AI impact, I'm not sure how companies can announce headlines.
We know that all jobs will be impacted by AI, and this is actually why we have massively trained all our employees, and we are actually providing tools so that employees can all benefit from GenAI in a secured environment within the company, so there's no doubt that this is driving efficiency if we take our pre-sales team, if we take our developers, if we take our, I mean, customer support, so this will have impact, but at this stage, the technology is really far from replacing humans, and I think it will never replace actually human, or it should not replace human, but it will really enrich and make our employees more efficient.
So at this stage, it's really difficult to anticipate, I would say, short to midterm headcount impact, but as part of our workforce planning negotiation with employee representatives, we've clearly highlighted the type of jobs and positions where we plan to hire and train because it's not just external hiring, it's also training.
We have already a few thousand employees working on data and AI, and we will continue to increase that. And so that's very important for us. But no doubt that AI will have impact on all types of jobs and will impact all employees. On the consumer and, I would say, business competitive environment, if we focus on the French market and the small businesses, this is, of course, a market that's always been very competitive.
As you know, we have a very solid market share, actually qualified as dominant market share by the antitrust authorities, but we fight hard to protect and defend this market share, and we've successfully done it over the past years. If we look at our global businesses and international footprint, it's clear that this is a very competitive market, especially when it comes to IT integration. On the IT integration type of businesses, our type of network services, we face competition from large IT integrators as well as, I would say, more traditional competitors.
This is not new, but this has definitely increased, probably driven by the maybe less dynamic IT environment in the past month.
That's great. Thank you for the color.
Okay. Thank you very much. Our next question comes from Mr. Mathieu Robillard from Barclays. Please go ahead, sir.
Yes, good morning, and thank you for the presentation. I had two questions, please. The first one is about France again, but looking at it slightly differently. Clearly, you are doing a very good performance with an acceleration in volumes despite the competitive environment. And I was wondering if, besides all the good things you've done, if that is also due to a reacceleration of the market growth in Q4, or you feel you're taking a bit more market share.
And I realize we don't have numbers from the other players, but maybe portability numbers that you may have could shed some light into that. And then I had a question about OBS. So we've seen that you've delayed a bit the stabilization of EBITDA, and as you flagged, 2025 is going to prove more difficult because there's more competition on the IT side.
Is your expectation and your guidance for 2026 based on a better environment in IT, or are there other levers that now make you confident you can stabilize that in 2026? Thank you.
Thank you, Mathieu. On France, I mean, definitely the performance in 2024 is based on the very solid and strong performance of our teams in France. As we said, 80% of our growth is coming from the convergent segment. The Q4 performance is not linked to an acceleration in the market dynamic. So it's really the accumulation of all the work we've done, as we've said, very detailed segmentation, very focused approach, and tactical movement, as well as this upsell cross-sell.
So there's no magic, but I mean, Q4 has not been less competitive, and I think we've been commenting quarter after quarter. Of course, if you look only at the mobile net adds, the mobile market remains extremely, especially on the low end, very competitive. Now, there's always seasonality, some seasonality in Q4, so that's driving. But as you said, at this stage, we can only comment for Orange.
We don't have the other play or the market performance. Jean-François, you want to add?
Yes, but we can comment because we have portability visibility, and we are very proud to be for the third quarter, consecutive quarter positive in portability versus Free and stable versus Bouygues. So that's something we are pretty proud of.
I think you share your pride, actually, when you say it. Jean-François. No, when it comes to OBS, of course, I mean, our 2025 and 2026 performance, I don't think we are I mean, we're not planning on a better IT environment. We are really planning on what we control. Aliette is driving a very aggressive, I would say, transformation, focusing, of course, on our internal efficiencies, our operational performance, as well as repositioning our portfolio. We've said it. We're investing on our next-generation platform, Evolution Platform.
We are launching new AI offers. We have been pruning our portfolio. Of course, we have Orange Cyberdefense that continues to grow double-digit, very solid performance, and a leader now in Europe, of course, benefiting to this result. No, we're not, I would say, betting on external to drive this.
Thank you very much.
Thank you very much. Our next question comes from Mr. Stéphane Beyazian from Oddo BHF. Please go ahead. Sorry, your line is open.
Thank you very much. Good morning. Can I ask you regarding the network shutdown because you've started some tests, actually more than tests in a couple of locations? So how is that going on and whether you start to have some thinking about what savings potentially you could get out of that from selling copper, for instance? Any indication would be interesting. And I've got a second question regarding free cash flows. Is it possible to have a little bit of guidance or color on what taxes you are expecting for 2025? So cash taxes and also possibly on litigation. There were a couple of issues at the end of 2024. Thank you.
Thank you, Stéphane. So I'll let Laurent comment on the free cash flow and taxes litigation. On network shutdown, I'll let Jean-François add further, but at this stage, we've read in the news some numbers on the savings or the benefit we could get from the copper resale. This is not science fiction because we plan to resell it, but the numbers are completely bullshit. At least they're not coming from us. So this is not what we're only starting to work on the supply chain for recycling this copper, but there's a cost to extract it.
And so yes, we will get savings, energy savings when the copper is dismantled, but this is obviously a very large industrial plan that we passed successfully the first step end of January. And that's going to be a key element, actually, of our next Capital Market Day because, of course, this is for us a key project in France. Jean-François?
Yes. So indeed, we are planning to shut down our copper network. As you know, this is a project that will bring us up to 2030. We have taken the first step because we have phases in this project. Actually, we have eight phases. That will bring us again to until the end of 2030. We had the first, what we call LOT, with 200,000 households that we've shut down. We have done that 31st of January. I mean, it went extremely well. I mean, we had less complaints than the number of fingers of the hand at the end. So we've been really happy about the way it turned out. And as turned out, sorry, and as Christel was saying, concerning the copper reselling, this is also going to grow in the next years, but we are, I would say, in the first steps.
We have started to shut down commercially what we call the second LOT, which is concerning 900,000 households, which are going to be shut down in end of January 2026. This project is starting extremely well.
Laurent on the free cash flow.
Yes. Morning, Stéphane. So the drivers in terms of our cash for 2025, of course, number one would be the EBITDA minus CapEx uplift in line with our guidance of EBITDA up 3%. So that's, of course, the main engine in terms of cash positive evolution. We will have against that some tax headwinds, and we have considered in our guidance of at least EUR 3.6 billion the tax impact in France, which is impacting us by around EUR 100 million. So that's on top of the guidance uplift we have. And we will have as well some limited headwinds on the financial interest due to the interest rate decrease, which is impacting our positive treasury. So all of that is leading to at least EUR 3.6 billion of organic cash flow.
Moving to the Free Cash Flow all- in , we have, as I said, some phasing on the licenses of 5G, mainly in MEA, which in turn will lead to globally this EUR 500 million average license per year over 2024 to 2025. This is the kind of run rate we see on the midterm so far. In terms of litigation, as you know, we had a litigation with CNIL indeed, which will be paid out in H1, and we are talking about EUR 50 million. We'll make appeal for this CNIL fine, and we do not have any litigation, I would say, as we see on 2025 so far, but this is something which is, of course, depending on the various lawsuits that we have.
Thank you, and just a quick follow-up regarding Orange Bank, which will go away this year. Will that help a little bit in terms of savings this year? Is there anything around any cash also that you may have to disburse? Anything that we should know?
Laurent?
No, absolutely. Yes, Stéphane. So very much in line with our trajectories. I remind you, the net cash impact is EUR 200 million for the Orange Bank closing, and we are in line with that. In 2025, a bit less of headwinds in terms of profitability, but nothing significant, all in line with the expected trajectories.
Thank you. That's very clear. Very clear. Thank you.
Thank you very much. Next question comes from Mr. Joshua Mills from BNP Paribas. Please go ahead, sir. Mr. Joshua Mills, your line is open in case you have a question. Okay. In that case, we'll move on to the question from Mr. Ottavio from Bernstein. Please go ahead.
Good morning. Very simple questions, but I guess it's something you want to tackle on the CMD later on, but it's on the capital allocations. In previous questions, it's been highlighted about your gearing that is effectively reducing, and that gives you options. The optionality, of course, it's on the cash distributions, but also in terms of the assets you have off balance sheet. I'm talking about Spain and the JVs on the fibers. Now, because in Spain also, you're trying to monetize or at least the plan is to monetize the networks. That will lead to an acceleration of the gearing, and that potentially also the time when the private equity would like to monetize their own stake.
So therefore, the question is, going into next year, looking at the ranking in terms of the priority between cash distributions and bringing some of the assets you've got off balance sheet, like Spain, and also the fibers, the JVs both in France and in Poland, which are on the pecking order. I know that it's very likely that you want to tackle this later on the CMD, but if you give us a bit of a flavor of how you're basically going to manage your balance sheet going forward. Thanks.
Thank you. So indeed, you're rightly pointing to the various options that we have. As we've said, we are very focused on value creation for the company, and our teams in Spain are very focused on delivering the synergies, which is the first lever to create value for us of sharing MasOrange. We will not disclose any timing or any intention, but we've been very, very clear on the fact that we want to have the option to reconsolidate the MasOrange asset. There's no predefined scheme to do that. So that means all options are open, and that's why we've been very clearly keeping the cash upstream dividend that we received at the creation of MasOrange and the low leverage at Orange balance sheet level. And as you know, we also have a lot of valuable assets on our balance sheet.
We have a lot of fiber footprint. We mentioned that. That infrastructure is a key pillar of our strategy, and we believe it's a core value. And we have Totem, we have various assets, we have FiberCo. The first priority for us with FiberCo is, of course, to increase the monetization rate of the fiber that sits on our fiber assets. So monetization can go through our retail or through a wholesale agreement. That's why we have wholesale teams dedicated to that. But no predefined, I would say, path. Of course, the Spanish MasOrange valuation is a key priority, deleveraging, priority one, finalizing the executing full steam, the synergies, and finalizing and closing the FiberCo.
If I can be a bit more specific, the NetCo , the monetization, when it will be done in Spain, the cash will go towards deleveraging or towards upstreaming dividends to Orange?
Oh, yeah, no, sorry. I thought because I thought I had already mentioned it, but no, the cash upstream to MasOrange from the FiberCo will go fully to the deleveraging of MasOrange.
Perfect. And in terms of the JV for fiber, you have both on the concession in France and in Poland. Do we expect that at some stage will be brought back into own balance sheet? Will you consolidate or you will be leaving outside your perimeter for a long time?
So if we talk about our French FiberCo, we have the option to take control back, and that's pre-agreed with our core shareholders. And this is something that we'll assess based on, of course, as always, value creation for Orange shareholders. And we have a similar scheme, by the way, in our FiberCo in Poland as well, where we are also looking at increasing, I would say, the value of our fiber footprint in Poland.
Good. Thank you.
Okay. Thank you very much. We will try once again the line of Joshua Mills, BNP Paribas. Please go ahead, sir. Joshua Mills, just in case your line is muted, you are now live in case you have a question. Okay. Perhaps not. In this case, we see no further questions on the line. We'll pass the line back to the management team for the concluding remarks.
Thank you all for joining this morning earnings call. We are confident in our ability to fully deliver our Lead the Future trajectory while accelerating. We have upgraded our organic cash flow target for 2025 to reflect this commitment. All our actions and initiatives are designed to lay a strong foundation for a successful phase beyond 2025. Thank you all.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.