Good morning, ladies and gentlemen, and welcome to Orange's Q3 2025 results conference. For your information, this conference is being recorded. During the Q&A session, in order to ask for the floor, please raise your hand in Teams. Please ensure that the mute function on your device is switched off to allow us to hear you when it is time for us to take your question. The call today will be hosted by Christel Heydemann, CEO, and Laurent Martinez, CFO, 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 floor to Christel Heydemann.
Good morning, and thank you for joining our Q3 results presentation. Before getting into our Q3 results, I would like to mention that last week, we submitted, together with Bouygues Telecom and Free Group Iliad , a joint non-binding offer to acquire a large part of Altice activities in France. In a challenging competitive environment, this deal would allow us to strengthen investments in France while maintaining a competitive ecosystem for the benefit of consumers. This non-binding offer amounts to EUR 17 billion, of which 27% for Orange. There is no certainty that we will reach an agreement, and we are willing to engage in a constructive dialogue with the Altice G roup. Back to our Q3 results, we remain fully focused on our business execution, and we are really pleased to report strong results driven by a robust commercial performance in France, Europe, and the Middle East and Africa region.
In France in particular, we are proud to reaffirm our leadership in fiber, with over 10 million customers and + 1.1 million new customers in the last 12 months. We have become the first operator in Europe to surpass this milestone in the domestic market, marking a major achievement in our state-of-the-art network commercialization. In Spain, Orange and MasOrange have announced an agreement with Vodafone Spain and GIC to create the largest fiber company named Premium Fiber. With 12 million premises and 5 million customers, this fiber core will provide considerable benefits for the Spanish market. Our continued focus on cost efficiency is reflected in the EBITDA growth of 3.7% this quarter, along with a 0.7% point improvement in margin rate. These robust results enable us to once again upgrade our full-year guidance, with a full-year EBITDA now expected to grow by at least 3.5%.
Let's review our strong Q3 results on slide five. Revenues increased by 0.8% in the third quarter, driven by robust retail performance of 2.6%, which offsets the expected decline in wholesale. From a segment perspective, revenue growth is led by Middle East and Africa, achieving double-digit growth for the 10th consecutive quarter, and Europe back to growth thanks to retail services and IT and IS. In France, retail excluding PSTN grew 0.2% as expected and was offset by the anticipated decline in wholesale and equipment sales. EBITDA reached EUR 3.4 billion, growing by 3.7%, giving us confidence to upgrade our full-year guidance to at least 3.5%. This growth is driven by our solid performance, as well as our continuous efficiency initiatives fueled by advancements in procurement, AI, and operational efficiency ambitions. In line with our eCapEx discipline, we maintain a CapEx to sales ratio of approximately 15%.
I will now hand over to Laurent for the business review, starting with France on slide seven.
Thank you, Christel. Good morning, everyone. In France, in a market which is overall flattish in value, the competitive environment remains generally stable, with sustained competition on the low end. In this context, we continue to uphold our efficient commercial strategy, grounded in extensive and innovative segmentation, strong customer loyalty, and value. This strategy led to a robust commercial performance, with 138,000 mobile net ads per quarter since the fourth quarter of 2022, 274,000 on fiber, and 20,000 on convergence. This performance is driven by increased momentum on Orange brand and effective churn management, with mobile churn improving by more than two points year- on- year. Convergence ARPU continued to grow, increasing by 1.1% year- on- year in the third quarter, while mobile and fixed broadband ARPU slightly declined year- on- year, reflecting the mixed effect related to the competitive landscape over the past year.
Fixed broadband ARPU slightly improved on a quarter-to-quarter basis. Moving to the financials, for France, our disciplined and efficient commercial strategy led to 0.2% growth in retail ex-PSTN revenues as expected. Revenue continues to be impacted by the structural anticipated decline in wholesale. Globally, we remain committed to cost optimization and confirm our objective of growing EBITDA in France in 2025, slightly more than in 2024. Let's turn to Middle East and Africa, which continue to deliver a very strong performance, demonstrating once again our positive momentum. Revenues are up double-digit for the 10th consecutive quarter, driven by our four key drivers. Looking forward, on the back of this performance, we are fully confident in our ability to achieve double-digit EBITDA growth in 2025. Let's turn to Europe.
Revenues are back to growth in Europe this quarter at 4.7%, driven by services growing at 1.4%, thanks to a balanced volume value strategy and an exceptional IT and IS quarter, notably in Poland. Net ads remain very robust in both mobile and fixed broadband, with mobile customer base reaching 22 million. Convergence revenue showed once again a strong performance, increasing by close to 6%. Looking ahead, we do confirm as well our 2025 outlook with a low single-digit EBITDA growth. Moving to Orange Business , revenues are impacted by last year's portfolio pruning, by the difficult IT market, and by the French macro environment. In that context, Orange's cyber defense growth remains solid at over 6% in the first nine months. In parallel, we are accelerating our transformation initiatives, focusing on growth areas such as sovereignty and security, while stepping up our efforts to optimize our cost base.
Nevertheless, considering the complex condition of the global IT market and the French market macro environment, the ambition to have EBITDA decrease in 2025 versus 2024 is difficult. Let's complete with MásMóvil Orange, our joint venture, which continues to create value with a strong focus on delivering synergies, which are close to our EUR 300 million target by year end. In this competitive market, we achieved strong net ads in the mobile segment and maintained stable volumes in fixed. Revenues are up 1.7% this quarter. Services revenues benefit from strong growth in both B2B and our new business initiatives, which offset the negative mix effect in a challenging telco market. We have been as well able to close strategic alliances with tier 1 p artners in energy, insurance, and alarms.
The positive momentum on equipment sales also fueled growth in the third quarter and is helping to extend the lifetime value of our customers. Lastly, we do confirm our outlook for 2025 for MasOrange . Back to you, Christel, for the conclusion.
Thank you, Laurent. I would like to conclude this presentation by confirming that our robust Q3 and nine month results make us very confident in reaching our objectives. In addition, reflecting our continued focus on efficiency and operational excellence, we are upgrading our EBITDA guidance to at least 3.5% after a previous upgrade in H1. Thank you for your attention. The floor is now open for questions.
In order to give time to everyone, please ask only one or two questions. As a reminder, to ask for the floor, please raise your hand in Teams. Please ensure that the mute function on your device is switched off to allow us to hear you when it is time for us to take your question. If we do not have time to take your question, then please contact our investor relations team after the call. As a reminder, journalists will have a separate Q&A in French at 10:30 A.M. Journalists, please stay connected after the presentation ends. Today, our first question comes from Akhil Dattani from JPMorgan. Akhil, please unmute yourself and ask your question.
Hi, good morning. Thanks for taking the questions. I've got two, please, if I can. The first is on French consolidation. Christel, you mentioned the non-binding offer that you as a consortium have now submitted to SFR. I guess the details are limited, but the one thing that stood out was that the percent of the total transaction price that Orange will pay is 27%, which seemed higher than people might have assumed, given expectations that there are relatively small portions of SFR that you'd likely buy. Could you just start by helping us maybe understand at a high level how that price was determined and maybe any color you can give us on how we should understand what bits of SFR you could buy? You mentioned within that in your commentary that you are willing to engage with Drahi and the creditors.
I just wondered if any sort of engagement has now kicked off so far. That's the first question. The second one, I guess, sticking with the event-driven aspect of these things, is MasOrange . In the last few weeks, there's been a lot of speculation around your engagement with your private equity partners around a potential buyout of the 50% of the asset you don't own. Any sort of update on what is actually going on and what you can share? I guess more broadly, is there any sort of timeline we should think about by which when you would need to make this call and then alternatively move to an IPO process? Is there any sort of timeframe we can understand? Thanks a lot.
Thanks, Akhil. On the French consolidation and the non-binding offer, I won't provide you more details on the split than what has been already communicated. As we've said, the B2B business would mainly be towards Bouygues Telecom and Iliad. We're looking at B2C spectrum and assets. We've done the estimates based on the level of synergies we would generate and based on what we could purchase. It's really a value-driven split. It's too early to provide you more comment given it's still a non-binding offer and we haven't reached an agreement with the seller, as you know. On the engagement so far, I won't comment. As you know, we made public the fact that we had submitted a non-binding offer given the importance of this transaction for the French market and for us, Orange, a listed company, and for Bouygues as well.
Our main priority, we know we would like to move as fast as possible in a process for the seller to decide. They have different options. We don't expect to make public every single discussion we would have if we want to move fast. We know there's a lot of media attention. I mean, 50% shareholder in MasOrange , we are planning and we are working on the strat plan, the financial plan for MasOrange . As part of this discussion, we are fully in line with what's provided in the shareholder agreement. There's a lock-in period before an IPO can be triggered in April 2026. We are also investigating all other options. As we said, they always remain open. There's no specific timeline and there's for sure no rush for us to reach an agreement.
Clearly, the discussions we have on the financial forecast for the company and the ambitions we both have for the company is probably what's generating a lot of media and speculation, I would say.
I think just to add on the French side that, of course, the price that we would put is consistent with the asset and the value we would purchase, obviously.
Great, thanks.
Thank you. Our next question is from Andrew Lee from Goldman Sachs. Please unmute yourself and ask your question.
Yeah, good morning, everyone. I had two questions. One was just to see if we can push a little further on, as Akhil put it, the event-driven opportunities for Orange. There's not much you can say on French consolidation. Could you just talk? You said obviously you want to accelerate or you want to move fast on French consolidation. Could you talk about your confidence in the approval process around consolidation more broadly in France in terms of both the EU competition authority approval and French authority approval and what's given you the confidence to launch this bid? If there are any timing implications around moving fast there. As a follow-up to that, just on the MasOrange side of things, is the speculation around Spanish consolidation complicating the timeline to kind of you reaching a conclusion on what you plan to do with that asset? A separate operational question.
In France, it looks a little bit like the competitive intensity at low-end mobile has spilled a bit into low-end fixed. Is that true? If you could just articulate what's going on there, that would be helpful. Thank you.
Thanks, Andrew. On the French consolidation, first of all, as you know, there's a process where Altice France has been restructured and the owner actually wants to sell. That's the driver of all those discussions, number one. Of course, in that environment, we do believe that a French group of companies providing synergies is the best solution to create maximum value. Now, when it comes to the regulatory process, the political environment, it's really too early and we know that authorities will have to review that in detail. In any case, if you look at the option, which is a piecemeal deal on one side or a solution amongst other telcos, we do believe that not only our proposal is the best one to protect the intensity of competition, but also to protect the ability of the industry to invest.
We know our networks require investment for security, for AI, and for resilience. We know the antitrust authorities are what they are. We know what happened in the U.K. with the CMA approval. We don't have any signal from antitrust authorities that they would approve such a transaction. We know, based on our experience with both Belgium and Spain, that they would review carefully. It could be EU or French processes. Actually, given we have three companies bidding for the main part of Altice France, it would probably be three antitrust processes. Depending on any of us, the three, it can be France or Brussels. Of course, antitrust authorities can decide to take the whole approach. There's no doubt that both authorities would work together, I would say, on the assessment.
The main rationale for us on why this deal makes sense, first of all, it's something we've been pushing and we are absolutely convinced that Europe needs consolidation, national consolidation. When you look at the intensity of the competition on our mobile markets, the ability to create synergy and efficiency for us on mobile is also the ability to sustainably compete and offer low prices to consumers. That's really the driver and that's going to be the core of our explanation, I would say, with antitrust authorities. Not to forget that this is a French group of companies in an environment where we're talking about highly critical assets. Again, there's no certainty that this deal would be approved until it is. On MasOrange , no, all the rumors and speculation on MasOrange or all the speculation on what could happen in the Spanish market have no impact.
I mean, we looked at the valuation of MasOrange in a standalone, I would say, view. Of course, we work actively to improve, I would say, our position in the Spanish market. That's the reason why we signed and we launched Premium Fiber, because we know there's a lot of players. I do believe that consolidation in Spain will probably come first from smaller players. We know some of them. Some of them are actually partners of us. Clearly, the market in Spain remains super competitive and will remain super competitive for quite some time. The comment I was making on antitrust authorities for France would be exactly the same for Spain. We would not expect anything to happen soon or to be concluded to reach closing for MasOrange. We don't take that into account, of course, for us.
When it comes to the competitive intensity in France, the low-end market remains very competitive. It's true that in Q3, we've seen a number of entry price points increasing. We are more around the EUR 10 for mobile. There's still Red, which is the SFR brand, cheaper than that. We've seen a EUR 1, EUR 2, EUR 3 difference compared to what we had seen, especially in the end of Q1 and Q2. On broadband, there's also promotions for the low-end broadband, but the market remains stable compared to what it was before. Last but not least, you know how important our convergence strategy is. That's really for us the fuel and the growth engine in our retail market in France.
Thank you, Christel. Very helpful.
Next up, we'll hear from Josh Mills, BNP Paribas. Josh, please unmute yourself and ask your questions.
Hi, guys. Two questions from my side, please. The first was just around Orange's group leverage. Would you be able to give us a bit of color about how you expect the SFR deal, if it goes through, to impact your leverage profile? Following on from that, does the leverage post the SFR deal still leave you with enough headroom to pursue other transactions, such as buying in MasOrange , as an example? Somewhat related to that, given that the French consolidation deal, if approved, won't complete until the second half of 2027, how do we think about how this impacts your shareholder returns policy to be outlined at the Capital Markets Day in February? The second question for me is just going back to the operational performance in France.
I think last quarter you gave a bit more color on your expectations for how French service revenues ex-PSTN should develop. Obviously, it slowed down 20 bps versus last quarter. How should we think about this going into year end? Is there the chance that this is going to turn negative or do you still have the ambition of maintaining flat to slightly positive retail revenues ex-PSTN in Q4? Thank you.
Thank you, Josh. I'll start by your second question and then Laurent can comment on your first one. Operational performance and for Q4, we expect the same trend as Q3, which means flat to small positive growth, excluding PSTN for retail services. Really, same trend as Q3. On the group leverage, Laurent can comment. I think we've said before, it's very important for us. We know shareholder return is important and we have a leverage that allows us to be flexible. Of course, remaining investment grade is important. We think we have a solid balance sheet and we have the opportunity to carry several transactions.
Yes, good morning, Georgios. Indeed, as you know, we have a very strong balance sheet. Of course, the potential acquisition of SFR will have some impact on the leverage, but it will create as well a lot of value, as we said, which means that this leverage will basically be smoothed on a relatively short period of time. Overall, we are confident that we can run both the MasOrange potential acquisition and our fair share of SFR purchase without, I would say, impacting the shareholder return, which remains for us a top priority.
Thanks. Maybe just one other follow-up, if I may. If we were to see the bid price for SFR change or increase over the coming months, is the agreement for the asset split between Iliad, Bouygues, and yourselves and the percentages given set in stone? Would there be the potential for certain operators to change the amount which they're buying and the assets which they are acquiring as part of the deal? How much flexibility is there on the 27% split you have today?
Thanks, Josh. You can be assured that the three of us have a very constructive dialogue and that's what we want to have with the seller. Obviously, I don't want to give you information that would jeopardize our ability to have the best negotiation in a transaction that's obviously very complex. As we said, we are value-driven in our approach. Each company, let's not forget that we have a very strict antitrust process and that this bid has been prepared, of course, with all the scrutiny and to be compliant with competition rules. All of us have our own models of valuation, but we also have such an experience and we know, of course, very well the French market. That's something we would be able to discuss, the three of us, with the seller.
Again, a value-driven approach, which doesn't mean we're thinking of a mechanical negotiation for such a transaction with such impact on every three players.
Many thanks.
Thank you. Our next question today comes from Roshan Ranjit from Deutsche Bank. Roshan, you can unmute yourself and ask your questions.
Great. Morning, everyone. I've got two questions, please. First question, just I guess in the context of any potential antitrust audience that we do get, can you remind us what percentage of your B2B revenues and total revenues you derive from France, please? The second question on the operational side. This was the second quarter where you have upgraded your EBITDA guidance, yet we haven't seen anything change on the organic cash flow level. Appreciate it is a greater than metric, but are there any other moving parts at the organic cash flow level? I know last year you absorbed a higher cash tax, yet still saw an upgrade, but any details you could give there would be very helpful. Thank you.
Thanks, Roshan. As you know, we do not publish the splits of our B2B between in France, but clearly, we have taken into account in our negotiation with Iliad Free and Bouygues Telecom the fact that when we have high market share, you can count on our competitors to try to get assets that would help them grow and increase market share. That's why the B2B part of Altice France would go to Bouygues Telecom and to some extent Iliad Free, not to us. We don't publish the split on B2B in France. On organic cash flow guidance, Laurent?
Yes. Hi, Roshan. Our guidance on cash remains valid above EUR 3.6 billion of OCF. That remains valid. I just take the opportunity to state that within our 3.8% of EBITDA growth in France, we have 0.9 points coming from the bank, which are not part of our OCF, as you know.
Thank you. Our next question comes from Mathieu Robilliard from Barclays. Mathieu, please listen carefully. In order for us to hear you, on your mobile phone, you need to press star six. Please press star six to unmute yourself and ask your question.
Hopefully, you can hear me?
Yes, we can.
Thank you. Thank you for the presentation. I had two questions. The first one was around OBS . You mentioned that the environment was tough and you have slightly, or you will maybe change the guidance or at least what you deliver. The question was a bit broader. Clearly, it is natural to see you lose a bit of market share on communication. I also understand that on IT, it's a competitive market. At the same time, we see a lot of growth for some services like cybersecurity, data centers, cloud, and obviously talks of increased need for sovereignty in Europe should be a positive for you. Maybe you could lay out a little bit where you see growth coming from at some point in the next future.
Also, if you could give a bit of clarity in terms of your data center exposure, maybe if you could give us a sense of what is the capacity you have in France and in Europe and how you expect that to grow. The second question, I was going to ask again about the potential SFR transaction. Just a point of clarification, because in the press release, you indicate that not all of the assets of Altice SFR are concerned by the bid. I also note that in the French press, there was some reference that the offer that you were making for the assets represented an EBITDA multiple of around 6.6, which kind of suggests, if I'm getting my math right, that the value of the EBITDA that you are bidding for is around EUR 2.6 billion.
Quite lower than what the trajectory of Altice EBITDA suggests for the full year based on the H1. I don't know if you can give a bit of detail as to what you're buying. I understand, obviously, there's no French overseas. There's some service businesses of Altice France that are not included. If you could give a sense of what is the EBITDA as a whole you would be buying, that would be very helpful. Thank you.
Thank you, Matthew. On the Orange business, clearly, there's, of course, the structural transition from legacy connectivity to next-generation connectivity. That's changing the nature of the services we provide, moving from a traditional telco to a more integration type of services. We are investing in our evolution platform, in really having a platforming approach for those services. Of course, cybersecurity is clearly, and by the way, next-generation connectivity is not a market that's declining. Of course, compared to the value of legacy, there's a value difference. Clearly, the next-generation connectivity is not a decreasing market. Cybersecurity, clearly, it's. Also, on cloud and data center, on cloud to start with, we are transitioning from some, so part of our solution has been in the pruning of the portfolio. We have some transition effect.
That's clearly an area where we are investing on sovereign cloud, private sovereign cloud, public sovereign cloud with Blue together with Capgemini. When it comes to data center capacity, we don't provide details. We have capacity in all the countries where we operate, and we are investigating plans to accelerate in that field. We are not a pure player in data centers, so we are still thinking what should be our strategy. Not ready to provide you more details on this. On SFR, clearly, the list of assets is what has been published. It's very clear. It's everything in Altice France but the overseas business, XP Fiber, Intelsia, UltraEdge, and ATS, their field services unit. That's everything else.
When it comes to EBITDA, bear in mind that for us, the valuation is both, of course, a multiple of EBITDA, which so far was based on the data we have, which is end of 2024, as well as our own assessment of synergies. Every of the three bidders has done its own assessed synergy plan. We've done our math, and clearly, the value comes from the synergies as well. It's not an easy, straightforward EBITDA calculation.
Thank you very much.
Thank you. Our next question today comes from Nick Lyall, Berenberg Bank. Nick, same goes for you. Please press star six on your mobile phone so that we can hear you.
Hi there, can you hear me?
Yes.
All right, great. If you could ask a couple on consolidation as well, please. On the argument, Christel, you mentioned the pro-consolidation argument it seems you're going to use is to protect competition. Could you just explain to us why you think cutting out a disruptive operator protects competition here? Are you arguing that Altice France wasn't sustainable? Maybe you could help us with that. Secondly, it's going to be up to the three of you to put together remedies. On the structural side, do you think there are any acceptable remedy takers left or do you believe the remedies, are you thinking this is going to be behavioral now post the CMA decision, for example? Could you help us a little bit with what sort of remedies might we have to think about? Thank you.
Thank you, Nicolas. I won't say anything that would prevent our ability to run a smooth and open dialogue with antitrust authorities. Clearly, what we see and think of mobile consolidation, and we know that from our MasOrange experience, where 18 months after closing, we are driving synergies that allow us to continue to compete on the low end as well as to compete on our A brand on the premium market. We are driving synergies and the market and the price point for consumers has not changed, on the contrary. In France, I think what we know is that we know exactly the amount of synergies that can be driven by bringing more mobile customers or broadband customers on our infrastructure. That's driving efficiency that in return allows us to continue to compete and to offer attractive price points for consumers while continuing to invest.
Otherwise, you have to cut investments if you want to just continue to play in a super competitive market. Remember that we would then end up with three players in the market, two of them being stronger. Of course, our objective is to be the leader in France. Our two other competitors post-consolidation, if that goes through, would have more ability to invest and would have more ability to compete head-to-head with us. That is why we do believe that competition authorities should really look at it similar to what the CMA has done in the U.K.
Okay, thank you.
Thank you. Our next question comes from Stphane Beyazian from ODDO. Stéphane, please unmute yourself and ask your questions.
Okay, now we hear you. Sorry about that. Good morning. Two questions, yes, if I can. The first one is, can you update us a little bit on the cost savings? I'm partially thinking of the early retirement plan, where you are in this regard, and perhaps also the network shutdown. I think you were planning to launch a tender for the copper and have different contractors. I was just wondering where you stand on that as you continue to make progress in your cost cutting plan. The second question, coming back to the offer, I was just trying to clarify one thing. If you're contributing 27% to the bid, would it be fair to say that your share of the EBITDA of SFR is probably a little bit lower than that because you may be taking a bit more spectrum than some other buyers in the consortium?
Would that be fair? Thank you.
Thank you, Stephane. I'll start with your second question. I won't provide you more details. Unfortunately, we don't want to speculate on what could be. Remember, this is only a non-binding offer at this stage and we haven't agreed with the sellers. I think it's really premature to provide you more details on that. The split of assets is exactly the one that has been shared in the press release. On cost savings, the early retirement plan is now open. It's been open for several months. The employees who are deciding on a voluntary basis to accept it, many have volunteered already. It's really executing as per plan. I don't know if Laurent, you want to comment on the various cost savings, procurement, and the copper RFP as well.
Good morning, Stephane. We continue to move full steam on the cost optimization, and you refer to procurement. We are working on our EUR 18 billion cost base to drive savings on this part. The copper contract is one of the major contracts on which we are working with Jérôme and the team in France, which is not yet decided. That will come for the next month. It is a jumbo contract indeed for the next four or five years. We will be, of course, eager to get the best value out of this contract to drive the strategic project for Orange France.
Very good, thank you.
Our next question comes from Otavio Adorisio from Bernstein. Otavio, please unmute yourself and ask your questions.
Good morning. Could you hear me?
Yep.
Perfect. I have a few questions there for that, but let's first start from Spain. You basically recently monetized or announced the monetization of the fiber core, the JV between MasOrange and Zegona. Now, Zegona, the main asset they brought were the clients. Therefore, the monetization of the assets relied on the long-term commitment of Zegona clients to that network. Zegona has the habit of playing many different fields. It looks to be likely that the potential could be a target for Telefónica. I was wondering how difficult it will be for Zegona to move to migrate these clients, if there are any penalty fees in that particular deal, and can Zegona actually disentangle from that JV? The second point is on the credit ratings. You effectively reiterate that it doesn't really matter the two deals you're currently negotiating in Spain and in France. You still remain investment grade.
That's true because basically you have quite large room. It's likely that potentially the BBB+ could be downgraded by one notch. Are you prepared for that or do you reckon that you have other levers to avoid that particular downgrade by one notch by the agencies? The third point is on the pricing. Pricing is domestic. You made a lot of comments on the fact that there is a lot of competition on the low segments, the value segments. I noticed that this quarter has been a bit different. It's not only been mobile where you've still got an ARPU that's going down around 4%. For the first time, I don't remember for how many quarters, you actually have a negative trend on the fixed ARPU.
If you can comment on that one, do we expect the repricing on fixed to continue and to have a negative trend in the next few quarters? Thank you.
Thank you, Otavio. On Spain, with the implication of Zegona and Premium Fiber, be assured that, of course, we have long-term commitment from both, of course, Mas Orange, and a third-party investor like GIC in such a transaction. That's really something that has been carefully taken care of. Laurent, the investment grade?
Hi, Otavio. On the rating, of course, early days, because we have as a... That is pure speculation, of course. Globally, we have a strong BBB+ rating. We feel that we have capacity to stick to this rating despite all of these potential transactions. It will all depend on the timing and the sequence of it. Globally, we are very confident that midterm will remain on this BBB+ rating that we enjoy today.
On price competition in France, you're right that our ARPU for broadband is slightly declining compared to one year ago, but it's also slightly increasing compared to Q2. That's what we can say. I don't know if maybe Jérôme, you want to give more details on the pricing environment and what we've seen.
Thank you, Christel. As you said, the environment remains quite stable on broadband, while it's more competitive on mobile low end in particular. What is very important for us is the convergent ARPU. As you reminded, convergence is our growth engine and our convergent ARPU is increasing by 1.8% at EUR 78.6. On broadband, we don't see so much intensity on the competition, but it's true that some mid-range offers on the market and some promotions have been impacting the year-over-year ARPU, but still progressing on a quarter-over-quarter basis, as you said.
Thank you.
Thanks. Next up is David Wright from Bank of America. David, please unmute yourself and ask your questions. Go ahead.
Hopefully, you guys can hear me. Thank you so much. Two questions, please. I think on both the Bouygues call and your comments earlier, you suggested the regulation could be separate processes, possibly even... I'm talking about, of course, the SFR deal, possibly even separate jurisdictions. I assume these are not mutually exclusive. If any one of those regulation approaches were to find difficulties or unreasonable remedies, I assume the entire deal would be off. Could there be any possibility, for instance, for Bouygues to separately buy the B2B business of SFR? I'm assuming any problem with any regulation on the whole deal is challenged. If you could confirm that. I am a little confused just on the French broadband pricing. I think you said... you said that the ARPU is obviously down a little more now. What is happening? Are you losing higher-value customers and adding lower-value customers?
Are the higher-value customers migrating into convergence? I'm just trying to understand that mix effect. Those two questions, thank you very much.
Thank you, David. On regulation, clearly, it's one proposal with three bidders, and our proposal cannot be split apart. Otherwise, it's not the same. Now, the regulation and the antitrust authorities would review case by case because they would review the impact for every one of the three companies separately. Of course, it's in a global approach to the market of what the Altice sale would impact. Clearly, even though it could be reviewed by a different size or one per company, in the end, it's the assessment of one transaction and the impact for each company in the market. It's too early to say whether one authority would claim the leadership on the other one. What we know is that in any case for any transaction, when we were reviewing with Brussels the Spanish transaction, the Spanish authorities were reviewing carefully and remained involved by Brussels.
In any case, we know that both teams would review carefully this transaction. On the French broadband pricing, clearly, as you know, we are gaining customers on broadband. We have indeed some of the new customers, that's why we call it the mix impact, have an entry price that's lower than the average ARPU that we had in our base. That's why you see a small impact on the base. You see the ARPU compared to Q2 and it's slightly increasing. We've had that impact in the past, so it's not really significant. We don't see a spin down of customers moving from high offers or premium offers to lower offers. Of course, we have some migration from pure broadband to convergent customers, and you see overall every segment of our customers is positive in net adds.
All in all, we are adding more customers in our base, and the mix, that's what we call the mix effect, some of these new customers are coming with a lower price than the base. That's the impact on the average ARPU.
Yeah, super clear. Thank you, guys.
Thank you. Our next question comes from Carl Murdoch-Smith from Citi. Carl, please unmute yourself and ask your questions. Carl, go ahead and unmute yourself. Okay, we are going to come back to you, Carl, for the time being. We are going to take our next question, which comes from Ondrej Cabejsek from UBS. Ondrej, please unmute yourself and ask your question.
Hi everyone, good morning. Thanks for allowing me to take questions. I've got one follow-up and then a separate question on Spain. The first follow-up is basically on the shareholder returns policy, which obviously you said is a very important feature for the company. Over the past three years, we've had a feature within this, which was that every year the dividend was supposed to grow. I was curious, now that we only have a floor, you have more clarity into I guess the timing of potential deals and the potential amounts involved and therefore the impacts on your balance sheet. I was also curious to therefore see whether the kind of growth element of the shareholder returns policy is something that you will be thinking about as very important for the next three-year period. That's one question.
The second question on Spain, coming from a slightly different angle, you have been in discussions with Vodafone also around potential RAN sharing, which obviously would have a benefit to your CapEx and also potentially to Totem, I believe. I was just curious whether there is any update on those specific negotiations. Thank you.
On the shareholder return policy, I won't provide you more details. Of course, we know that's one item that we would cover as part of our 2025 results in February and our Capital Markets Day at the same time. Yes, you're right. We have a floor at EUR 0.75, as reminded in our guidance. On Spain, we already have RAN sharing in some areas of Spain between MasOrange and Vodafone Spain. Nothing new on that front to comment on. Of course, when it comes to tower companies and Totem, actually, we have been negotiating, but that was part of our synergy plan. When we combine Orange and MásMóvil, we have been renegotiating and working on the network synergies between the two companies. Also, as part of that, all tower companies in Spain have been contributing. Of course, Totem was already supplying Orange and the network of Orange has been maintained.
Not much to comment on top of that. No, nothing new on the network synergies, I would say, beyond what we had already planned as part of the MasOrange transaction.
No progress on like the full RAN sharing project that's been kind of in the media in Spain?
I guess you're talking about some speculation around the creation of a specific vehicle where we would combine assets. Indeed, nothing. We have, as we are, which is we are sharing and we are using the Vodafone Spain network and they are using the Mas Orange network in some areas. Nothing has changed.
Thank you very much.
Great. Carl, we are going to try one more time. We are going to give you the floor. Please try to unmute yourself. If it does not work, I will send you the conference phone number and you can try that way. Okay? We just gave you the floor. Please unmute yourself and ask your question. All right, stay tuned for an email with the phone number. Our next question comes from Emmett Kelly from Morgan Stanley. Emmett, please unmute yourself and ask your questions.
Okay, good morning, Christel. Good morning, Laurent. I've got two questions, please. The first question, please, is on consolidation and it's on the potential impact on towers. Can you say if there would be any impact on Totem Towers in France from a successful completion of the transaction? Secondly, just looking at the press release last week, you said that the non-binding offer is subject to several factors and one of these is the due diligence. As you get access to the SFR data room, what are you really looking for? Are you looking at the churn of the subscribers, the quality of the subscribers, the free cash flow profile of the business? Are you looking for areas of overlap where you can target cost reductions? What are your red lines there? Thank you very much.
Thanks, Emmett, on the impact of any potential consolidation on the French market and specifically on Totem. Of course, given our view is that we would create more synergies, we would actually load our network with more customers. No impact foreseen. Every day our teams are planning for network evolution. As you know, part of the transaction is to solidify the ability for telecom operators in France to continue to invest. I think this transaction, on the contrary, would probably provide more ability in the long run for all players in the market to invest, which I see as positive for Totem. On the due diligence, nothing specific. This is really pretty standard what we look at for due diligence. It goes from the financials, but also everything that you can think of, but really standard. No specific, no red lines. It's really pretty standard.
Thank you.
Thank you. Our next question comes from Fernando Cordero from Santander. Fernando, please unmute yourself and ask your questions.
Okay, thank you very much. Two questions from my side. The first one in Spain, and particularly also on the potential consolidation scenarios. I would like to understand at which extent you would be interested in or you believe that Mas Orange would be, let's say, stronger if it would be regaining the full control on the mobile network. Today, it is having a RAN sharing agreement with Vodafone Spain. I would like to understand in which scenarios you would be interested in having full control of this RAN sharing agreement. The second question, also starting from Spain but ending in France, given that the operations in Spain are now putting a lot of focus on, let's say, services on top of connectivity, starting with devices, but also other services like energy, alarms, and so on.
At which extent do you foresee this strategy to be potentially implemented as well in France? Thank you.
Thank you, Fernando. In Spain, on the network side and potential further market consolidation, we don't see, I mean, we cannot comment. As you see, we've created the Premium Fiber because we see the value of combining assets and making sure we bring more customers on an existing infrastructure. We have this similar rationale, very value-driven approach. When it comes to mobile network, we don't, I mean, as we said, nothing has changed. We leverage the Vodafone Spain network. They leverage our network. We are more looking for more synergies than trying to de-synergize amongst players, given the competitive intensity in the market. When it comes to diversification, a lot of the initiatives that Mas Orange has launched are actually already in place in France. We have been home security is a market we have launched a few years ago, insurance as well, content as well.
Devices, I mean, equipment sales are actually part of the growth in Mas Orange. It is somehow applying the same rules that Orange Spain or the same recipe that Orange Spain was having from a marketing standpoint to the full Mas Orange scope. I think, of course, we keep on learning from things that Mas Orange is launching and testing in Spain. That's useful to compare and to benchmark ourselves also in France. This is something we have done already as well in France for quite some time.
Fernando, we can add that around 8% of our retail services are coming from all of these adjacents. There is a clear path in terms of positive evolution on this. Indeed, we are cross-fertilizing with our Orange colleagues on these subjects.
Okay, many thanks, really clear. Thank you.
Great. Thank you so much. Our next question comes from Eric Ravary from CIC. Eric, please unmute yourself and ask your questions.
Hello. Yes, good morning. Thank you for taking my questions. Two questions. First one on OBS . In the press release, you don't reiterate your target to stabilize the EBITDA in 2026. I wanted to check if you're removing the guidance for next year. The second question is on wholesale revenues in France. The decline is accelerating over the last two quarters at - 9%. For the next quarters, should we expect the wholesale to come to a double-digit decline due to the acceleration of copper decommissioning? Thank you.
Thank you. On the Orange Business soft guidance, what we see clearly is that the overall market environment, be it the IT market or the French, I would say, macro environment, is highly uncertain. In that environment, our message is that it's difficult. The guidance we have is difficult, but we are not setting a different guidance at this stage. Of course, our strategic plan for Orange Business and our cybersecurity activity would be a core pillar of our next Capital Markets Day in February. We continue to drive with the same intensity our efficiency program, our transformation, our repositioning on the new portfolio. It's really more the overall market environment that's making the execution of the plan uncertain and difficult. It's not because we are slowing down on everything we've launched already. On the wholesale trajectory for Q4, Laurent, I suppose it's the same, but...
Indeed, what we said, Eric, is that the second half wholesale evolution will be in line with the H1, same trend. All of that is definitely in line with our global guidance. You know, you remind of EUR 1 billion revenue decline of wholesale between 2022- 2025, so fully consistent with our expected trajectory.
Thank you. As a reminder, if you'd like to ask a question, please raise your hand in Teams, or if you're connected on your mobile phone, to raise your hand, it is star five. Now, we will move on to our last question from Russell Waller from New Street Research. Russell, please unmute yourself and ask your question.
Thank you. Excuse me. Yes, good morning, everyone. I just had some questions on the offer to SFR, please. First of all, could you just explain why your offer excludes those assets that you listed? XP Fiber, Intelsia, etc. Why were they excluded? Would you consider changing your offer to bid for the equity so it includes those assets, for example, if that's what the seller wanted? Second question, obviously the offer was made in public. Can you just confirm that that's standard practice? For example, when you made the offer to MásMóvil, were there negotiations in private first and then the offer was made in public, or did you just make the offer in public, as you did for SFR?
Finally, could you just talk about whether or not there might be clawbacks or clauses included in the deal based on, say, the performance of the underlying asset at SFR? There are some people who have concerns that there's underinvestment or CapEx is low, for example, and you might buy an asset that maybe doesn't quite meet expectations. How would you protect yourself from that aspect? Thank you.
Thank you. On the overall transaction, and of course, I
mean, the fact that we have a proposal coming from three players is not standard practice in submitting an NBO. Especially with two players listed and given the amount we're talking about, and the fact that we had officially submitted an offer, we thought, and that was also a legal interpretation. That's something we've disclosed and we've discussed with the market authorities. That's not something we decided on our own. That's really what has driven the press release on the proposal, even though indeed it's an NBO. At this stage, it's not the confirmation that we've reached an agreement with the seller. That's very clear. It's very early to comment on other things like a clawback clause or everything, because that would mean we have a final and signed agreement. Of course, that's something we would be happy to comment on.
We hope on the day when we have a deal agreed between parties. That's not the case today. On the assets and some of the assets that have been excluded, XP Fiber, as you know, is owned 50% by Altice only, or 49% or 51%, I don't remember. Other players are involved and it's an asset that has been for sale for some time. Some of the other assets are really independent assets and very different from our telco business when it comes to call centers for supporting Altice. We don't think these are assets that naturally make sense for us to acquire. We don't think, by the way, that Altice would have difficulty to find to launch a sale process. Again, what we said is we believe our proposal is a good proposal. We want to be constructive and dialogue.
I don't want to anticipate any conclusion that would be reached. I don't want to put words in the mouth of Altice. That's for them to assess what they want to do.
Thank you.
Thank you. That was our last question. I will now hand it back over to Christel Heydemann for any concluding remarks.
Thank you. Thank you all for joining our Q3 results. We are pleased with our solid results, reaffirming the strengths of our strategy and efficiency focus. Based on these results, we are upgrading our Assess what they want to do.
Thank you.
Get back over to Christel.
Upgrading our EBITDA guidance from above 3% to at least 3.5%. Thank you all, and I wish you a pleasant day. I really look forward to seeing you at our next Capital Markets Day on February 19th.