Good morning, ladies and gentlemen, and welcome to Orange third quarter 2022 results conference call. The call will be hosted by Mr. Ramon Fernandez, Delegate CEO, Finance, Performance and Development, with other members of Orange Executive Committee for the Q&A sessions that will start after the presentation. Thank you, and let me hand over to Mr. Ramon Fernandez.
Thank you. Good morning and welcome to our Q3 2022 financial results presentation. We are gonna start on slide four with the highlights for the quarter. First point, you can see that we enjoyed solid revenue growth in Europe, with revenues in Spain returning to growth this quarter for the first time since Q1 2019. This represents an important step on the way to reaching EBITDA growth next year. At group level, top line growth was notably driven by an increase in convergent ARPU, which was achieved in Spain, but also in France, in Poland and in Belgium. This good ARPU trend, which is crucial to meet the current inflationary challenges, should continue to be driven by our more for more strategy, supported by a high level of customer satisfaction and by the adaptation of our offers to real changes in usage.
I'm also pleased to say that despite an adverse context, our Scale Up program is on track to reach by the end of the year our 2022 target of around EUR 600 million cumulative net cost savings since 2019. You know it is based on EUR 14 billion of indirect costs with more than EUR 550 million delivered at the end of September. I would like to highlight that in Europe our direct energy purchases are fully hedged for 2022 and at more than 90% for 2023 at a reasonable average price given the circumstances. Finally, a word on TOTEM, our tower company, which is successfully developing its business with third parties, now representing 18% of our hosting revenues, a three-point year-on-year increase.
This dynamic will continue to be fueled by an important deal with Telefónica in Spain for the rollout of 5G. In Q3, group revenues reached EUR 10.8 billion, up by 1%, with retail services growth more than offsetting wholesale decline. This performance was driven as usual by Africa, Middle East, but also by a strong Europe, which benefited from the recovery in Spain. Enterprise was stable, while France, although still down, improved, thanks to the absence of any significant base effect from co-financing. The sequential acceleration of group revenues was partly driven by activities with no margin contribution, such as the acceleration of equipment sales and the smaller decline in wholesale, previously more penalized by the decrease in call termination rates. As a result, EBITDA increase was more limited with +0.2%.
eCAPEX grew this quarter as expected by 5.2%, resulting in a decline of 4.4% year-on-year at the end of September. All in all, despite the very difficult macroeconomic and geopolitical context, these first nine-month earnings enable us to reiterate our 2022 guidance. EBITDA will indeed accelerate sharply in the last quarter, mainly thanks to the base effect of our 2021 employee shareholding plan, which will deliver a mechanical increase of more than 5%. Turning now to our business review, starting with France. Revenues improved at -1% this quarter, thanks once again to the absence of significant co-financing base effects. Revenues from our retail services pursued their growth, reaching 2.6% excluding PSTN this quarter.
This trend highlights a solid commercial performance in both value and volume in a context of normalization of fiber acquisitions following the strong demand during the pandemic. In mobile, we again achieved strong volumes this quarter in acceleration for both B2C and B2B, and with a positive portability balance vis-à-vis all other operators. Our 212,000 net adds, mainly driven by the Orange brand, fueled equipment sales and mobile ARPU increase while churn kept improving. On the fixed side, our 47,000 broadband net adds were still driven by fiber volumes above pre-pandemic levels with 293,000 FTTH net adds while ARPU remained stable. On the convergent side, ARPU grew by 1.5 EUR. This is +2.2% this quarter, reaching 71.40 EUR.
Finally, our customer satisfaction continued to improve, resulting in a +2.5 points increase in Net Promoter Score since the beginning of the year. We stand out as the best mobile network in France according to ARCEP for the 12th consecutive time. Let's now turn to Europe, which is back to growth this quarter, including Spain, and with an outstanding performance of Poland at +8.4%. This good result was driven by the acceleration of retail, fueled by convergence, IT and IS, and the continued recovery of customer roaming. This quarter was also marked by a rebound in equipment in all our countries impacted last year by COVID-related restrictions. Since the beginning of the year, all our European countries have been able to apply price increases, a key tool to tackle inflationary pressure.
Let's move to Spain, where revenues were back to growth for the first time since Q1 2019. Thanks to the continued improvement of retail services. This is a result, firstly, of more value thanks to the constant focus on ARPU increase and a better mix associated with a strict control of promotional policy. The ARPU improvement will be sustained in the future by the reshuffling of Orange convergent offers launched in August. Secondly, we have demonstrated our commercial resilience by the improvement in all churns. Wholesale also returned to growth this quarter, thanks to the recovery in visitor roaming and the sequential improvement in international traffic. The continued improvement in retail, combined with our cost efforts, fully support our objective of returning to organic cash flow growth in 2022 and EBITDA growth in 2023.
Finally, regarding the joint venture with MASMOVIL, we have started the discussions about the merger control process with the European Commission, and we expect a closing during the second half of 2023. Let's move to Middle East and Africa, where Q3 top line growth was 4.2%, slowing down compared to the 2021 strong rebound. This still solid performance demonstrates the resilience of our well-balanced footprint with strong growth in 12 out of 16 countries. While the security situation is weighing on Mali and Burkina Faso and with a temporary slowdown in Côte d'Ivoire. In Q3, retail services were as usual fueled by our three main growth drivers. Fixed broadband at +23%, data at +17%, and B2B at +13%, supported by the increase of more than 20% of our 4G and fixed broadband customer bases.
Orange Money trend is improving thanks to our response plan, which allows us to maintain our positions within the footprint while our active base and transaction values continue to rise. All in all, the 6.6% growth in revenues over nine months is in line with our full-year ambition, especially as Q4 will benefit from a lower base effect given that Orange Money repricing started in Q3 2021. Turning to our enterprise segment, OBS. Revenues were stable for the quarter in line with the first half, thanks to growth in mobile and IT and IS offsetting the decline in legacy business. Our IT and IS business accelerated its growth, driven in particular by our IT business. In addition, mobile continued to benefit from the rebound in roaming.
The OBS recovery plan currently being rolled out will address the pressure on our margins resulting from the profound transformation of our business model. However, this plan will not deliver its first effect before year-end. In conclusion, despite a very difficult macroeconomic and geopolitical context, I reconfirm our guidance for 2022 and our strong focus on delivering our 2023 guidance. Above all, the organic cash flow targets the pillar of our financial commitments. We look forward to sharing with you on February 16 next year, our full year 2022 achievements, as well as our new set of midterm objectives and strategy for the remainder of this decade. Thank you for your attention, and we are now ready with the executive committee team to take your questions.
Please ask only one or two questions so that most of the participants can ask their question. To ask for the floor, please press the star or asterisk key, followed by the digit one on your telephone keypad. Please ensure that your 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, please contact our 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 speakerphone. We will take our first questions from Nicolas Cote-Colisson from HSBC. Your line is open.
Thank you.
Please go ahead.
Thank you. Good morning. First question is on Africa and Orange Money. If you could tell us when you think you can get back to revenue growth at Orange Money, and also give us an indication of the impact of the reversal effect on EBITDA in Q4 from Orange Money.
Also on Africa, I'm interested in your energy costs, if you could help us on the proportion of OpEx and maybe which currency you are using to pay for the energy. I've got a second question, which is more general on the group, because given the current interest rate environment, do you still see the 2x net debt EBITDA as appropriate, or do you think a bit like after the financial crisis in 2008, that a new normal for leverage standard is required? Thank you.
Okay. Thank you, Nicolas, for your questions. We will start with Africa Middle East with Jérôme Hénique, CEO of Orange.
Yes. Good morning. Thank you for your question. About the Orange Money as mentioned, we saw a turning point in Q2, and the decrease is now slowing down quarter after quarter. We consider that it should be close to zero in Q4, and we'll be back to growth in 2023.
Now, what we could add is that on the margin, it has impacted our margin by three to six points, depending on the countries and the level of reprice that we had to do because we wanted to maintain a very strong distribution network, and it's mostly the level of commissions that we had to maintain during the quarter that have an impact on the margin of this segment. About the energy cost, it's less than 5% of our total costs. There is very low impact so far because most of the country are not dependent on the national grid for most of their sites, first.
Second, because there is subsidy from many government on the energy in our footprint so far. We expect to have a low impact on the energy cost rising in 2022, for probably less than EUR 15 million full year.
Thank you. Thank you very much, Jérôme. On your second question, Nicolas, I think we are fortunate enough to have, you know, an extremely solid balance sheet. One of the best ratings, triple B plus, of the industry. A very strong liquidity. We had, you know, a cash management, which I think was well placed when we see the current context. Our current leverage is confirmed. We are not changing our guidance on this around 2 ratio for the time being.
Okay. Thank you very much. Sorry to insist on the contribution of Orange Money EBITDA growth in Q4 compared to last year, because you were talking about the 5% headwind from the employee plan. I was wondering what kind of indication you could provide us with regarding Orange Money contribution to Q4 growth.
Maybe I can follow up on this one. You have well identified that this Orange Money positive contribution compared to last year will be a significant part, but not the only one to the additional 3% growth we need to get above the 5% growth coming from the comparable base effect on the shareholding plan. Yes, Orange. We're not going to give an extra-
Sure.
Unless Jérôme wants to give a precise figure, but it will be a nice contribution to the overall growth coming from EMEA.
Okay. Thank you very much.
We will take our next questions from Andrew Lee from Goldman Sachs. Your line is open.
Yeah.
Please go ahead.
Yeah. Thank you. Good morning, everyone. Just had a question, Ramon, on your comments around the guidance for 2023. Ramon, thanks for the color in the presentation. Just on the EBITDA guidance, how confident are you that you can hit the midterm guidance given if you end FY 2022 with kind of 2.5% EBITDA growth guidance, which you're going, sorry, delivery, which your guidance suggests. What improves? You know, if you could just talk us through the moving parts of what improves into FY 2023 to deliver the kind of close to 4% EBITDA growth that would be required for your midterm EBITDA guidance, or even to get to kind of 2.5% EBITDA growth for FY 2023 as consensus anticipates.
Just a sense of the moving parts and the key improvements from the 0.2% EBITDA growth this quarter would be really helpful. Thank you.
Thank you, Andrew, for your question. In 2023, what you can expect is the continuity of what we've seen in France, with a performance which is around stability. If you want to see rough elements. We just heard Jérôme Hénique, and Africa is aiming at double-digit growth in EBITDA. You know, this is our guidance, and we are extremely confident that we can support this performance over time. You have Europe, where we have seen a very strong position, and we know that within Europe, Spain is going back to growth in 2023, where it will still have a significant decrease in 2022, although it is, as we know, improving.
Europe will be a nice contributor also. You have some other parts. We will have the enterprise business, which obviously will still be negative in 2023, but the trend is going to progressively improve. You have some other moving parts which are going to bring positive contribution. This is the central segment. This is mobile financial services. This is TOTEM, the TowerCo. These are the big parts which should be supporting the performance for 2023 in EBITDA. Second point I would like to add is that, as I said, in the introduction, we have hedged more than 90% of our energy costs for 2023.
We know as we speak what is roughly going to be the bill for electricity in 2023, which is, I must say, some kind of comfort in the hectic times we are going through because we know where we are going. It will be an increase of course in electricity cost compared to 2022, but it is manageable. The last point I would like to emphasize is that we have our CapEx fully under control. If ever we were not able with our cost saving exercise, with the Scale Up program, which as I said, is on track with what we can also do in terms of discipline on direct cost, in addition to indirect cost.
When you add all this up with discipline on CapEx, the capacity to reach the organic cash flow target in 2023 is something that we are comfortable to reiterate today. I guess that when you look at the global scene, this should be a comforting, you know, exercise.
Thank you, Ramon. It's very helpful.
We will take our next questions from Roshan Ranjit from Deutsche Bank. Your line is open. Please go ahead.
Morning everyone. Thanks for the questions. First one I have is on France and the retail revenue trend, which you know you highlight the normalization of the fiber adds has led to that kind of slight slowdown in growth this quarter versus previously. You are reiterating your 2%-4% mid-term guidance there. If we are thinking to next year and the scope for price increases, which you haven't put through anything this year, should we look to the Spanish market and the increase you did at the end of the summer as a kind of benchmark for where you feel you could position the incremental value as you called it in Spain for the French market?
Basically it's a question around price increases in France for next year. Secondly, on enterprise, last quarter you highlighted it was more a product segmentation rather than competition, which is leading to these tough trends. Has anything changed there for you to now adjust the kind of H2 trend, or is that still a product segmentation which has maybe taken a bit longer to implement? Thank you.
Thank you. Thank you, Roshan. I will turn to Fabienne Dulac for the question on France and to Aliette Mousnier-Lompré on enterprise. Just before turning to Fabienne, on the pricing power question, just to confirm that, we've been able, thanks to growing Net Promoter Score everywhere and low churn levels to increase prices in Europe, which obviously is going to be still a feature for us in the future because there is no way that inflation could be everywhere except, you know, in the telecom industry. Fabienne.
Thank you, Ramon. Good morning. As expected, we observe exactly as you said, a slowdown in market growth in fiber activity, but it's normal. We are back to normal pace. This move is not new. We observe it from the beginning of the year. This slowdown, if you remember, is due to the acceleration recorded in 2020 and 2021, due to the post lockdown period. The fiber attractiveness is still there, but a little bit different, and we know that. We have different action plans to better address customers, specifically in rural areas. We know we are posting a strong performance exactly as we posted in Q3.
I remember we are still number one in acquisition, 293,000 new customers, and we have a very slow churn rate. We are not worried by this move. It's normal and we are very confident to stay within the 2%-4% growth in retail services excluding PSTN. Thanks to the mobile, very dynamic in 2022, more than we expected due to the 5G attractiveness and the high-end market very, very strong. Maybe one point behind your question. We don't observe any change in the customer behavior, specifically, in this back to school period. We are not impacted more than the other sector by the premiumization of our strategy. All our handset sales are made on high-end handsets.
The brand Orange is very solid and 70% of our sales are made on Orange brand. We are able to pursue our strategy more and more to raise our price in back book and in front book, if you observe at Orange, but not only at Orange, at competitors. The market recovery is ongoing despite a more tense context. We are really confident despite if we have some headwind and we know the situation is very tense, but we are very confident due to the quality of the network and Arcep recognized it again a few days ago due to the NPS that we have a very solid position in France, and we are confident for Q4 and for 2023.
Merci. Thank you very much, Fabienne. Aliette?
Yes. Hello, everyone. On the enterprise market, just as a reminder, we have three major elements explaining the situation. First, we have a market shift that was accelerated by the COVID crisis. We see our legacy business, especially around the fixed voice and around MPLS connectivity, decreasing very sharply. It's minus 6.4% year-on-year in Q3 on this segment, which is historically highly profitable for Orange Business Services. In parallel, we have cyclical elements related to the chipset shortage, inflation, also consequences of the war in Ukraine. The last point, the third one, is that we also have internal complexities which are explaining that our IT growth, which is today very high, is not fully translating into EBITDA growth in this segment.
Our organization is very complex, not customer-centric enough, and it prevents us from adapting to the market shift, and it generates also additional costs. All in all, we are obviously taking several drastic measures. We were expecting on a comparable basis, if we compare H2 2021 and H2 2022, we were hoping to have an easier favorable comparable basis in H2 this year. What has happened is that the decrease in the core business that has accelerated, and especially the decline in fixed voice is hurting us very badly. Just to give you one number, the decline of fixed voice in France, which is again a highly profitable business for us, is declining year-on-year by 10%.
Now we have a recovery plan which is being currently rolled out to address the pressure on our margins. It's a very profound transformation for Orange Business Services. We have three main directions for this action plan. We are putting very strong emphasis on short-term business performance, as you can imagine, with a very robust action plan to deal with inflation. Secondly, we are reshaping our go-to markets really to focus Orange Business Services on what I would call infrastructure-led digital transformation for enterprises. We are refocusing our activity on five strategic value propositions. The last direction we are taking is that we are changing our organization. A new organization, much more simple, more customer-centric, will be in place as from January first and will start to deliver its results.
Thank you very much, Aliette.
Great. Thank you. We will take our next questions from Mathieu Robilliard from Barclays. Your line is open. Please go ahead.
Yes. Good morning, everyone, and thank you. I had two questions. The first one is with regards to the EBITDA trajectory in Q4. You flagged clearly that you would have a tailwind from easier comps of around 5%. You just mentioned that Orange Money would also be helpful in Q4. Could you give us a little bit more granularity as to what could bring the EBITDA growth to be at least 8% that you need in Q4 to be at the lower end of the guidance? The second question was on energy costs. You've indicated you're fully hedged for this year, 90% in 2023. My estimate is that your pure commodity energy costs are taking out taxes and logistics.
Is that probably energy costs grow from EUR 300 million to EUR 400 million in 2022? If you could confirm that ballpark reasonable and what kind of absolute increase based on the current hedging we could expect for 2023. Thank you.
Thank you. Thank you, Mathieu. Well, on Q4. Everybody has understood the 5% increase coming from the shareholding plan. This is fine. We talked about Orange Money. Once again, we had started to decrease our fees on Orange Money last year in Q3. In Q4 2022, we are going to start from a much better place. You can once again expect that, looking at the 3 points you need to get to the 8%, a significant part will come from this, but not only because, as we said, there are some temporary factors which are weighing on Q3, which should start to be better already in Q4.
OMEA will be, as a whole, a significant part of the improvement to be seen in Q4. You will have some other contributing factors. I will just list one, which is the fact that you know that we have, we don't call it like this, but it is a voluntary leave plan that we agreed on last year in December. The pickup rate is accelerating, and Q4 will be part of this acceleration. These are the different elements among others, which will contribute to this performance in Q4. Once again, you know, if a zero point, I don't know what, was missing from the 2.5% that we are expecting, which I'm not expecting now, we have plenty of room.
You've seen that the CapEx is late in being ruled out. In terms of operating cash flow, and even more in terms of organic cash flow, there is zero risk that we would miss our target. Honestly, there is no issue in 2022 at all. When you look at energy once again, the hedging has been done. Obviously the average cost of hedging is higher in 2023 than in 2022, but it is less than twice more expensive, significantly less, more than twice. If you take the main part, of course, of this story, which is, you know, electricity costs, and when we talk about energy, fundamentally, what has changed is electricity.
Here you are coming from a base, which was roughly around EUR 600 million in 2021. It's gonna be slightly above EUR 700 million in 2022. You will have a bit more than EUR 100 million cost increase. Then in 2023, you will have around EUR 300 million. I'm answering your question, Mathieu, you will have roughly around EUR 300 million cost increase in 2023 for electricity costs, which means that in two years you will have increased and reaching around EUR 1 billion in electricity costs at a group level coming from EUR 600 million roughly in 2021. This is once again manageable within all our efforts.
Indirect cost cutting with Scale Up, direct costs, room for maneuver, pricing power that we have initiated and that we will continue, and discipline on all the other issues, including CapEx. This is why, once again, we are confident to confirm the organic cash flow target for 2023.
Thank you, Ramon. Just a point of clarification, the EUR 600 that you mentioned for 2021, that's all in, right? That's including taxes and logistics and plus the, what you call the electricity prices.
That's the electricity direct expenditure at group level.
Okay. Thank you very much.
We will take our next questions from Jakob Bluestone from Credit Suisse. Your line is open. Please go ahead.
Hi, good morning. Thanks for taking the questions. I had a question on your or two questions relating to sort of rising rate environment. Firstly, can you maybe just help us with a bit of guidance around what should we expect in terms of the increase in your interest costs? I guess particularly as we head into next year, your bond yields have gone up by about 2%. So just to sort of help us understand that. Specifically, as you pointed out, your net debt is fairly low, but you have EUR 8 billion in cash on your balance sheets. Your gross debt is actually fairly high. Is there any scope for maybe bringing down some of that gross debt to maybe not see quite as much of an interest increase in the coming years?
Just secondly, could you just help us understand how you expect Orange Bank to perform in this sort of current environment? Is it a beneficiary from higher interest margins as rates go up? Or as the economic climate deteriorates, do you expect to start seeing some losses on loans? During COVID, you lost EUR 200 million on sort of bad write-downs. Any color there would be helpful. Thank you.
Thank you. Thank you, Jakob, for your two questions. On the first one, once again, solid balance sheet. Net debt under control. With rising rates, yes, it will be more, you know, expensive to issue new bonds. But we will have a limited need to borrow more in the following months, given the strength of the balance sheet and the cash we have already in our pocket. The increase is not going to be very significant. But clearly, the average cost of our debt has reached its, you know, low end, and the future will be a future where this cost will increase.
Compared, you know, to other players, evidently we are in an extremely comfortable situation, thanks to the base point we have. Do we need to bring down, you know, the EUR 8 billion-EUR 9 billion cash situation? In fact it's more nine than eight. I don't think so. Honestly, we don't know where the world is going. We don't know if we may not come back to, you know, 2008-like situation around us. I think it's better to have this cushion, if I may say so, in order to face possible storms in financial markets. Sorry to say so.
With Orange, at least, you have a very solid situation, and the increase in the cost of the debt will not be a significant moving part of our organic cash flow perspective for the future. Orange Bank, I think Stéphane Vallois, the CEO of Orange Bank, is with us. I'm going to give the floor to Stéphane, who is the new CEO of Orange Bank, to take your questions. Okay. We'll come back to your question because there is a connectivity. Stéphane is online, but he's gonna join us in a few minutes. You will have Stéphane taking your questions.
What I can say, and then you will have more color from Stéphane, is that we are in line with our perspective for Orange Bank, which is to progressively go towards the break-even point at the turn of 2024 or 2025. Okay. There is a commercial performance which is, you know, very good. The performance of the app is extremely well rated. We are going to regularly reduce the, you know, negative EBITDA contribution from the bank. It has started already, so it's gonna be a positive contribution. We are basically on track with a plan.
I guess you have seen that we are regularly examining different options, I would say, to ensure the future of what has been built over the past five years. We now have 1.9 million customers in Europe. We have a premium part of the customer base, which is regularly increasing, the paying customers. We now have 80% of our, you know, new customers which are coming with paying accounts. We are basically on track with what we want to do with Orange Bank.
Thank you. That's very helpful.
We will take our next questions from Stan Noel from Bernstein. Your line is open. Please go ahead.
Good morning. Can we go back to Africa and Middle East? Can you help us understand if you exclude the impact of the Orange Money repricing last year and also the, let's say, the situation impacting Burkina Faso and Mali, what would have been the top line growth in the region this quarter? Also in Côte d'Ivoire, can you give us a bit more color on the temporary slowdown that you are experiencing there? Thank you.
Thank you, Stan . Jérôme .
Yes. Restating Orange Money would be close to a double-digit growth, 9% growth year to date versus the 6.6% growth that Ramon mentioned. That's first. About the Q3, as you mentioned, we have first an impact of, it's very limited to four countries out of 16, this slowdown. We have 12 countries out of 16 are still growing, and the average growth for these 12 countries is 11%. Still a very solid growth in most of our countries.
As Ramon mentioned, it's the diversity of our portfolio which enables us to post still a solid global growth. Now focusing on those four countries, three of them are impacted by, let's say, security issues, which is impacting our operations directly, particularly in Mali and Burkina Faso, with some sites not being operable anymore. The other one, as mentioned, is a temporary slowdown in Ivory Coast. It's mostly due to regulatory adverse decisions. One is about KYC. The government decided for the operators not to accept any more some identity documents, ID cards before 2009, and that had an impact on the customer base because we were not able to continue with those customers.
They are coming back, thanks to a very aggressive, let's say, reconnection and re-identification actions from the country. The other one is about a regulatory decrease in the domestic termination rates, which has impacted the top line as well on fees, wholesale business line. The main two impacts and of course, Ivory Coast is one of the countries where we decided to reprice on Orange Money. This is the third impact for Ivory Coast, but with a very strong performance on Orange Money from the operational point of view, particularly by protecting our market share in this country.
Thank you very much, Jérôme. Stéphane Vallois joined us. We will come back if anybody wants to go back to Orange Bank, Stéphane is there. Otherwise we'll continue to take up questions and we'll come back if anybody wants to have further color. Jakob, you can send us a message if you want to have a further answer. Let's follow up.
We will take the next questions from Nick from SocGen. Your line is open. Please go ahead.
Hi there. I think that might be me. It's Nick Lyall from SocGen. Morning, everybody. It was just a very quick one, please, on staff, please, Ramon. Have you started any talks at all with the staff in any of the businesses? It sounds like you've been chatting quite closely to staff in OBS on the reorganization plan. On one side, the CPI growth seems quite low in France, but on the other, obviously there's been disruptions at things like fuel depots and terminals. Could you just tell us what the plans are in terms of talks with staff about rises and salary rises for next year? If there's anything you can tell us about expectations that we should be thinking of for next year as well, please. Thank you.
If a question, Nick, the question is centered on OBS or is it a more general?
Sorry, I should say more generally about France, please, Ramon, not about French staff. I should have said that at the start.
Okay. Gervais Pellissier will take the question. Thanks.
Yes. Good morning, everybody. Just regarding the evolution of purchasing power for the employees. On the French territory, we have been undertaking discussions to implement, I would say, some of the dispositions of the so-called Loi pouvoir d'achat that was passed this summer. This will relate just to an additional premium for middle range and low level salaries that might apply to the French employees. That is embedded today in the projection and guidance that has been shown by Ramon. The premium will be below EUR 1,000 per employee for this year or below EUR 500 , depending on the level of the salary.
Thank you, Gervais. As Gervais said, obviously this is embarked in the guidance and for 2022.
That's great. Thank you.
We will take our next questions from Stéphane from Oddo. Your line is open. Please go ahead.
Yes, good morning. Thank you. Regarding the cash flows, I was just wondering if there is anything in cash taxes, working capital or exceptionals, for instance, related to the staff's departure plan that you would want to highlight or expecting in the second half and could have some impact for the full year, therefore. Regarding the towers, I was just wondering, you know, how committed you're still about the monetization because I would guess the more you wait, you know, to potentially, the more difficult it's gonna be in terms of valuation and number of possible partners, for instance. Any update on the towers would be appreciated. Thank you.
Thank you. Thank you, Stéphane. No. On cash flow, I think there is nothing extremely original to say. Basically, when you look at our, you know, organic cash flow, the performance of the operating cash flow is driving the evolution in the other parts below operating cash, which is working cap, or tax, or interest on the debt, is more or less stable. When you look at the evolution of the operating cash flow, EBITDA minus CapEx, you have essentially the evolution of the organic cash flow. This is the big picture. There is no specific element I need to signal to you.
As far as towers are concerned, the question which is how committed you are on monetization is, I would like to qualify your question if I may. The strategy we have with TOTEM is to in a way monetize the fantastic assets we have, but not necessarily uniquely through what you call, I guess, Stéphane monetization, which is basically selling the asset or, you know, joining forces with others. There is a first step of monetization, which is extremely important, which is through organic growth. Here we have been working and Nicolas Roy, the head CEO of TOTEM is with us far away, huh, because he's independent, but he is sitting on the very far end of the table.
He has been successful in securing deals with, as I said, for instance, Telefónica for 5G in Spain. I guess you will see more news in a few days or weeks on some other deals of this kind, which will show the capacity to you know, increase third party revenues. We said that these are now 18% of total revenues are increasing by three points. There is a whole aspect of what TOTEM does, which is maximizing the value of what we have, if I may say so, as it stands. Then there is the second part, which is you know, being part and being an active player of the consolidation of the tower market in Europe.
Here, of course, we are still absolutely committed to be part of this story. There are some, you know, ideas floating around, and we will be with TOTEM, part of the consolidation of the tower market in Europe. No doubts about it.
All right. Thank you.
We will take our next questions from Alex Ronchi from Bank of America.
Hi Kim. Thanks.
Your line is open. Please go ahead.
Hi. Hello, everyone. Thanks for taking my question. I'll just like to come back to Orange Bank, if I may, 'cause we've seen headlines over the last few weeks, and I think this morning, again, some comments being made to the press, about a potential sale or partnership. Just trying to figure out what was really your strategy. 'Cause you did mention Orange Bank, you know, performance being very good, reiterating breakeven in 2024-2025. What would a partnership or sale or partial sale enable you to do that you're not able to do by yourself today? Or is it just about divesting? Is it about monetization, or is it about strengthening your distribution channels? Thank you.
Thank you. Thank you, Alexandre, for the question, and it will give Stéphane Vallois, the CEO of Orange Bank, a chance to also answer to Jakob's initial question. I would just, before giving the floor to Stéphane, reiterate the fact that, as it has been the case in the past five years, we have constantly been watching all the options which are going to help to accelerate the growth and the profitability of Orange Bank. This is the general approach we have, and you also know that we have a general review of all our activities.
Obviously, with Stéphane, we are considering all the means which are going to help confirm what has become, you know, a very nice digital bank in Europe, one of the best, with a nice customer base, paying customer base. Stéphane can give you some more color on this.
Yes. Perhaps to answer your question, I think there are many opportunities to develop synergies with any partner we may find, on the banking side, on the distribution side, on anything that could boost the development of the bank. I think there could be many opportunities. I think that's the interest of the group to find the right partner to boost the development of the bank. I think we will do great things with in the future.
Excellent. Thank you.
Thank you, Stéphane. Thank you, Alexandre.
We will take our next questions from Jerry Dellis from Jefferies. Your line is open. Please go ahead.
Yes. Good morning. Thank you for taking my questions. First question has to do with the recovery plan in the enterprise division, please. It looks as though consensus is currently anticipating that an EBITDA decline in enterprise of 20% in 2022 will become a 2% EBITDA decline in 2023. A number of the recovery initiatives that you discussed earlier seemed rather structural in nature. Are you confident that you can stabilize enterprise EBITDA next year to the extent that consensus is currently anticipating? Secondly, on the proposed merger with MASMOVIL in Spain, be interested please on your thoughts about the implications of the Advocate General statement last week, what implications that has for your discussions with the competition authorities. Thank you.
We'll turn to Aliette for your first question, and I'll take the second one.
Indeed, the recovery plan we are rolling out is quite structural, and as I mentioned, we are facing quite a profound transformation of the business model of Orange Business Services. What it means concretely is that B2B is expected to be back to growth no sooner than 2024, and that in the meantime, we will progressively improve the trends, and we expect to get a slight improvement already in H2 this year, and then to continue this improvement in the course of 2023.
Thank you very much, Aliette . On MASMOVIL, there has been this position of the Advocate General on the U.K. case. We don't have yet the decision from the Court of Justice. These are at this stage only conclusions. When we look at our case in Spain, once again, it is a very different situation, whatever the U.K. case will be. As you know, MASMOVIL is not an important infrastructure operator. It relies to a large extent on the wholesale market for the provision of its fixed and mobile services. Therefore, the creation of our joint venture with MASMOVIL is not resulting in the loss of an important infrastructure operator.
Needless to say, we are also on a market in Spain where competition is extremely, you know, intense with a myriad of players. We will see where the previous case in the U.K. goes. Whatever the conclusion of this case, the Spanish situation is very different.
Thank you. Could I just follow up on the enterprise question, please? -2% EBITDA decline in 2023 would suggest probably back to growth in the second half of 2023. Just to confirm, that's not the way that you think about the enterprise recovery.
No, you know, Jerry, I think I said it when I started answering the first question on what are the moving parts of 2023 to go to the expected average of 4% increase in EBITDA. I said I think clearly that on the enterprise segment we would still have a negative contribution, which is not going to be only -2%. This is totally embedded in our perspective. We will see a progressive evolution of the situation, as we said, starting H2 2022, very progressive improvement. Overall in 2023, it will go better. All that Aliette was describing drives to a progressive improvement.
This is embarked. When we say that we see growth coming back on EBITDA no sooner than 2024.
Thank you very much.
We will take our last questions from Thomas Coudry from Bryan Garnier. Your line is open. Please go ahead.
Yes, good morning. Thank you very much. Two questions, please. One on the cybersecurity unit. It was carved out previously, but I understood from press reports that a possible IPO was not on the table anymore. Could you please just update us on the different options that we can have as far as the cybersecurity unit is concerned? Then the second question, please, is about possible power cuts in France, in particular this winter. Is it possible that this leads to network cuts? So in that case, can we consider some, let's say, computation and some impact on revenues over the winter should these power cuts happen? Thank you very much.
Okay. On cybersecurity, of course, this will be one of the many parts that will be addressed in the future strat plan that Christel will be disclosing on the sixteenth of February. You know, regarding this IPO question, when we created Orange Middle East and Africa in 2015, we said that this platform could be a platform for strategic partnerships, financial partners, possibly at some time IPO, et cetera. This was in 2015. You've seen that we have been growing the activity fantastically in Africa in the current organization. For cybersecurity, when we had this so-called carve out with the creation of a dedicated entity last spring, we said that it would open the same kind of opportunities.
This is the story we have with Orange Cyberdefense, a fantastic asset, one of the leaders in Europe, with around EUR 900 million revenues growing fast. You could see the 13% growth in revenues in Q3. This is going to be the platform to envisage different options. You can imagine many options, and we will be talking about this in more details in February. Clearly, cybersecurity is going to be one of the growth engines for the group in the future, and it is a very strong asset.
Now, your question on power cuts and there is a very strong energy that Orange France has been putting in place, and we've been working on it also at a group level. Your question is focused on France, so Fabienne is going to take the answer.
Thank you, Ramon. Yes, you're right. There is a possible load shedding this winter. We are currently working with all relevant stakeholders, Enedis, RTE, on this possible shutdown with different scenario. In any case, it will impact not only Orange France, but all the activity in France, maybe one hour per day, no more. There's no impact on the business if it's your question. We are very confident that we will not have, we wouldn't have any impact on the business. The question we have is how we can organize a business continuity plan in this context to guarantee the best quality and to guarantee the connectivity.
It's why we work with them to identify some priority area, as data center, and as a different priority or strategic area to protect customers in B2B and B2C. In any case, it's not a question of business. It's a question of continuity plan that will impact all players in France, whole activity in France. It's why, as Ramon explained just before, we are working to reduce our consumption of energy. We decide to reduce 10% of our instantaneous consumption for one hour a day during the peak energy times to support and to be able to reduce our consumption. Through this reduction in consumption in peak period, we think we are able to sustain and to avoid load shedding.
All the team are focused on this point for the winter for all customers of Orange France, but not only.
Thank you very much, Fabienne. If I understand well, this was the last question. Just one quick word of conclusion to you know, reiterate once again, a key point, which is our absolute comfort on our cash flow target, given all what we said. It is you know, a situation where we are in control, where we made, I think the right decisions, including on the energy hedges. The Scale Up program is delivering its results despite the inflationary environment. You could see the figures, and the pricing power is there. With the dynamics we have in the different parts of the group, we are extremely confident that we can reach our objectives.
I would like to conclude this call, thanking you for your attention, for your questions. We will be following up these discussions in the next days and weeks. Merci beaucoup.