Good morning, ladies and gentlemen. I'd like to welcome you to Orange's first half 2023 results conference call. The call today will be hosted by Ms. Christel Heydemann, the CEO, and Mr. Jean-Michel Thibaut , Interim Vice President, Finance, Performance, and Development, with other members of Orange's Executive Committee for the Q&A session that will start after the presentation. Thank you very much. I would like to now pass the line to Ms. Christel Heydemann. Please go ahead, ma'am.
Good morning, everyone, welcome to our financial results presentation for the first half year, 2023. I will start with the key highlights of the second quarter. I will leave the floor to Jean-Michel to detail our results. Let's start directly on slide four with the key highlights for the second quarter. First, I would like to highlight the results of our focus on execution, which gives us complete confidence in achieving our full-year guidance. With firstly, a strong retail acceleration in France and Europe, thanks to our pricing power, which is driving up convergence ARPU. Secondly, our outstanding performance in Middle East and Africa, with EBITDA up double digit. Third, strict cost discipline, already delivering EUR 175 million net cost savings in first half 2023. Last but not least, our recovery plan to improve Orange Business EBITDA is on track.
During Q2, we also achieved crucial new milestones in terms of our asset portfolio management, starting with the closing of the VOO acquisition, which is now consolidated in the group's accounts from June. This crucial acquisition for strengthening our convergence strategy in Europe does not imply any change in our group's guidance. The European Commission's investigation of our joint venture with MásMóvil entered phase two. As expected, discussions to reach an agreement on the retail business are continuing, while it was confirmed that the deal would not impact competition within the wholesale market in Spain. We expect a closing during the second half of 2023. The deterioration of the banking market has delayed our break-even for Orange Bank in Europe. As a result, we announced at the end of June, our intention to withdraw Orange Bank in Europe from the retail banking market by 2025.
In parallel, we entered into exclusive negotiations with BNP Paribas to define a referral partnership for the Orange Bank customer portfolio in France and to take over the business in Spain. This restructuring plan does not impact our group's guidance and will lead to a limited EUR 200 million cumulative net cash out for the group. Moving to the next slide in our financial achievements. Our recent price moves account for the acceleration in our Q2 revenue growth and will fully impact our top line in the second half of the year. Our EBITDA performance grew by +1% in Q2, demonstrating our ability to offset inflationary pressures through strict cost discipline and a strong pricing power.
Our ECAPEX continued to strongly decrease, allowing, together with our EBITDA slide growth, organic cash flow to reach EUR 1.5 billion, giving us full confidence in delivering at least EUR 3.5 billion organic cash flow this year. Finally, our balance sheet remains very healthy, with a net debt over EBITDA ratio increase to 2.09 times due to the VOO acquisition, still in line with our objective to remain around 2 times in the medium term. In H2, we also progressed on our ESG commitments. We are proud to have reached well ahead of 2025, our target of -30% carbon emissions for Scope 1 and 2, thanks to an acceleration of renewable sources within the group energy mix.
The next milestones to reach our commitment to become net zero carbon by 2040, notably includes the objective to decrease by 45% our carbon emissions for all scopes by 2030, with Scope 3 representing more than 80% of the group carbon emissions. Besides environment, we are on track towards our 2025 objectives relating to circular economy and digital inclusion. With all of that, I will now hand over the floor to Jean-Michel for more details on our financial performance.
Thank you very much, Christel. Good morning, everyone. Let's start on slide eight, with group revenues up +2.6% year-on-year in Q2, recording the highest top-line growth in 15 years to reach EUR 10.9 billion for the Q2. As Christel highlighted, top line growth accelerated in the quarter, driven by our retail performance, which benefited from price increases. Growth in retail outpaced the decrease in wholesale by more than 4 times, while equipment sales maintained their high single-digit growth. Looking at our segments, MEA continued to be the main growth driver, with revenues up double digit at +12%. Europe posted a solid growth at +2.7%. This strong performance was achieved thanks to Poland at +5.5%, Belgium with 3%, and Spain up +2.1%, confirming its recovery.
Orange Business recorded a 2.4% growth, with IT&IS and mobile activity that more than offset decline in legacy business. France was down by minus 1.3%, as the retail services, excluding PSTN growth, was 3.4% and did not offset the expected decline in wholesale. Moving on to EBITDA, it grew in H1 by +0.8% after a sequential acceleration in Q2 to +1%, thanks to a remarkable MEA and a robust performance of Europe, especially fueled by the turnaround in Spain. These sound performances more than offset both Orange Business, still decreasing in the first year of its recovery plan, but clearly improving the trend compared to 2022, and France, negative as expected, due to a peak in inflation, especially on energy costs, while only partially benefiting from price increases.
Our cost discipline is even more crucial to the current inflationary context, with already EUR 175 million net cost savings achieved in H1 versus 2022. We are well on track to reach our EUR 600 million net cost saving target by 2025. The group CapEx decreased sharply by -5.7% in H1. H1 CapEx represented 14.6% of sales, well in line with our ambition of reaching around 15% of CapEx to sales at the end of 2023.
The main contributor of this nearly EUR 200 million decrease in net investment over H1 is France, with a sustainable drop of -2 to -3 points CapEx to sales, given that we have now reached 35.6 million FTTH connectable homes, that represent an 83% coverage of the country's premises. In parallel, as part of group's capital allocation policy geared towards value creation, MEA has increased by 95%, supporting its strong top line and EBITDA growth. On the next slide, you can see that our net income landed at EUR 1.1 billion. The almost -EUR 0.4 billion year-on-year decrease mainly resulted from the impact of the French pensions reform, which extended the duration of our senior part-time program.
Our organic cash flow reached EUR 1.5 billion in the first half, which gives us complete confidence in achieving our full-year guidance of at least EUR 3.5 billion. As a reminder, cash flow generation is usually higher in H2 due to the seasonality of our business. Last year, cash generation was more evenly spread than usual, which explains the limited year-on-year improvement in the first half of the year. The net debt increased by nearly EUR 2 billion due to the VOO acquisition, and remains around 2x EBITDA, in consistence with our medium-term target.
Last but not least, before turning to our business review, let me highlight our strong liquidity position as well as our low cost of debt, with an average maturity of 7.7 years, which are crucial assets in the current macro environment, with interest rates rising, especially compared to some of our direct competitors. Let's now start our business review with France, where retail services revenue growth already accelerated sequentially in Q2 at +3.4%, excluding PSTN, despite benefiting only partially from our recent price increase. Our discipline strategy that balances volumes and value resulted in an increase of all ARPU, and in particular, convergent ARPU, at +3.6% year-on-year, while mobile contract churn stabilized at a low 10.8%, and with a net promoter score back to above 25 in July.
Retail growth will further accelerate sequentially, as price increases deliver their full potential in H2, as well as with the launch of 5G by Sosh, with a +EUR 5 premium versus 4G. H1 EBITDA decrease was mainly due to energy price peak and also included, as planned, the front-loaded part of our 2022-2025 wholesale drop, while only benefiting from two months of price increases at their full potential. H2 EBITDA decrease will be more than halved compared to H1, despite adverse effects, which will remain thanks to the full positive impact coming from price increases. All in all, with ECAPEX declining sharply by 13.5%, in line with our medium-term expectations, cash flow generation grew with EBITDA minus ECAPEX, increasing by +5% year-on-year in H1.
Let's now turn to Europe, where retail services accelerated in Q2, supported by convergence, delivering the benefits of price increases as well as strong B2B performance, notably in Poland. Wholesale revenues continued to reflect the regulatory decrease in call termination rates and the decline in international traffic, both of which have a low impact on margins. Solid retail momentum, together with actions implemented to counter inflationary pressures, have enabled us to increase EBITDA by an impressive +7%, thanks to EBITDA growth in all countries without exception, improving Europe's EBITDA margin by +0.9 points year-over-year. Let's have a closer look at Spain, where revenues grew for the fourth consecutive quarter. This growth is being fueled by the continuous acceleration of retail services and strong equipment sales. The wholesale decrease was the result of regulated reductions in mobile termination rates.
In a highly competitive market, we continue to support growth through our focus on customer value management. This resulted in the accelerated increase of convergent ARPU by +4.9% year-over-year, combined with continued improvement in churn, -2% to -3% year-over-year. Moreover, in B2B, we achieved growth in all segments. Our customer base increased by +66K in FTTH and +51K in mobile postpaid, passing 2 million 5G customers. Our sales momentum, supplemented by our continuous efforts on cost optimization, has positively impacted our EBITDA, which is now back to growth, and confirming the expected turnaround this year. Let's now move on to the EMEA region, which is once again a region that demonstrated the sustainability of its strong performance, fully in line with our ambitions. Revenues increased by 12% in Q2.
All countries grew, our four growth driver, Orange Money, fixed broadband, data, and transversally B2B, run at full speed. EBITDA grew faster than revenues at +12% year-over-year in the first half, with 7 out of 16 countries recording double-digit growth in EBITDA. As such, our EBITDA margin increased by +50 basis points, fueled in particular by the strong turnaround at Orange Money. Turning to Orange Business, revenues increased by 2.4% in the quarter. This was driven by the growth in mobile and IT&IS, which together outweighed the decline in the legacy business. The growth in IT&IS alone, exceeded by 1.5 times, the decrease in fixed services, thanks to robust growth in digital and data and in our cybersecurity business. All our efforts are focused on EBITDA recovery.
Consistent with that focus, H1 losses are in line with our aim to reduce the rate of decrease in 2023 EBITDA compared to 2022, which, as a reminder, was at minus 19%. The trajectory of H1 EBITDA is fully in line with our expectations. Our recovery plan started this year and will take time to materialize. Indeed, key initiatives such as the voluntary departure plan are expected to have an impact into next year's EBITDA. This concludes this business review section, and I will now hand over back to Christel.
Thank you, Jean-Michel. I would like to conclude this presentation simply by reaffirming that this first semester's results underpin our confidence in achieving our full-year guidance, which remain absolutely unchanged and now include VOO. Thank you for your attention. Jean-Michel, the entire Comex, and I are now ready for your questions.
Thank you very much for the presentation. We will now be moving to the Q&A part of the call. If you have any question, please press star 2 on your keypad now, star 2 on your keypad and wait for your name to be called. If you are dialed in via the web, you may also ask a voice question. We will now give a moment or so for the questions to come in. Thank you. Our first question comes from Mr. Nick Lyall from Societe Generale. Please go ahead, Nick. Your line is open.
Morning, everybody. Thanks for the question. Could you help us a little bit on some of the movements for France for the second half, please? It sounds like you're talking up a little bit, obviously, on the revenue boost, as you've said before, because of the price rises coming through for the full six months. Could you help us a little bit with the service revenue boost and whether things like the front book moves on Sosh might help a touch? Also, are there any moves on costs that we need to bear in mind for the run rate for the second half as well?
It sounds like what you've said is everything is pretty much revenue-based, but are there any movements in costs maybe, that we should pencil in, such as energy, which might be a little bit beneficial for run rates in the second half, too? Thanks very much.
Thank you. I will start and then will hand over to Jean-François Fallacher, can give you a bit more colors. As we highlighted, clearly the impact in H1 on the revenue line, there's only one I mean, one quarter of price increase, and you will have the full semester of price increase in H2. Top line will benefit from it. On the cost side, indeed, we are actively working on our cost efficiency programs, and this is part of our trajectory. We fully confirm the overall guidance that we have for performance of France of a slight EBITDA decrease over our three-year plan.
Indeed, we had this impact in H1, mostly due to the energy price, which unfortunately, we know is determined for this year, and we will have more benefits, I would say, of the lower price of energy for next year. Now, on the top-line performance, I will let Jean-François Fallacher give more colors on the overall commercial performance.
Thank you, Christel. Yes, to add upon what you were just saying, I mean, in terms of comparison H1, H2 on the cost side, I mean, there is no expectation of any rise whatsoever on the cost side. I mean, you've seen that year-on-year, we had a raise of our energy prices, which explains actually the EBITDA performance in H1 year-on-year. As Christel was saying, in terms of top line, what you see in these results is actually a raise in the service revenues to 3.4% in Q2 versus 2.1% in Q1, which is clearly explained by the fact that you all know that we raised our prices.
... beginning of this year, I mean, we announced this raise of prices from EUR 1 or EUR 2 on mobile and broadband and convergent offers. We have been massively raising our prices. 90 million of our customers have been impacted by that. You see the performance in ARPU, which is going up. Actually, what is embedded, what you have to understand very well, is that in this first semester, H1, you have only two months, which of these price increases are embedded. We expect indeed, H2, in terms of service revenues, to be better because we will have the full benefit in H2 of these price increases.
Once more, on the cost side, I mean, we have no expectation, or we have expectation of basically some stability and, not only stability, but as Christel was saying, we are obviously working very hard, on efficiencies. There are already some efficiencies embedded this year linked to, what we call, TPS, which is the departure of many people in Orange France versus last year.
Thanks very much.
Thank you. Thank you. Our next question comes from Mr. Nick Delfes from Redburn. Please go ahead, sir. Your line is open.
Yep, thanks very much. Just a question on Spain. If I look at the Spanish revenue performance, it's pretty good. If I take out the equipment, though, it's flattish. Can you talk a little bit about how you've restructured costs to get the EBITDAaL performance that you've achieved there? Just finally, on MásMóvil Orange, just to confirm, you're still expecting a resolution early September. Thank you so much.
Thank you. Indeed, Spain, as you know, we've been working already for several quarters on the recovery, and we conducted a number of cost efficiency programs, which are now fully benefiting in Q2. On top of that, because of the inflationary environment, we had a number of price increases. You're right to say that the equipment business is boosting top line, but as you know, we follow carefully the retail services and the level of churn, which was part of our recovery plan with a churn that has massively decreased. We've also worked on our own cost efficiency, including sales commissions cost reduction.
That's overall, there's not one item that explains this recovery. It's a number of items that we worked on. I don't know if Marie-Noëlle, you want to give more colors on the top line dynamic.
I guess it's the market is highly dynamic, but we've been, you know, both working on the price increase, with a very positive dynamic on the gross adds, but the churn is also having a very good trend, despite the price increase. This is absolutely true on the mobile, but also on the fixed part. There is this, you know, strong positive move. Then, as Christel said, this is, you know, what has been put in place by Jean-François and keep by Ludovic Pech, is making sure that, you know, there is a very, very strict discipline on all the different costs.
This is a very positive and for the H1 and for the H2 either.
Coming to your question regarding the progress on the MásMóvil project, as you know, we continue to work, we continue working with the European Commission to find acceptable solutions, and we remain confident in the outcome of this process. As you know, the timetable, we have until July 28, end of this week, to submit the remedies, and the decision is expected on September 4. So we are confident of on the process, which will enable the transaction to be finalized by the end of 2023.
Great. Thanks so much, indeed.
Thank you very much. Our next from Jakob Bluestone from Exane. Please go ahead, sir. Your line is open.
Hi, good morning. Thanks for taking the question. I had a question just on the French competitive environment. If you could maybe just give us a little bit of color. It seems like there's been a pickup in promotional activity, but at the same time, your mobile net adds seem fairly robust, and I think you had almost a 1 percentage point drop in contract churn in France, so it's below 11%. If you could maybe just help us understand what's going on there. Just also very quickly on networking capital, I think you had a fairly sizable inflow in the quarter, so in the first half. Can you maybe just remind us what you expect for the full-year? Thank you.
Thank you. You're right to say that the competitive environment has sharpened in Q2. I don't know if Jean-François, you want to give more details, especially on the mobile market.
Yes, thank you, Christel. Thank you for the question. In terms of competitive environment, in France, we have seen some, let's say, aggressivity on the side of two of our competitors, entering with, let's say, some offers... at around EUR 10, offering 40 gigabit of data. Indeed, the market has not been completely quiet. We believe that this is probably linked to the Q1 results. As you have seen in Q1, if you remember well, I mean, the overall French market has been slowing down. It was one of the first quarter where the total net adds of the markets were not positive. We believe this is probably a reaction from our competitors to that. On our side, what I can say is that we have been extremely disciplined.
We have been extremely disciplined in terms of pricing and promotions. We definitely are pursuing a value strategy. We are watching day by day the mix between volume and value, with again a value strategy, which is leading us to this, I think, quite impressive year-on-year service revenues growth of 3%-4%. I take the opportunity to anticipate the question about the price moves we have been doing. As you've been saying, I mean, our churn is really under control. We see year-on-year a very slight increase of churn. We had a Q1, which was not as good, but Q2 is much better.
If we look at the measure of customer satisfaction, which is NPS, what we can say is that, as well, I mean, price increase is not obviously transparent, so we had a decrease in NPS if we compare to last year in Q1, in Q2 as well. We are very happy to see that in the first 2 weeks of July, we are back to the level of the NPS that we had last year, same period. Overall, what we can say is that this massive price increase that we applied to 19 million customers has been really, I mean, very well, very well executed, and without damage to our customer base and our customer satisfaction.
I mean, showing the results of the very strong investments that have been done in the past. We are very proud again after all the stars we got from ARCEP on the mobile network, to see that the last results published by ARCEP on our fiber network show that in the top 75 mobile fixed networks in France, 60 are Orange network, showing as well our strong performance and quality on our networks that are appreciated by our consumers.
Your second question, was it on the network capital expenditure or working capital?
No, sorry. Working cap. You had an insert of EUR 2 million in H1. Just what you expect for the full-year.
Okay. Jean-Michel, you want? Thank you.
Yes, indeed, Jakob, the point is that as I mentioned earlier on, in H1, we have a temporary element, which is that as we have massively reduced our CapEx, basically, the activity effect on working capital is a very short-term negative because the football field of people who whom we owe money to has shrunk a little bit. For the full-year, this should normalize, and we should not have this negative working capital contribution to the organic cash flow for the full-year. This is one of the reasons why we are fully confident in reaching the above EUR 3.5 billion target for the year.
Combined with the fact that, usually our organic cash flow is backloaded in the second part of the year as in every year. Nothing, nothing bad to expect in this area.
Very clear. Thank you.
Okay, thank you very much. Our next question comes from Georgios Ierodiaconou from Citi. Please go ahead, sir. Your line is open.
Yes, good morning, thank you for taking my questions. The first one is just a follow-up on the comments you just made around the French pricing environment. I was curious, you mentioned NPS returning back to pre-price increase levels. If you don't mind giving us an update of whether churn is also improving during the second quarter and into July. I'm just asking this because obviously the competitive intensity increased during Q2 and into Q3. Just wanted to understand whether the improvement in NPS is sufficient to mitigate some of these competitive moves.
My second question is around Ethiopia. There's been obviously a few articles suggesting that the local government wanted to approach you and see if there was an interest either in investing in the local incumbent or in a third license. Curious to hear your thoughts, whether that is a venture of interest to you and between a brownfield versus greenfield project, what would be preferable? Thank you.
Thank you. I will hand over to Jean-François to give more comments on the churn and especially end of Q2 impact of the competitive environment in on mobile, especially.
Yeah. I'm going to comment on the Q2 as a competitive environment, which I believe has been rather stable. We've been even seeing in these first 2 weeks of July, some moves from our competitors, which are, we believe, going in the right direction because we've seen some slight, very slight, but still price increases from 2 of our competitors. The offers I was referring to, that were brought in Q1, which we found pretty aggressive. The offers that 10 EUR 40 gig have been actually have been changed by 2 competitors to 10 EUR, 20 gig. Here as well, we see things on the market rather moving in the right direction.
To answer your question on the churn, I mean, obviously, we have seen a slight increase in the churn linked to the price increase, the massive price increase we announced in end of last year, Q1, 2023. As I was saying, in Q2, this is back to, I would say, on mobile, quasi the level of churn we had last last year, same quarter. As concerns broadband, this is slightly above last year, but nothing that we are worried about. Again, I mean, this movement, we see it as a, as a success, basically.
Coming to a question on the Ethiopia. As we've said, our plan to grow and deliver solid performance in Middle East and Africa is, I mean, relies on our organic performance, but we are also always looking at non-organic opportunities, but only if we believe they are creating value and for the group.
There's an official process that was launched by the Ethiopian government, and that's why it's been I would say reported in the media, but at this stage, we have no more comment to make, and we don't believe at this stage, at least, that there's any I mean, no comment to make, and the conditions are not yet the one that we would consider value creation. Again, these discussions are ongoing, officially driven by the government in Ethiopia.
Okay, thank you.
Okay. Thank you very much. Our next question is from Mr. Stéphane Beyazian from ODDO BHF. Please go ahead, sir.
Yes, thank you. Two quick one, please. On fiber, there are still a lot of talks in the French press about the quality of network, and I mean, you seem less exposed to shutdowns and faults than some competitors, but do you see any evidence that the rollout was rushed, perhaps in the countryside, and perhaps some reinforcement and even burying some lines on the ground could happen and possibly have an impact on future CapEx for Orange? The second one, perhaps to Christel. Orange Bank was obviously a key project of the previous CEO.
up a little bit of cash. Now that you are more than a year into the CEO role, and free cash flow recovering, have you identified, or are you looking for any sort of project where you would, you know, potentially, would want to drive Orange, or your focus is very much on the free cash flow recovery? Thank you.
I will let Jean-François comment on the strong quality of our fiber infrastructure, which was validated by the regulator in France, indeed.
Oh, yes, thank you, Christel. I mean, we were absolutely proud and happy to discover the first ranking that was published by ARCEP two weeks ago about the quality on the fiber networks. As you know, and you have seen on this listing, there are more than 230 local fiber networks and fiber networks providers in France, indeed, mainly in rural areas. I'm not going to comment whether or not this has been rushed or not. What I want to insist upon is that in this list of 230 networks, if you take the 75 best networks in terms of the number of failures on these networks. In the 75 best ones, Orange has deployed 61 of them.
If you look at the 75 best networks in terms of the number of customers, The success ratio of customers that are brought to this network, Orange, again, is placing 55 networks in these 75. We're very happy to see that this is the proof, if ever needed, that being a telco is really our job, and we are placing, again, the best network in the top of this list. By the way, if you look at the bottom of the list of these networks, none of these networks have been deployed by Orange.
Thank you, Jean-François. Regarding your question on Orange Bank and new projects or business diversification that we could think of, first and foremost, we are very focused on the execution of our Lead the Future plan. We have many innovations and many things that we are investing in to continue delivering value in our core business and leveraging the work of Orange Innovation and the excellence of our teams, both on the infrastructure layer, on the services for our customers, on the enterprise segment in particular. We're also investing on the on cybersecurity.
No big, no big bet, I would say, in terms of new opportunities, really focusing on creating value and delivering our Lead the Future plan.
Very good. Thank you.
... Okay, thank you very much. Our next question comes from Mr. Andrew Lee from Goldman Sachs. Please go ahead, sir.
Good morning, everyone, and thanks. I've just got two questions. Firstly, just maybe following on from your answer to the last question, your broadband line losses accelerated in the second quarter to just over 30,000 from just over 20,000 the previous quarter. I wonder if you could just talk to why you think that is, given the improvements you mentioned you were making? Second question, just on Enterprise, which is a black box for us, and I get that visibility is probably not that high for you, but given we're halfway through the year now, and you're still anticipating improvement this year versus last year, could you just give us a sense of trajectory as we head into 2024? Like, it's obviously very heightened.
EBITDA declines are very anomalous versus most of the rest of the sector, even, given that that's a low bar. How do you think about the improvement into 2024, or at least the run rate that will be heading out for 2023 on Enterprise? Thank you.
Thank you. On the broadband negative, I mean, net adds in France, remember that we have two trends: one with fiber, one with DSL. Again, Jean-François, you want to give more details?
Yeah. Thank you, Christel. What I can say is that indeed, I mean, as you can see, we have a negative net adds, which are slightly negative. I just want to remind that we have a customer base of 12.4 million broadband customers, out of which a large majority, more than 60%, are fiber customers. I want also to remind that, if you look at just fiber, we had a quarter with 250,000 fiber net adds. The machine, the acquisition machine of fiber is still going full speed ahead.
Indeed, this, let's say, slight negative, if we look at the total broadband, is clearly explained by the fact that, as you've seen in Q1, we believe that the entire market is basically slowing down. There, as we have the largest base, obviously, we are slightly suffering more eventually than others, but these numbers are absolutely according our expectations, I can say.
Thank you, Jean-François. Regarding the Enterprise business, which obviously is not a black box for us, and we know exactly what we are driving. As we've always said, the transformation is a deep transformation, and it will take two years for us to recover, and we don't provide detailed guidance by business, but we expect to improve compared to last year, the EBITDA losses for Enterprise. We've launched many actions, and I will let Aliette comment, including a voluntary departure plan, which will take full effect end of this year. And we've launched many actions on the pruning of the portfolio repositioning. So I don't know, Aliette, if you want to give more details.
Hello, everyone. To give slightly more color, indeed to remind first, starting with the numbers we had in H1 2022 was a minus 25% year-over-year on the EBITDA. In H2 2022 was a minus 17% if we exclude the 2021 employee shareholding plan impact. Our objective for this year was first to stop the bleeding and also to implement structural changes that will be fueling our future recovery. That's why you see only, I would say, very modest improvements at this stage in H1 2023, as we have a minus 16.7% decrease of the EBITDA. This is fully matching our target for this period, and we are in line with our plan.
The recovery plan objective is now, and as we explained in the Capital Markets Day earlier this year, the profit transformation will take two years, and we expect to keep on improving the decreasing trends in H2 and moving forward in 2024. Concretely, what we had announced is a plan with four pillars. The first one is about simplifying our operating model. What we've done so far on this is that we have a new operating model that has been put in place on January first, with tighter P&L monitoring. I have also changed half of the executive management team of the company.
We are launching a voluntary departure plan, and we are discussing with the social representatives at the moment. This should be starting in Q4 this year. We should get a go to proceed by the end of this year, and this will be actually materializing into departure of staff as from Q1 2024, so Q1 next year. The second lever of the transformation plan was to focus our investment and to restructure our portfolio on what will really make us win in the future. On this, we are fully on track with what we had announced, which is that we will divide by two our product portfolio by the end of Q1 next year.
This is ongoing as we speak, and this will give us oxygen to again focus our investments and focus on what is delivering value. The third pillar of the transformation plan is about transforming our traditional connectivity business to gain efficiency.
Here we are working on several aspects, including improving our delivery lead times and delivery performance, especially on fiber in France. We are also investing to digitalize and to automate our connectivity business with clear expected impact on the customer experience and on our efficiency drivers. The last pillar of the transformation plan has been about accelerating the profitable growth in digital services to fuel our future growth. Here we have launched an ambitious reskilling plan, and we are also having ambitious recruitment campaigns to fuel our cyber defense, but also our digital and data activities. We are also working hard to fix our cloud performance that has not been at the expected level.
Thank you very much. That was really helpful.
Okay. Thank you very much. Our next question comes from Thomas Coudry from Bryan, Garnier & Co . Please go ahead, sir.
Yes. Hello, thank you very much for taking my questions. I have 3, please. First 2 ones are on broadband, actually. Coming back to the discussion on broadband, as we saw, indeed, limited in comparison with the customer base, still, are there diverging trends that you see here in your dynamics and performance in rural areas versus more urban areas? That actually takes me to my second question. To talk about satellites, I think that Christel, you have gone to a teleport a few days ago and made some announcement as far as Orange strategy in satellite is concerned with a new offer to be launched. Could you please tell us more about how you view satellite in your mix?
Is it a good way for you to address indeed performance in rural areas? More importantly, do you intend, and how do you intend to accelerate in satellites? We know there are many things going on in the industry with many new offers coming to the market. What is your vision here, and how do you intend to push on that front? The third question, actually a global question for Jean-François. Obviously, you have left Spain in very good conditions. Are there any recipes that you intend to apply to France, given your experience of good track record in Spain? Thank you very much.
I will take the satellite question, and then I will let Jean-François give his recipe for France and the broadband, net adds. Thanks. Satellite, as you've seen, rightfully actually, satellite is part of our tools to provide solutions and broadband connectivity to customers, and that's why we wanted to communicate, and actually we are already using satellite for broadband connectivity in rural areas in France. It's today under our Nordnet affiliate, which is a company owned by Orange France. We did this communication to make sure that this would be more visible.
Rightfully, we will launch new offers with better bandwidth and connectivity to second half of this year, I mean, toward the end of the year, under the Orange brand, which will help us make more visible this solution, who are absolutely key if we want to reach 100% connectivity of the territory in France. To be fair, if we look at the landscape, we, the regulator, and I would say our politicians tend to think a lot about 100% coverage through fiber in France, which we know is not economically viable, and it's not. Satellite connectivity is a fantastic solution for rural areas.
That's why we want to promote them as well, in addition to our mobile, fixed wireless connectivity, as well as, obviously, our fiber connectivity. We do not intend to invest massively CapEx on satellite. We already have a lot of terrestrial infrastructure, which we leverage actually for many constellations, but we will not invest in satellites themselves. We buy, we have partnership with all the satellite projects, we do work with all the constellations, and we also use satellite as a fantastic resiliency solution for all our enterprise customers.
This is definitely an area that we want to continue to leverage, to invest, to make sure that it's fully used as part of our, I would say, toolbox, to serve customers, but not as a new venue for CapEx investment, of course. Jean-François, any recipe?
The cooking. I will take this first question. I wish it would be that simple, that you could use Spanish cooking recipes to France, but unfortunately, as you know, we have different kitchen here. No, now, seriously, the markets are different, the challenges are different, the positions of Orange in Spain is different than the one in France. I've learned in my past that it's very difficult to just apply recipes like that. That's why I've been spending the first 90 days of my mandate here, understanding the market, understanding the team, the position....
With the help of Christel, we are actually working in making an instance, let's say, of the Lead the Future strategy to France, that I'm planning to communicate back to school in September next year. We are working on a very strong plan to push what we were explaining. A strategy of value in France clearly to execute the plan that has been explained to you guys in February of 2003. That's on the cooking side. On the first question you raised about some trend changes in the rural versus urban areas in France, the answer is no. We don't see any change of trends.
We are extremely attentive to what's happening on the rural areas in France, simply because you know that we've very strong market shares in these areas. We are really very attentive. Here, we are relying on our very strong point. The very strong point is clearly our territorial presence in France. We are strongly present in all the territories with a very large retail network of shops in France that we have decided to slightly extend to a number of 600 shops in 2026 for that reason as well. We're extremely attentive, and we see no changes there. We are keeping, I would say, that precision share that we need to have to defend our market share in these areas on fiber.
Okay, thank you very much. We will be moving to the next question. Next question comes from Emmet Kelly, from Morgan Stanley. Please go ahead.
Yes, good morning, everybody. Thank you for taking my question. Just have one question, please, and it's on French EBITDA trends. Back at the Capital Markets Day, you gave guidance for the CMD period for French EBITDA to be down low single digit %. It's obviously down by 5% in H1, and you've said the rate of decline should be more than half in the second half of the year. Could you talk about the kind of key dynamics that we'll see in French EBITDA beyond 2023, in terms of the moving parts and, in particular, energy costs, headcount costs, et cetera, and whether you believe that 2023 could be the low point for EBITDA growth in France? Thank you.
As we've and you rightfully said, we believe that in H2, the EBITDA decrease will be half compared to H1. There are many trends, as we highlighted during the Capital Markets Day, and we fully confirm our 2022-2025 guidance for France with a slight decrease of EBITDA over the period. As you know, there are many trends, a very solid retail services growth, the wholesale decline, which we know is front-loaded on the three years, and obviously working on our cost structure to cope with that.
We do believe indeed that, H1 2023 was a low point for EBITDA decrease, and we fully confirm our 3-year guidance for France.
Okay, thank you very much. Our next question comes from Mr. Akhil Dattani from J.P. Morgan . Please go ahead, sir.
Yeah, good morning. Thanks for taking the questions. I've just got two, please. Firstly, on VOO, Christel, you mentioned obviously the benefits that transaction can have for your Belgian asset. I just wanted to dig a little bit deeper into some of the numbers. You've provided in your pro forma financials, the contribution that VOO provide for this year, and that implies an EBITDA margin of just 25% for the asset. Whereas I think when the asset was being acquired, the implied margin that you were providing was for about 37%. I just wanted to help us understand what's changed, and that implies a acquisition multiple of about 13x EBITDA, so it seems like quite a high multiple.
I don't know if I'm missing something, but any sort of color to help us better understand what's going on there would be super helpful. Then just a quick one on Spain. You've obviously had very good trends and a very strong recovery so far in H1. I wonder if you could provide us a little bit more granularity on what's happening around pricing. It seems to be that whilst the higher brands are raising prices, and we've had CPI linkages from some operators, at the low end, we seem to be seeing some quite aggressive moves with data speeds on broadband, increasing data allowances increasing, but without price hikes. It looks like there's a bit of cannibalization at the low end.
Just a bit of color on exactly what's going on and how confident you are in terms of the trends you're seeing at the moment. Thanks a lot.
Thank you. On VOO, you're right to say that there's a difference. Actually, the difference between the historic EBITDA that was presented for VOO in the signing presentation and the now pro forma figures is linked to different accounting practice, and in particular, VOO had a significant level of operating expenses that were capitalized, that we reclassified in consistency with the Orange accounting practice. There's no change, it's just the accounting that's been aligned with our pro forma practice to restate and to use the same methodology.
Sorry, just to elaborate on that, to avoid any misunderstanding, there's no surprise in this respect, everything had been spotted in the due diligence. These accounting practices or differences were fully spotted, and we have just implemented what we had seen during the due diligence phase.
On the Spanish market, and I will let Mari-Noëlle give provide more details. You're right to say that there are still a very competitive low end of the market in Spain, with very dynamic competitors. As you know, the Spanish market is extremely competitive, and that's actually our strong argument when we interact with the European Commission on the antitrust process for the rational of our transaction with MásMóvil, which is we need to gain market share to generate more ability to invest for our Spanish customers on the Spanish market. I don't know if Mari-Noëlle, you want to add on the dynamic?
I guess the Spanish market is highly dynamic, as you said, this is what we keep saying to the European Commission, because it will stay a very dynamic market. The high-end part of the market, which is, you know, led by essentially Telefónica and Orange and all the football offers and so on, is, you know, is really the upper part of the market and will have a very strong dynamic, either on the middle part of the market, on the low part on the market. These both, you know, part are much more than 50% today.
This is going, you know, as you know, since many months in Spain. We still have high value, and Orange is very well-positioned on this market, with an increase of value for Orange customers. We have a very dynamic market. The overall churn of the market is going down. This is very important also because, you know, this washing machine had to slow down. We have this market in three parts, the lower one, middle one, which is a strong one with Jazztel and the upper part of the market with IRP and Yoigo.
Great, thank you. Great, thank you.
Okay, thank you very much. Next question comes from Mathieu Robilliard from Barclays.
Yes, good morning, thank you for the presentation. There's an echo. I had 2 questions. The first one is on the French pricing mechanics, in terms of the increase of the back a few months ago. I just wanted to confirm that this increase only applies to people that are out of contract, which is typically 30% or maybe 40% of the base. As existing customers exit the contract, they are then facing a similar price increase. The impact of the price increase will grow throughout the year because there's more and more customers being affected by it. I just wanted to check that, and it was the first question. With regards to the second question, it had to do with wholesale.
You give us a detailed impact of the decline of wholesale revenues between zone 22, zone 25 at the Capital Markets Day, and also gave us an impact on the EUR 0.4 billion. I just wanted to understand if that EUR 0.4 billion also includes the fact that in areas where you're not rolling out fiber yourself, you have to basically rent infrastructure, and therefore, that is a bit more costly. I just wanted to understand if that was included or if that was a different one.
Thank you. On your first question, the line wasn't good, but I think your question was on the price increase mechanism and the impact on our accounts. I'm not sure what you describe is exactly what we did, because actually we did a full back book price increase. Any customer who had a contract with us received a letter between December and January, February, where we informed them about a plus 1 or plus 2 EUR per offer price increase, and as you know, we have a 3 months advance notice obligation in the French law, and that's why we announced those letters. Then the price increase was fully implemented.
Obviously, we did that with more than 20 million customers, so that's why we couldn't do that one shot. It was done, and the full impact started. We had the first impact starting in March, but the full impact only started really in May. That's why we said that we will have the full benefit in H2, while in H1, we only had fully 2 months of price increase on the total customer base. When it comes to the wholesale dynamics, we look at the EBITDA and the impact of wholesale decrease on EBITDA only for the business we do for the wholesale. The impact of EBITDA for our retail services when we rent fiber, we apply it to our retail services EBITDA.
The EUR 400 million decrease linked to the wholesale decrease of the copper to fiber migration in France, as well as many other low margin or any other wholesale activities, does not include the impact of renting fiber on the non-Orange networks.
This is mature, fully embedded into our 2022-2025 EBITDA guidance. We have transformation at work. As Jean-François said, we have lots of departures. All this is showing the fact that we have, as we said during the Capital Markets Day, 2022 to 2025, a slight decrease in CAGR for EBITDA for France. H1 is perfectly in line with our plans. This is exactly the point we were expecting, with the recovery that we commented with the fact that H2 rate of decrease will be more than halved. As there are two elements that will ease the way into 2024 and 2025.
One is the fact that the wholesale revenues side is front-loaded as part of the EUR 400 million EBITDA hit, as we said. This pressure will be lower in 2024 and 2025. Second, there is the energy component where we have a peak in energy cost in 2023, and as well, this will ease into 2024 and 2025, and together with the ongoing deep transformation of Orange France with our cook, Jean-François. Thank you very much.
Okay, thank you very much. Our next question comes from Mr. Nicolas Cote-Colisson from HSBC. Please go ahead, sir.
Yeah, thank you. Hi, everyone. I've got a last question on Africa. Can you update on Orange Money? It looks like the revenue is growing fast. Would you think that the competition is now more rational? What are the next ways to grow revenue beyond the penetration of services? Thank you.
Thank you. Very happy to ask, Jérôme Hénique to answer that question.
Good morning. Thank you for your question. Indeed, our Orange Money revenues have been increasing, 2-digit, over 25% growth during this half. This is the result of a transformation plan we conducted with lower pricing, which has a strong impact on the elasticity of the volumes. With an ARPU, which is now stable or increasing, depending on the countries, because we have as well a much better mix of the revenues of Orange Money. It doesn't rely only on cash out, which was the case before we conducted this transformation plan of Orange Money. It's now much more balanced in between the cash in, cash out transfers, international transfers, and payments.
That gives us a very strong positive perspective for the months and years to come, because the more we will rely on the diversity of services, the more we will be able to increase our revenues on top of very strong dynamics of customer base.
Okay, apologies for that. Nicholas, you are unmuted. If you were saying anything or any follow-up, please go ahead now.
Oh, no, that's all fine. Thank you.
Thank you very much.
Thank you.
Our next question comes from Roshan Ranjit from Deutsche Bank. Please go ahead, sir.
Great. Thank you, everyone. Morning. Two questions, please. Firstly, just a quick follow-up on France. You've been talking about the price increase, which has driven that nice acceleration of growth. Your previous guidance, ex PSTN, 2%-4%. Given that we've got an extra month of the price increase in Q3, could we be right at the top end of that range? What about the upselling within the tiers? You've previously given a number. I think it was around 20% of your new ads were taking the Livebox 6, which had that 5 euro premium. If you could give us an update there, please. Secondly, just on CapEx, a nice decrease again this quarter.
Any inflationary pressures that you're seeing on your CapEx spend, and your guidance for a sharp decrease, are we talking about basically 6% decrease? We're tracking in line with what you delivered in H1. Thank you.
Thank you. On the 2%-4% guidance for the whole 2023-2025 period for retail services, we confirm it. As you I mean, the price increase, the ARPU increase will obviously be part of this, of I mean, will be a key lever to achieve it. At this stage, we don't change it, and we don't provide obviously more detailed guidance by year or by quarter.
On the CapEx, indeed, we continue to drive, I mean, to benefit from the massive investment we've done in the past on fiber, and that's now allowing us to reduce the overall CapEx spend. We monitor closely the inflationary pressure that we have, but, you know, thanks to BuyIn our JV for procurement with Deutsche Telekom, we are very confident on our ability to contain the impact of inflation on our CapEx. On the Livebox's performance, Jean-François?
This is going very well. I mean, this is obviously the one we are providing in the high end of our offers on Orange, and going very well. What I can share is that it's representing more than 10% of our acquisitions, so a very strong commercial success.
Great. Thank you very much.
Okay, thank you very much. Our next question comes from Carl Murdock-Smith from Berenberg. Please go ahead, sir.
Hi, thank you very much. It's great to see your progress on turning net zero carbon and your focus there. Kind of given the focus in recent weeks on the other side of the Atlantic, I just thought I'd ask for an update in terms of the amount of lead in your, in your network, and how you control, how you remove that and that kind of progress. Then secondly, on enterprise, well, enterprise and B2B more generally. Enterprise revenue beat expectations, and within the European division, B2B growing 8%, that's all very impressive. I was just wondering what the outlook was like in that segment, and what are the key drivers of that kind of acceleration?
How much is that European growth, related potentially to the European recovery funds? Thank you.
Thank you. Thank you for your comment on our net zero carbon trajectory. Regarding environment and the lead pollution discussion that popped up recently, actually, this is not something new. In the case of all our, I would say infrastructure in Europe, this is something that we've worked in the past, but today, there is only a very, very, very small. Actually, if we look at France, we estimate 0.07% of our copper network in France, which still contains lead. There is no lead in fiber or cable networks. These copper cables are usually in concrete structures that are waterproof, so no risk.
As you know, lead was banned in Europe much earlier than it was in other geographies. This is not an issue, and obviously, this is something that we follow very carefully. In Poland as well, we are well below, I mean, 1% of all our copper cables that would have lead. It's really something that we follow carefully. As you know, we have this copper decommissioning program. We also implement all that's required to protect our employees and our subcontractors when it comes to, I would say, polluting or dangerous material environment.
On the B2B performance, we are very happy with our B2B growth in Europe, as we reported. It's driven by the focus that we have. The key drivers, it's a mix of drivers, but in some countries, we actually benefit from the European funds. I have in mind Spain, for instance, in Poland as well. It's not the only driver. We are also actively focused with all our teams in all geographies, to make sure that we tap, especially in the with the small and medium enterprise when we operate in those countries.
That's fantastic. Thank you very much. Thank you very much.
Thank you very much. That was our last question. I will now pass the line back to the management team for the concluding remarks.
Thank you. Before ending this call, I would like to give you a few words. Firstly, we achieved a strong performance in this first half of 2023, which demonstrates the positive effects of our disciplined execution, including the right pricing policy in executing our cost savings plan and obviously in our investment decisions. Secondly, we will see H2 EBITDA in France improvement, thanks to full effects of price increase in the second half of the year, making us totally confident in an improved second half EBITDA performance and full achievement of our guidance. Finally, the most important, we remain fully focused on the execution of our Lead the Future strategic plan, key to sustainable growth across all our main financial KPIs, which include a strong organic cash flow, growth trajectory, and a clear improvement in value creation.
I now wish you all nice holidays and look forward to meeting you again in September.
Thank you very much. This concludes today's conference call. We'll now be closing all the lines. Thank you and goodbye.