Good morning, ladies and gentlemen, and welcome to Orange first half-year 2022 results conference call. This call will be hosted by Miss Christel Heydemann, CEO, and Mr. Ramon Fernandez, Delegate CEO, Executive Director, Finance, Performance and Development, with other members of Orange Executive Committee for the Q&A session that will start after the presentation. Thank you, and let me hand over to Miss Christel Heydemann.
Thank you. Good morning, and welcome to our Q2 2022 financial results presentation. I will start with the key highlights of the year, and then I will, of course, leave the floor to Ramon to detail our results. Let's start directly on slide four with the key achievements of the quarter. First of all, EBITDA and EBITDA margin both improved in Q2 and as well as for the first half as a whole. This is our second consecutive quarter of telecom EBITDA margin increase. Second, these improvements, combined with a significant decline in our eCapEx, have fueled the strong increase in first half organic cash flow, reaching EUR 1.4 billion, which underpins our full year target of at least EUR 2.9 billion.
Finally, we have taken a further step towards the creation of our joint venture with MASMOVIL in Spain, with the signing of the transaction that strengthen our positioning while generating significant synergies. The closing of the transaction is expected in about a year's time, after the competition authorities have completed their review. Last weekend, we announced the signing of a deal, paving the way for the creation of a 50/50 joint venture that combines the forces of Orange and MASMOVIL into a single, stronger operator for the benefit of customers and businesses in Spain. This new company will continue investing in 5G and fiber, notably thanks to potential synergies in excess of EUR 450 million per annum from the fourth year post-closing.
This 50/50 joint venture, co-controlled by Orange and MASMOVIL with equal governance rights, includes a right to trigger an IPO for both parties under certain conditions and after a defined period. With, in such a scenario, an option for Orange to take control of the combined entity at IPO price. The transaction is subject to approval from antitrust authorities and other relevant administrative authorities, and it is expected to close during the second half of 2023 at the latest. I strongly believe that the creation of this new company is of fundamental importance for the group, for the Spanish telecoms market, and for our customers. Now the financial results of the second quarter, presented in slide six. They are penalized by the base effect of the particularly high co-financing proceeds received in Q2 2021.
Excluding this effect, revenue growth was similar to Q1 at +0.7%, and EBITDA grew strongly by +4.5%. This performance confirms our full year 2022 EBITDA guidance, as EBITDA growth will accelerate in H2, notably due to our cost efforts and the base effects such as the employee shareholding plan. During this first semester, we also achieved a strong increase in organic cash flow of more than EUR 600 million year-on-year to reach EUR 1.4 billion, driven by EBITDA growth, but above all by the significant decline in ECAPEX. Finally, our very solid balance sheet is an asset in the current context, with a stable net debt to EBITDA ratio of 1.91. At Orange, we believe that strong economic performance is not possible without social and environmental leadership.
On this slide, we outline the key KPIs we use to track our progress towards a more sustainable, inclusive and responsible world by 2025. I will now hand over the floor to Ramon to go into details on our financial results.
Thank you. Thank you, Christel. Good morning. Let's start with group revenues, which were stable over the first semester, reaching EUR 21.3 billion. In the second quarter, revenues at EUR 10.7 billion decreased slightly by 0.4% as they were negatively impacted by the base effect of important co-financing proceeds received in 2021. Excluding co-financing proceeds, revenues that could be described as recurring grew by 0.7% in line with Q1. Retail growth is greater than wholesale decline, thanks notably to data in Africa, Middle East, increasing strongly by more than 21%, convergence up +3.2%, and fixed broadband growing by 5.2%. Looking at our segments, EMEA remains our main growth driver, with revenues up by 7.2% this quarter.
France reported -2.7%, but was stable, excluding co-financing, demonstrating our ability to offset the continued decline in wholesale, thanks to growth in retail. Europe improved to -0.9%, thanks to the solid performance of Poland, +3.4%, and Belgium +4%, but also the ongoing recovery in Spain. Enterprise was down by 1.1% due to a decline in voice and data, which was not offset by the growth in IT services and integration, the latter now representing 43% of OBS revenues. Slide 10. Group EBITDA grew by 0.5% this quarter, reaching a +0.7% increase for H1. Excluding co-financing proceeds, EBITDA grew by 3% over the semester.
EBITDA margin from telecom activities continued to increase for the second consecutive quarter, with +31 basis points in Q2, or +17 basis points over H1. MEA remains the main contributor to this performance, with a double-digit growth of 11.6%, which compensates for the strong deterioration of enterprise at -25.3%. This segment, hit by conjuncture pressures in the middle of its transformation phase, is a top priority for the group, and we will come back to it. France, at -0.9%, grew by 3.6%, excluding co-financing proceeds. Europe is up by 0.6%, including Spain, which pursues its recovery. Lastly, the EBITDA of international carriers and shared services segment improved by EUR 56 million, notably thanks to cost reduction.
As of the end of June, as part of a scale-up cost efficiency program, the group had achieved nearly EUR 450 million of net accumulated indirect cost savings compared to 2019, a pace consistent with our plan. These savings come mainly from the ongoing transformation of our operational processes. The group is fully mobilized on the EUR 1 billion accumulated net savings objective by the end of 2023 compared to the end of 2019, in spite of a tough inflationary environment. Turning to our investments, the group ECAPEX decreased sharply by 8.7% in H1, mainly due to France, as the peak of FTTH deployment has passed. This trend confirms our commitment to decrease eCapEx over the full year, even if the full year decrease will be much more moderate than in H1.
On slide number 12, you see that our net income landed at EUR 1.5 billion. The significant +EUR 4.1 billion year-on-year increase can be attributed primarily to the counter effect of a goodwill impairment booked on Spain last year, as well as significantly lower restructuring costs compared also to last year. Excluding the impairment base effect, net income is up by EUR 369 million. In H1, our organic cash flow reached EUR 1.445 billion, fully in line with our full year guidance, growing by EUR 605 million, thanks to eCapEx strong decrease out of a catch-up in H1 2021.
Organic cash flow generation will be relatively linear this year due to a smaller decrease in CapEx over the full year than in H1, as well as an acceleration of EBITDA growth in H2, which will not be fully reflected in the organic cash flow. In particular, the employee shareholding plan granted in Q4 2021 had a negative impact on EBITDA of EUR 172 million, but no impact on organic cash flow since it was booked below this KPI in purchases of treasury shares. Net debt reached EUR 24.4 billion at the end of June, slightly up this semester. Despite the growth in organic cash flow, this reflects in particular the payment of the final dividend for 2021 and the disbursement of licenses.
The group net debt to EBITDA ratio of 1.9 to 1 is comfortably in line with our objectives of remaining around two over the medium term. Let's turn to the business review with France, where revenues for the quarter were stable, excluding co-financing proceeds. Retail service revenues pursued their solid growth this quarter at +1.4% or +3.4% excluding PSTN, reflecting our strong commercial dynamic. In mobile, we achieved a solid performance with 173,000 net sales, driven mainly by the Orange brand and by the generalization of Airbox services to further enhance our broadband customers' experience. On the fixed side, the market is normalizing after the strong hype caused by the generalization of remote working during the first phase of the pandemic.
This is reflected in our +26,000 broadband net adds, still driven by fiber volumes above pre-pandemic levels with 263,000 net adds. Thanks to 5G and fiber price premium, all our ARPUs grew year-on-year, with convergent ARPU reaching EUR 70.6. This trend will continue to be fueled by our new high-end offer, Livebox Max, launched in April, which already accounts for 15% of our broadband customer acquisitions. In addition, we further strengthened customer satisfaction this quarter, as illustrated by the net promoter score increase and the decrease in all churns for mobile, fixed, B2C, as well as B2B customers. In the first half of the year, the EBITDA margin improved by 0.3 points, reflecting both the decline in wholesale revenues with low or no margins and our efforts on costs.
The evolution of EBITDA over H1 of -0.9% or +3.6% excluding co-financing strengthens our objective of approaching stability over the year. Also eCapEx decreased significantly after having reached more than 90% of our own fiber deployment targets by 2023. Finally, to conclude on France, we have submitted to ARCEP, our regulator, an agreement to extend the sunset period of the national roaming with Iliad until 2025 under similar commercial conditions to the previous contract. In financial terms, this agreement will represent for Orange an additional highly margined revenue that will allow us to secure our trajectory for France wholesale EBITDA, which will be a maximum loss of EUR 500 million between 2021 and 2025.
Let's now turn to Europe, where we once again delivered this quarter a very solid quarterly performance in retail services, growing for the first time since Q1 2019, thanks to convergence, IT and IS in Poland and the recovery of customer roaming. Wholesale revenues continued to reflect the regulatory decrease in call termination rates and the decline in international traffic, both of which have a low impact on margins. Good retail momentum, roaming recovery, and the actions that we implemented to counter inflationary pressures have together enabled us to grow EBITDA this semester and improve the margin rate with a continued improvement in Spain and an ongoing strong performance from the other European countries. In Spain, slide 17.
In the context of our operation with MASMOVIL, our recovery plan continues to bear fruit with further improvement in retail revenues driven by higher convergent ARPU and the resilience of our customer bases. In a still tough competitive environment, we have continued to increase customer satisfaction this quarter, enabling us to decrease churn and improve convergent NPS while pursuing a disciplined commercial strategy. We have just announced a new service upgrade on Orange convergent offers applicable from early August and increased connectivity on Jazztel convergent and mobile offers at the same price. The continuous improvement of retail services was offset at the revenue level by the decrease of low margin activities such as international traffic and equipment sales.
All in all, despite the inflation context, EBITDA continued its recovery plan this semester, supported by retail and cost efforts, which underpins our objective of a return to organic cash flow growth in 2022 and EBITDA growth in 2023. Let's move on to the Africa Middle East region, which enjoyed another excellent performance, fully in line with our ambitions. Revenues increased by 7.2% in Q2 and by 7.9% for the first half. This performance is driven by our growth drivers. As you can see here, data plus more than 21%, fixed broadband close to 28%, B2B more than 12%, supported by both a value effect and a volume effect with an increase of more than 20% in the customer base of 4G and fixed broadband. The decline in Orange Money is decelerating.
Thanks to our response plan, we have been able to weaken the competition and maintain our positions within the footprint, while growing the Orange Money active customer base by close to 10% to reach close to 25 million customers, and also growing Orange Money transaction values. This half year was also marked by a strong growth in EBITDA, close to +12%, and in an increase in the margin rate of more than one percentage point. This performance was achieved despite the inflationary context, thanks to our strong discipline on indirect costs. As a result, EBITDA has been growing faster than revenues for 10 consecutive quarters. Nine of our 16 countries recorded double-digit EBITDA growth. Let's now turn to the enterprise segment where the situation is more challenging.
This half year was marked by a significant deterioration in EBITDA, and our main priority is to recover the profitability of this segment in a context of transformation that has already begun and that we are going to accelerate. Revenues were down by 1.1% in the quarter, almost stable over the first half, -0.2%. Due to the decline in the legacy business, partly offset by growth in mobile and IT and integration services. As I already said, IT and IS now accounts for 43% of revenues with sustained growth in cybersecurity plus 13%, cloud plus close to 15%, and digital and data more than 7% growth. In a moment, I'll say a few words that illustrate the growth dynamic of Orange Cyberdefense.
However, EBITDA deteriorated significantly during the first half of the year at -25% due to the accelerated and higher than anticipated decline in high margin voice and data services, insufficiently offset by our growth release. This is due to both cyclical issues such as chipset shortage and management of salary inflation, but also to structural issues now addressed by the new management. The faster adaptation of OBS to this accelerating transformation is our top priority. We have already taken several measures that will bear fruit in the second half of the year, with the EBITDA decline expected to be halved compared to H1. This will be based on a plan implemented by Aliette Mousnier-Lompré and her team over the next 12 months. Our annual meeting, the OBS Summit, scheduled next September, will be the opportunity to provide an update.
If we now take a closer look at our Cyberdefense business, we finalized in May the carve-out of OCD to take full advantage of the growth potential of this market, especially in managed services, which is our area of expertise. Cyberdefense will remain federated within the OBS segment in order to fully benefit from the synergies with the group's other B2B activities. As you can see, with a 13% growth in H1 above the market, we are on track to achieve our EUR 1 billion revenue ambition in 2023. With remarkable organic growth in many geographies, we are already the leader in three countries and aim to become the leader in cybersecurity in Europe within the next five years.
Lastly, before ending this business review, let's have a look to TOTEM, which revenues were up by 8.4% this quarter, leading to a double-digit growth over the semester. Hosting activities which fuel EBITDA grew by 3.1% in the first half, driven by the 6.7% growth in third-party revenues. The limited increase in EBITDA of 1.8% this semester includes the set up costs of the new organization.
The number of sites and the tenancy ratio are still relatively stable, but our first commercial successes confirm, on one hand, the appetite of our competitors for our hosting services in France and Spain, and on the other hand, our expertise in complex network architecture with highly constrained environments, as in the case of the Grand Paris Metro line number 15, which was won by TOTEM, and we'll get back to it before year end. Let me now turn back to Christel, who will conclude this presentation.
Thank you, Ramon. Before ending this presentation, I would like to reconfirm our objectives for 2022 as well as for 2023, and our focus on delivering our organic cash flow targets, the pillar of our commitments to the market. I look forward to sharing with you our new set of midterm objectives and strategy for the next decade in February 2023. This timing will allow us to build on our achievements in 2022. Thanks a lot for your attention. We are now happy with all the management team to take your questions.
In order to give time to everyone, please ask only one or two questions. To ask for the floor, please press the star or asterisk key, followed by the digit one on your telephone keypad. Please ensure the mute function on your telephone is switched off to allow your signal to reach our equipment. If we do not have time to take your question, then please contact investor relations team after the call. If you find that your question has been answered, you may remove yourself from the queue by pressing star two. Again, press star one to ask a question, and please use the handset, not the phone speaker. We'll take our first question. Nicolas Cote-Colisson from HSBC, your line is open. Please go ahead.
Oh, hi. Thank you. I've got two questions, please. The first one, I'll start with the cost inflation in general, and maybe more particularly energy and labor costs. I guess the question is what capacity do you have to offset this at the EBITDA level to get to the guidance? In particular, I would refer to Orange Polska, which indicated yesterday a 50% increase in energy costs, although I thought you were nicely hedged for 2022. There's also pressure on salaries in France. Any color on the mitigating effects against inflation would be great. My second question, Christel, maybe directly to you, if I may, and maybe preempting a bit your February presentation. After three months in the driving seat, have you identified some structural changes that would make sense?
If you could share with us how you see the ideal perimeter of Orange in the coming years. 'Cause I notice that cyber defense is now carved out. Could it be an area where corporate action is able to bring more scale and could make sense? Thank you.
Thank you for your questions. We were expecting your question on the cost and the overall inflation environment. I think we will reconfirm what we said, I think, when we published our 2021 results. We do believe obviously we are facing the same environment as everyone on energy, on salary inflation pressure. This is true in France, but this is true in all our countries in Europe and in Africa. We do believe that we have strength to overcome this. First of all, our market positioning, because in this environment, we are delivering our more for more strategy.
Obviously trying to maximize pricing capabilities in the market, and this is due to our premium positioning, network quality, customer satisfaction, net promoter scores, and that's obviously something that we monitor very carefully. We don't have one answer because obviously, from one country to another, we have different abilities to implement price increase. In some countries, we have in our contracts the ability to do that. In other countries, we do that very carefully. In all cases, we want to make sure that we offer the best portfolio of offers to customers who can decide whether they want to go to a low range of offers, low price, I would say, or to a more premium options.
On the energy side, we are. Can you hear us?
Yeah, it seems.
We have been covering our position, and so more than 90% of our energy needs in 2022 were covered. This is obviously something that I don't have the specifics in mind for Poland related to your question. At group level, more than 90% of our energy needs were covered, and this is obviously a strength in 2022. We are also covered for more than two-thirds of our needs for 2023, and we will continue to monitor this very carefully. Just so that you know, I mean, it's been already many years that Orange has been focused on reducing our energy consumption.
We have appointed at group level an energy manager who is working with all our companies in every country to make sure that we implement our energy efficiency measures. We are focusing on reducing energy consumption, while at the same time having a very determined energy price management policy. Optimizing the ability that we have to indeed cover and anticipate for potential price increase. On the pressure on salaries, indeed, this is true in France, but this is true in every country. We have local negotiation with our employee representatives. We are paying a lot of attention in particular to low salary employees. This is something that we take into account.
As you know, in France, for instance, at the beginning of the year, we have implemented a plus 3% salary increase on average. This is including many different mechanisms, but really favoring low salary ranges. This is a dialogue that we continue to have. Noting the fact that in the past, particularly in France, we had salary increase above inflation. This year, indeed, we are below inflation, but this is always negotiation with employee representatives, as well as taking advantage of measures implemented by governments, which obviously are different from one country to another.
On your second question, after three months and potential structural changes, I won't give you any scoop, I would say, on announcement that we will make in a few months. I think on cybersecurity, the carve-out of our cybersecurity activity is something that was initiated by the previous governance. This is something that I've reviewed in detail, and I confirm that we should indeed implement. As well as I'm spending a lot of time with, I would say, all our B2B teams to make sure that we are organized to capture market growth opportunities, profitable market growth opportunities. Cybersecurity is absolutely an opportunity for us.
I think as we presented this morning, we continue to grow and to overperform the market growth, and we have an ambition to reach EUR 1 billion revenues by 2023. We will indeed continue to invest in this domain.
Okay. Thank you.
We'll take our next question from Roshan Ranjit, from Deutsche Bank. Your line is open. Please go ahead.
Great. Morning, everyone. Thank you for the questions. Two for me, please. Just looking at some of the trends in France a bit more in detail, I noticed there was a slight slowdown. Nothing, I guess, concerning at this stage in the retail trends, 1.4% versus the 1.7% there in Q1. Now I guess this comes on the back of the, I guess, EUR 5 premium for Livebox 6, the back book price increases initiated last year. Could you just run us through how we should think about that retail trend going forward, if it's getting tougher to implement these price increases?
I guess, you know, we are lapping some of the output price increase, but are we still kind of comfortable with that 2%-4% retail ex PSTN growth, please? Secondly, on Enterprise, I know you have flagged this tough environment for the last two quarters now. I think previously you had suggested that we could see a return to EBITDA growth by FY 2023. Can you update us there now, given this sharp decline that you've reported in H1? Thank you.
Thank you. Now I will hand over to Fabienne to answer your question in France so that she can go into detail, and then we'll take the enterprise question.
Good morning. Thank you for the question. You're right, we observe a slight slowdown. I would like to highlight one point. Despite the economic context, the activity remains solid. We observe a move between mobile and broadband. This market momentum a little bit soft. It's not new. We observe this phenomenon, this move, since November 2021. This is due to the acceleration we record in 2020 and 2021, just after the lockdown period, where fiber was very attractive and we recorded a very strong commercial momentum. It was normal that in 2022 we observed this slight slowdown. At the upper right, the mobile is very active and very dynamic.
It's exactly what you can observe in the result we record in Q1 and in Q2. We are very comfortable that 2022 will be a different year than 2021. More oriented mobile than fiber due to the 5G penetration and the attractiveness of 5G offers and momentum. We are not worried by the 2022 dynamic, and we are very comfortable with the result. The volume are well oriented and very strong. The ARPU are very well oriented. We launched, as you said, a new Livebox called Livebox Max with 5 EUR gap. We are able to keep to keep on our premiumization strategy on mobile and on broadband with the new offers, higher in price.
This offers represent 16% of our sales when we expected 10%, so no worry about the market, even if the market is changing and moving. No impact for Orange, and we are very confident for 2022.
Thank you, Fabienne. Regarding your question on the Enterprise pressure margin and the ability to recover. Indeed, the H1 EBITDA decrease is due both to the acceleration of the decline of our high-margin legacy business, which is not yet offset by our growth relays, which have a lower margin. It's also due to economic difficulties such as the war in Ukraine, the chipset shortages or varying levels in our growth activities. Adapting OBS to the deep transformation of the market is a priority project. We have already taken several measures which will bear fruit from the H2, during which the decline in EBITDA should be half compared to H1.
On your question regarding recovery in 2023, I would say yes, indeed, it may take a bit more time to recover, but we are determined and already starting in H2 you will see an improvement.
Okay. That, that's very helpful. Thank you.
We'll take our next question. Stéphane Beyazian, you from Oddo BHF, your line's open. Please go ahead.
Thank you. Two questions if I can. One on CapEx and a follow-up on pricing in France. Regarding CapEx, I was just wondering whether you could elaborate on the very strong decline in the first half. Actually, what's happening in France to explain a reduction so fast? I mean, is it just that you've done most of the fiber? You know, when we're looking at the initial guidance, which was to be around EUR 7.4 billion or slightly lower, I was just wondering whether you could comment if you're actually well on track to be largely below that level or not, or we should expect definitely a much higher CapEx level in the second half.
Regarding pricing in France, I was just wondering, I mean, you did mention obviously the Livebox and the gap where you're doing well. You identified other potential actions that could be done on some of your packages. Do you think the competitive environment is allowing you to take some price actions in the future?
Thank you. On CapEx, Ramon, do you want to take this one?
Yes. Thank you, Stéphane, for your question on CapEx. The decline in H1, which is quite strong, as you said, with close to -9% is not to be seen as replicable in H2. You should expect that what is seen by the market by consensus on the full year evolution of CapEx is what we expect to do. Second half you will have more CapEx because there is some cyclicality around in a number of areas. Bottom line, what we are doing is what we said, which is basically that the peak of CapEx at group level has been reached. That now we are going from now on in 2022 to reduce the overall CapEx figure of the group.
We're not going to have the figure of H1 and H2. In H2, we will have a growing CapEx figure, and so the yearly figure will be what we said, maximum EUR 7.4. We will stick to this. I mean, I can elaborate further, but it's better to take more questions. You know, the reason why we are able to start to decrease, you know it very well. In all our European countries, the fiber rollout has been very well advanced. As I said initially, we are at 90% of the overall target of deploying FTTH homes in France, target we have for 2023. This is going to be also turning to the first question on inflation.
One of our great assets compared to others, the networks in Orange as a group are very well deployed today. In terms of the impact of inflation on CapEx, we will be more protected than others.
Thank you, Ramon. Your question on the ability to price in France and the competitive environment, I will let Fabienne answer directly.
Yes, thank you. Yes, even if the market used to be a little soft, as I said, and the economic context is more tense, I think the most important in France is market repair. The market repair is still ongoing. It's good news because we need that to maintain our strategy. All competitors and all players keep creating a better competitive environment, and all raise their price or organize some back book repricing as we started in 2019 now. I am really confident that even if the context is a little bit complicated, more than we expected, we are able to maintain our premium strategy. At the other, we need to raise the price specifically in the inflation context we know. I am not worried about this point.
All the competitors have a limited recourse to promotion, as you can observe. All competitors try to push back book repricing when opportunity is there, and we will do the same in the future. We are able to launch new offers, two new offers, more premium. We will play with this game, and we are very confident that we can do that. Maybe another point very important to highlight, we observe a strong rationalization on the MVNO brand. This process is very significant because it's a kind of consolidation specifically on the mobile, and that contribute to create a better environment also. We can pursue the strategy we have decided in the past.
Thank you. Thank you.
We'll take our next question. Jakob Bluestone from Credit Suisse, your line is open. Please go ahead.
Hi. Good morning. Thanks for taking the questions. Two quick questions. First, just on the economy itself, you've obviously talked about the sort of macro headwinds in the OBS side. I was just wondering if you could share with us if you're seeing anything else in the other segments. I mean, in France, I think, Fabienne, you did mention some economic strain starting to appear through price inflation impacting Africa and so on. If you can maybe just comment on any other sort of signs of slowdown in other parts of the business. Then, just second, I think you mentioned that two-thirds of your energy costs were already hedged for 2023. Can you maybe just share with us what would be the increase in your energy costs?
What's the step up in 2023 energy OpEx, please? Thank you.
On the overall economy, obviously, I mean, we are observing, like everyone, the impact of the Ukraine crisis. We are still in an environment where our COVID
COVID, the health environment is what it is. Supply chains are massively disrupted. There's a lot of questions on what's ahead. I mean, Fabienne already answered for the environment in France. We are observing, everyone is asking questions, but it's very difficult to detect early signs. Maybe I will let Fabienne add a few more points on the context in France before we talk about energy costs.
Yes. I just want to recall that the slowdown we observe is only on the fiber market, not on the mobile. We have a very dynamic and active activity on the mobile. Don't make a mistake about this point. Maybe to talk about another segment, we can talk about the SOHO and SME market, because this is very active. We observe a very good performance on the SOHO and SME market segment with more than a stable trend year-on-year. We have a very strong performance, better sales than last year, despite very strong competition. We are even doing better net adds compared to last year with the ARPU increasing. There is slowdown, yes, on the fiber, but that's all. The mix is well oriented.
The volume on the fiber is a little bit less than we knew, and I explain why. This is due to the acceleration in the past. But at the same time, the ARPU are all increasing with a very significant move. EUR 70 for the convergent, it's a very good performance. Volume and value are au rendez-vous on the B2C, on the B2B, if we look at the SME and SOHO market. I don't think we have to be only on a slowdown, market appreciation.
I think to complement that, what we observe is an acceleration since, I would say, COVID of, I mean, online shopping, as we mentioned, enterprise accelerating their transition to digital solutions. We see customer visits in physical point of sales have indeed decreased and they have moved more to online. We mentioned already the enterprise acceleration on digital collaboration solutions. The working from home policies also have an impact. This is not due to the overall economic environment. This is acceleration of market trends. Regarding your question on energy cost, I will let Ramon take it.
Thank you. Thank you, Christel. On the general environment, of course, there are some headwinds, but there are also some positive elements we see. Roaming, for instance, is back, largely back, and in many European countries, in fact, back to 2019 levels. Of course we have, you know, also some positive news around. Overall, we our total roaming revenues are just now at group level 15% below the 2019 level, which is a very encouraging rebound. I don't know if Jérôme or Monique for Africa, Christel will want to say a word on what's happening in Africa.
In one word, I would say that we do not see any impact of the overall environment yet on the level of growth that we can see in Africa. We will go to Jérôme just after a very quick answer on your energy question, which is that just to recall, and Christel gave the figures, but you know that total energy costs are slightly above 2% of total OpEx. I would say the good thing is that we had largely hedged our energy cost before the market price increased. The 90% coverage in Europe and the two-thirds for 2022 is largely done at a very acceptable price, including for 2023. We are quite well protected.
The overall increase is quite limited and is fully absorbed by, you know, all the cost efficiency programs, the cost reduction programs we have. It's of course fully embedded in the guidance that we gave for 2022, for 2023. When we say that we confirm the organic cash target for 2023, it is with the impact of the increase in energy price. This is really clear, and I don't think we will give more specific figures. But if you take, you know, the inflationary impact and you add the price increases that we have already in the books plus the cost reduction programs, we largely offset the impact of inflation, including energy.
Yes. Thank you, Ramon. Jérôme Hénique speaking. As a complement for Orange Middle East and Africa. As you said today, there is no sign of a deterioration of our growth of the impact of the inflation that we start facing in some countries on the demand. On the contrary, we continue our strong growth as mentioned, with 7.2% growth on our revenues, because the appetite for both fixed and mobile data is still there on the one end. On the other end, in most of our countries, the impact of inflation on both energy and consumption products are mitigated by the states which regulate the price of energy in half of our countries in particular.
In it encourages us to speed up on our renewable energy policy with lots of initiatives from solar farm to data center solarization. We are pushing hard to make sure that we will have more and more solar and mastering of our own energy production in our countries. Last but not least, energy cost is less than 5% of our total production costs in the region. It's still mitigated and as you said, fully mitigated by the growth in the revenues and the very good performance on the mastering of indirect costs.
Thank you.
We'll take our next question from Mathieu Robilliard from Barclays. Your line is open. Please go ahead.
Yes, good morning, and thank you. I had two questions. First, in terms of the EBITDA, as you flagged underlying EBITDA grew more than the reported one, and you reiterated the full year guidance. If you could give us a little bit more details in terms of the plus and minuses that would help reach the guidance. Specifically, I think you mentioned that you expect the enterprise EBITDA decline to halve, and I was wondering what would drive that. That's the first question. With regards to the second question, it's about Africa. There were reports in the press recently that you may be interested in investing in Nigeria.
I don't know if you had any comments around that and more specifically, if you could remind us how do you see inorganic expansion in Africa? Thank you.
Thank you. On the EBITDA trend and pluses and minuses for 2022, I will let Ramon take the question and maybe we will hand over as well to Aliette. That we can zoom on Enterprise and then we'll come back to your question regarding Nigeria.
Thank you, Christel. Thank you, Mathieu for the questions. On EBITDA. In order to get to be around 2.5% growth, we aim at in 2022. The different big blocks are basically, you know, France, as we said, thanks to the very solid performance which is reported this morning on H1, is helping us to more than confirm, I would say strengthen, and this is the word I used, in fact, strengthen our objective to be very close, very, very close to stability of EBITDA in 2022. Which I must say, was not so obvious when we started the year. The dynamic on many accounts with Churn, with ARPU, with volumes, et cetera, in France is really very solid.
This is an important part, of course, of the overall performance. You have OMEA, and you just heard Jérôme Hénique, the new CEO of OMEA. This double-digit growth in EBITDA is extremely solid. The business in this region is extremely resilient and delivering regular fast growth. You can book this in your expectations. You also know that Europe is also you know growing. This is new because the you know six countries of the Europe segment starting with Poland, Belgium, et cetera, Romania also are delivering very nice growth. Marino is also with us this morning. Spain is doing much better, even if still decreasing.
The overall Europe contribution is going to be positive to EBITDA growth in 2022. On Enterprise, we turn to Aliette. As we said, second half will be much better than H1. As Christel also recalled, the pace of decrease should be halved in H2. Let's say that the mobile finance and TOTEM segments are positively also contributing to this overall evolution. You have the central contribution of ICSS, which is contributing importantly to this overall performance. You know, we are extremely confident that we will reach the target of EBITDA growth for 2022.
For the second half, once again, you know that there are some base effects which are not playing in H2. There is the cost of the employee share plan last year, which is not going to be there. It had an impact of EUR 172 million last year. There is no counter effect also of fiber co-financing, which is having an impact in H1. So these are the moving blocks, Mathieu. I hope it helps. Once again, we are quite confident that we will deliver the guidance this year. Then maybe Aliette to give a focus on OBS.
Yeah. Thank you, Ramon. A few words on the OBS business. As you saw, our profitability is sharply decreasing in H1. There are three main reasons for that. The first one we talked about is the erosion and the transformation of our core business. We see, for instance, on fixed voice, the acceleration of the transformation of the customer's usage driven by COVID has really changed the landscape in an accelerated way versus what we were expecting. The second reason is that we have strong IT growth and our IT and integration revenue is growing, but this is not fully translating into EBITDA growth at the moment.
The reason is that we don't have yet the required agility and critical mass to be at the market benchmark. Although we are now the third IT company in France, for instance. Also we had clearly a lack of discipline in the past 12 months on our cloud line of business. We had a lack of anticipation and monitoring of our cost base in context of inflation of both salary inflation and also hardware inflation. The third reason, after erosion and transformation of the core business and the IT and integration area, of our profitability challenges is that we have quite a complex organization today, which is limiting our ability to provide simple and customer-centric solutions.
It prevents us, as a consequence, to efficiently adapt to this new market demand for more integrated and more end-to-end and more outcome-driven digital solutions. Starting from this diagnosis, of course, we have built an action plan. We are also at the moment driving a comprehensive strategic and portfolio review for Orange Business Services together with Christel. I will not share the conclusions today. What I can tell you is that we will simplify our operating model, and I will trigger a reorganization process of Orange Business Services in September in order to decrease our G&A and to facilitate the transformation of our core business towards more integration and also to facilitate our financial and sales discipline in IT domains.
Short term, because as we said, the EBITDA decline will be halved in H2, we have a solid action plan to, what I would say, refocus on our operational basics. It's about better managing our inflation situation. It's about workforce management, activity monitoring, sales pipe monitoring. To give you maybe two concrete illustrations, we have now a structured action plan around inflation to make sure that we have legal clauses meant to adjust inflation in all our contracts, which was not the case in the past. To make sure that we adjust our quotation tools, that we apply the existing clauses in all our contracts as well, that we adjust our sourcing strategy.
We have a comprehensive and structured plan on inflation management. The second illustration I can share with you is around cloud, because as I mentioned, we had some challenges on cloud in the recent past. We have an action plan in place that is starting to deliver first results in June. We've increased our labor unit prices. We've also again added inflation clauses in all our contracts. We have a very tight labor management in place, and we are also restructuring our portfolio and legal entities on the cloud area to improve our fixed costs. That's the overall landscape. Again, short term action plan and also more long-term strategic review.
Okay. That's very clear.
Thank you.
So sorry, I just want to finalize on that. The improvement in H2 will be driven by an acceleration or better trends in revenues combined with cost cutting. That's how in the short term it works, yeah?
Yeah. That's the picture.
Thank you.
Regarding Nigeria, there is no specific project. This is very clear. However, to be clear, you've seen the excellent performance of our Africa and Middle East region. We are indeed always looking at potential opportunities.
Thank you very much.
Thank you. We'll take our next question. Alex Frontiers from Bank of America, your line is open. Please go ahead.
Hi, thanks for taking the question. One, if I may, is just if you could give a little bit more color on the ICSS loss reduction and where those are coming from and what's the plan in place there. Then maybe just a follow-up actually on that question, what's the strategy regarding OCS? I think we've seen in the press that you might consider at some point divesting from this entity. We equally also had a relatively weak IPO of Deezer, which I think you've got a very tiny stake in still left. So if you could elaborate perhaps on your larger content slash media strategy and how you see the space evolving, it would be very interesting. Thank you.
Yep. I will let Ramon take the ICSS question.
On the ICSS part, you have among a number of elements contributing to this positive contribution. You have the share plan of last year, which has an impact on the part of the central cost. You have the new senior part-time program, Accord Intergénérationnel, which was agreed on in last December, and which is bringing, of course, an important contribution in 2022. Which will be also contributing to 2023 because part of this voluntary departure plan will have an impact in 2022, and also in 2023. These are two of the, you know, important blocks. You have also the positive impact of the recovery in international mobile services.
Plus some, you know, other smaller elements, for instance, Orange Marine, you know, submarine cable laying activity. You have a number of pieces contributing to this. Overall, this is, you know, a significant growth contributing to the EBITDA overall growth performance for the year.
Thank you, Ramon. On OCS, first of all, I mean, OCS is a success with almost 3 million subscribers. It's true that since we created the OCS almost 15 years ago, there's obviously massive changes in the content and streaming market. We are looking at and we have been already announcing, I think 1 year ago, that we are looking at potential scenarios to ensure a continued success for OCS and for our customers. We don't have any specific comment to make.
Indeed this is a review that started already some time ago.
All right. Perfect. Thank you.
We'll take our next question. Thomas Coudry from Bryan, Garnier. Your line is open. Please go ahead.
Yes. Good morning. Thanks for taking my questions. I have two, please. First one is a follow-up coming back on OBS. You didn't mention competition as an issue. What are you seeing on that front? Isn't competition intensifying? We've seen a number of consolidation moves on the B2B market lately in France, and you know, especially on, you know, new voice services such as Unified Communications or even SD-WAN, you know, replacing MPLS. Don't you see increasing competition and risk of losing market shares here? Then my second question, please, is on MASMOVIL.
Could you please tell us again why you are confident that the deal should go through the competition authorities, given that you could have, you know, in the target configuration a dominant position in mobile or even in fixed? Thank you very much.
Thank you. I will hand over to Aliette and maybe Fabienne to give more colors on the competition environment in France.
Yeah. I will leave it to Fabienne specifically on the French market and especially on the SME and SOHO market. Generally speaking, what we see on the B2B market is that the COVID crisis has intensified the digital transformation of enterprises. This has disrupted the positioning of B2B operators on the market. Because what has happened completely is that COVID accelerated some pre-existing transformations that were already there, but such as the transformation to a more software and cloudified world. This is opening the door to new competitors.
Very concretely, I mentioned, for instance, earlier the fact that, with all the lockdowns during the COVID period and the overall move to home working, we see that the fixed lines that were on the desks of the employees in enterprises, they are progressively disappearing. They are transformed into collaboration software tools. That completely means that the high margin telco voice business that B2B operators were having is now progressively replaced by collaboration solutions. The competitors are not at all the same. The game is not at all the same. We are entering into much deeper partnerships and also into more integrated business.
What we've seen as well, and you mentioned this in your question, is that, again, the lockdowns, home working had a big impact on the way enterprises manage their networks. They used to have big sites with many people leveraging the MPLS networks of telcos, especially in critical locations, big sites, headquarters. Now with new hybrid ways of working, we see enterprises accelerating their shift to internet connectivity associated with flexible routing solutions, what we call SD-WAN, for instance, you mentioned it. Again, this is opening the door to new competitors. On this core business segment, that's where we are challenged, but that's where as well we have wonderful assets to get this fight into this new competitive environment.
Because thanks to the integration capabilities we have, infrastructure integration capabilities. Thanks to the cybersecurity assets we have, thanks to the cloud assets, we are very well positioned to play into this new game of infrastructure integration and to defend the value of our core business. I remind you that on SD-WAN, for instance, we are considered by Gartner as being in the top two worldwide ranking. We have those assets. More specifically on, in the IT environment there, we are competing head to head with more traditional IT companies. As we mentioned earlier, we are now ranked as the third IT company in France. Specifically on the IT segments, we have growth rates that are more or less at the benchmark versus competition.
Maybe Fabienne, you want to say a few words?
Yes. Thank you, Aliette. Yes, on the SOHO and SME market, you're right, we have to face more competition. It's not new information. Some new players came on this market one year ago. Despite this, more intense competition, we don't see any impact on the market share for Orange. I think this is due to two pillars we have. Our brand, very strong brand, Orange in France. The loyalty of our customers are very strong. I think it's a strong asset. The second part is the strategy we decide to pursue and enrich our offers to make the difference with the other competitors. We launched, for example, two new services at the end of 2021 linked to cybersecurity. These two offers are very successful.
They are very unique on the market and sustain all the strategy we have. As I said a few minutes ago, the results obtained in 2022 are better than in 2021, despite more competition.
Thank you, Fabienne and Aliette. Coming back to your question on the MASMOVIL transaction and the very important next step with the European authorities. First of all, let me remind you that there are today five mobile operators in Spain. We are confident that the creation of the JV will enable more competition than a pure standalone scenario on the infrastructure side, thanks to strong synergies that we would generate from the joint venture. Actually the joint venture will not reduce the intensity of competition in the Spanish telecom market, which will remain fueled by a well-developed and competitive wholesale market.
Thank you.
This is the end of question, and now I will hand over the floor to Christel Heydemann.
Thank you. Before ending the session, I would like to stress again the key takeaways from our Q2 results, which are underlying top line, excluding co-financing, similar to Q1, up + 0.7%. EBITDA strongly up, + 4.5%, again excluding co-financing. EBITDA margin improving and H1 organic cash flow up more than 70%. This performance let us reconfirm our full year 2022 EBITDA and organic cash flow guidance and also paves the way towards our 2023 targets. I really look forward to talking again, and for now, I hope you all have an enjoyable summer break.