Hello, and welcome to Iliad half year 2022 results. My name is Suzanne, and I will be your coordinator for today's event. Please note, this call is being recorded, and for the duration of the call, your lines will be on listen-only. However, you'll have the opportunity to ask questions. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero and you will be connected to an operator. I will now hand over to your host, Thomas Reynaud, Iliad Group CEO, and Nicolas Jaeger, Deputy CEO, to begin today's conference. Thank you. Good afternoon, and good morning for our U.S. listener. I'm Thomas Reynaud. I'm in Paris, in our head office with Nicolas Jaeger, CFO, Nicolas Didion, Head of Investor Relations, and we have the chance to have in Milano, Benedetto Levi, CEO of Iliad Italia, and in Warsaw, Jean-Marc Harion, CEO of Play. I hope you had a great summer. I can tell you that, for the Iliad teams, the heat was on during this summer. Over the past few weeks, our teams have been fully mobilized, in order to repair our networks in record time after the fires and the violent storms and also the flooding in Poland. When I think about this past summer, I'm even more convinced of the importance for Iliad to accelerate its commitment to fight climate change. This morning, we announced good results, and we can be proud of those results as they prove that we were able to build, from scratch and step by step, a unique growth model in the European telecom industry. We have the best revenue growth rate of the top 15 European telcos, with an organic growth of 6.6% in Q2. At the same time, we were number one in terms of net adds in each of our three main markets, Poland, France, and Italy. We also managed to increase our profitability with EBITDA up 10% in a tough economic environment. Another highlight of this quarter, the fact that we are now a convergent player offering fixed and mobile in all our three markets with the acquisition of UPC Polska in Poland and with the launch of our fiber product in Italy. I do believe also that these results call for humility because they are above all the outcome of many years of investing in our networks and in our innovation strategy. We know from experience that nothing should be taken for granted, and that we should never rest on our laurels in a very competitive telecom market. One of the specificities of our group is that we reinvest an average of 25% of our revenue in our networks so that we can rise to the challenge of fiber and 5G. As you can see on slide seven, there is a strong acceleration of our network rollout in Italy, in France, and in Poland. During the first half of the year, we also continued to prepare for the future by making a major decision at the beginning, and Nicolas will come back on it. We decided to strengthen our financial structure by raising EUR 5 billion in midterm financing. At the same time, we sold over EUR 1 billion of minority stakes in some infrastructure companies that we have in France and in Poland. We were also very busy on the M&A front. We closed our EUR 1.5 billion acquisition of UPC Polska in Poland, and we set up a strategic partnership with InfraVia, the infrastructure fund, in order to create a FiberCo that will cover half of Poland with fiber. This FiberCo will be live by the end of the year, and we will start rolling out fiber over six million homes in the coming weeks. Strategic decision also in terms of network initiatives, where we sign a very important RAN sharing agreement with Wind Tre in Italy in the rural zone. We get the approval by the Italian authorities, and we will very soon get also the approval of the EC. We continue to prioritize innovation by reinforcing our expertise. We made the acquisition of Redge, which is a leader in streaming technologies and in OTT platform in Central Europe with 150 developers, mainly located in Poland. A lot of expertise in the IPTV software, so it makes a lot of sense for us and also for our networks. We also make a commercial agreement with Certideal, with the leader of smartphone refurbishing in France. If we have a quick look at a few facts and figures in each geography. In France, we're getting stronger with market share gains. We are number one in fixed and number one in mobile, and we have the best top line momentum over the past five years. Our networks are delivering a very improving performance. According to the nPerf survey, we are number one for broadband services and the leading alternative operator for 4G bandwidth. In Poland, the first quarter was marked by the outbreak of the war in Ukraine and the arrival of mass numbers of refugees in Poland. I can tell you that the reaction of the Play team of our Polish colleagues has been totally amazing. At the same time, we decided to distribute free of charge SIM cards to the Ukrainian refugees. More than 500,000 SIM cards have been distributed. We also had in Poland a sharp increase in our mobile and broadband subscribers. The priority going forward after the acquisition of UPC Polska is to create the first synergies. We already started. We released our first convergent offerings in June. In Italy, finally, we continue to build a long-term positions. We're still in a hyper-competitive market with very intense win-back activity from our three main competitors, and at the same time, very, very aggressive offers being launched by MVNOs, especially PosteMobile. Having said that, we were number one for mobile net adds for the seventeenth consecutive quarter with 250,000 new subscribers. I think that there is only one person that has done better than us. This is Roger Federer being with number one for 18 quarters in a row. One of the highlight of the quarter in Italy was, of course, the launch of our broadband activities. In just five months of operation and addressing only one quarter of the Italian population, we managed to get 68,000 broadband subscribers, which is a good start, and I do hope that the trend will accelerate over the next quarter. As you can see, Iliad has a unique growth profile. We are in a very challenging environment in terms of supply cost, in terms of electricity cost. I get a conviction that we will adapt to that new environment and that we will keep on growing the business. Nicolas. Thank you, Thomas. Good afternoon, everyone, and good morning to the US. Let's go to slide 13. Despite the volatile market environment, the group continued its fast growth, started in 2021, and in the same time increasing profitability and reinforcing the financial structure. Like for like, revenue growth was high again, coming in above 6%, almost 7% in Q2 2022. The growth is solid based on strong momentum of net adds. We added more than 600,000 new customer at the group level during the second quarter. Also the effective sales management, which is shifting the weight of the subscriber mix towards the high value plans. If we go to slide 14, a deeper analysis of the group revenue and profitability. Consolidated revenue for the first time topped the EUR 4 billion mark. It's up by almost 8%, a bit more than 8%. It's a mix of the acquisition of UPC that was done on the first of April, and that contribute to EUR 100 million for the semester. The second, the most important part, a robust like-for-like growth on all geographies. France, for the beginning, above EUR 2.7 billion, a very strong growth, almost 7% in the second quarter, and driven by a mobile service revenue and fixed service revenue, but also a strong momentum on B2B. Italy, double-digit growth again. 15% growth over the semester and a contribution of over EUR 440 million for the semester. The growth is mainly linked or almost mostly linked to the strong momentums on the net add. If we shift now to Poland. Poland contribution is a bit below EUR 900 million. With, of course, the contribution of UPC that we detailed before, and a good momentum in terms of service revenue, which has been hampered as in Q1 by NGR and FX. On the profitability on the right part of the slide, we almost hit the EUR 1.6 billion mark. It's almost 13% growth year-over-year, with a very good momentum on the French activity. A full acceleration of the EBITDA and the profitability of Italy that almost reached EUR 90 million compared to EUR 6 million last year. In Q2 2022, the EBITDA margin of Italy is above 20%. We transform the commercial success into a profitable success, and now we have to keep growing that activity in order to make it fully profitable on a free cash flow basis. Poland, we had a contribution of almost EUR 400 million, and that integrates, of course, the positive effect of UPC for the semester. If we move now to investment and free cash flow, we almost invested 25% of our revenues, EUR 1 billion. Strong investment in Poland that take into account the consolidation of UPC, of course, plus the acceleration of the rollout of our mobile network. Italy, the momentum has not slowed down. We are still at a high level of investment with EUR 200 million that take into account the first CapEx topics. In France, it's slowed down, that is linked to less effort on the 5G compared to last year, where with a stronger grade of the 700 MHz for 5G and also some positive impact of IFT connectivity that were sold. How does it turn in terms of operational free cash flow? Very positively. It's an increase by almost EUR 200 million. We are above EUR 550 million of operating free cash flow for the group with two big contributor. One is Poland, and that is a bit below compared to last year. I remind you that last year we had a positive one-off with the BTS of 500 sites sold to Cellnex. We almost absorbed the full part of that one-off with the growth and the integration of UPC. Strong increase of France with the two drivers of pushing lower CapEx and higher profitability and the drive of Italy reducing significantly to EUR 110 million for the semester. If we now move at the free cash flow of the group, so we have the detailed analysis of the first part, which is the group operating free cash flow. So after that, we have the working cap. That is a mix of BTS to be sold, impact of the Free Flex offer that is working well, but that requires a bit of investment. And that are actually the two main part, a bit of tax that are due at the end of the year. Financial interest increasing slightly in line with the total debt. EUR 400 million of tax. That's roughly EUR 200 million of regular tax and EUR 200 million of one-off tax from the proceeds that we had of our minority stakes for EUR 1.1 billion that you can see on the right of the slide. The other one-off element that you can see in the free cash flow is the almost EUR 1.5 acquisition of UPC in Poland. The rest is the regular spectrum payments and the ordinary dividend. I remind you that the big payment for the spectrum in Italy will be in H2 in September. What is the capital structure? The group has slightly increased its leverage, as expected with the acquisition of UPC to 3.1 at Iliad S.A. level, which is solid and clearly showing that the strong increase of profitability enable us to manage well the leverage. On the right-hand side, very important part of this slide show you the maturity profile of Iliad debt. It's well-balanced. It's a mix of corporate bonds, bank lines, short term, and other type of financing. The maturity is well spread. On the left part of the diagram, you can see a big bar of EUR 5.2 billion. That corresponds to a bit of liquidity cash that we had in the balance sheet. More importantly, almost EUR 5 billion of liquidity that has been raised end of July in order to secure the full amortization of the next 24 months of debt, plus all our investment need. Clearly, the group has a very secure approach when it comes to maturity and liquidity. Seeing the volatility on the of the market, we have chosen to be over-funded, and we rely on a very strong pool of banks that allow us to have that free type financing of EUR 5 billion. The cost of debt is still below 2%, but will mechanically increase over time in light of the rate increase and the refinancing coming years after years. If we go now to the structure above of Iliad Holding S.A.S., that is the structure that carries the acquisition debt following the takeover. The structure is delivering as expected from 4.6 to 4.2, full benefit of the proceeds coming from the sales of the infrastructure in Poland, allowing delivery of EUR 1.2 billion at the holding level. You see on that slide our ratings. Clearly our ratings have fully been reconfirmed by all the rating agencies at all the different levels, which means Iliad S.A. and Iliad Holding S.A.S. As a conclusion, following 2021, the first half of 2022 was another successful period. We've continued robust growth in all our three geographies, but also showing the positive innovation and investment policy that we had over the years. Higher operating free cash flow, solid financial structure with a high level of liquidity thanks to the new financing arrangements, topped up during summer. Our robust first half results confirm the success of the group's urban business development, underpinned by a solid and profitable asset base. Our strong earnings growth, high liquidity levels will enable us to comfortably pursue our growth plans while, and this is, I think it's a very important statement from us, maintaining our financial discipline and keeping our pledge to bring the leverage ratio at Iliad Group below four times. I open the Q&A session. Feel free to ask your question. Thank you. As a reminder, if you'd like to ask a question on today's call, please press star one on your telephone keypad. To withdraw your question, please press star two. The first question comes from the line of Mathieu Robilliard from Barclays. Please go ahead. Good afternoon. Thank you for taking the questions. The first one would be on France. I wanted to know if you could give a bit more color in terms of the competitive environment. How has it evolved during the second quarter, and what do you see in beginning of September? Also if you could give a bit more color in terms of your mobile output trends, which were very strong in Q2. I wanted to understand if there was anything particular that explains that. The second question was on Italy. Thank you for sharing the broadband subscribers numbers. I know that Virgin has announced, I think, that they're also launching a broadband service there. I wanted to understand if you were seeing a big reaction from the existing players in terms of pricing to try to respond to your offer. Then the last question was on INWIT, and really, if you were making any progress in terms of having access to their infrastructure since the last time you presented your results. Thank you. Thank you for those questions. Regarding the trend in France, the French market is still very competitive, with very aggressive offers in terms of pricing, especially with the targeting new customers, with a big promotion for the first year. In that context, thanks to our very strong footprint on fiber, we can make a difference. We have already switched more than 60% of our subscriber base from copper to fiber. To my best knowledge, this is the highest penetration rate among the four operators. It's a natural edge in terms of pressure on pricing. Regarding our ARPU mobile trends, it has nothing to do with international roaming. It's really the strong underlying trend of getting more customers at EUR 19.99 and a switch of some of our existing customers from the EUR 2 to the EUR 20 package. At the same time, keep in mind that we launched Free Flex one year ago, and there was a big difference before and after Free Flex. Free Flex makes clearly a big difference and explains a big part of the good performance, good commercial performance of the last 12 months. In Italy, Benedetto? Yeah, sure. Hi, everyone. Concerning the launch of Virgin in Italy, no, to be honest, we haven't seen any effect on the market so far. Concerning, unfortunately, there are no real news since last time, so the procedure of appeal against the remedies is still ongoing. I would like to stress once again just that, of course, our willingness is not to have a conflict, but just to do business with INWIT. Unfortunately, TIM and Vodafone are still preventing INWIT from doing so, from doing business with us in the era of the remedies. I say once again that we have an interest, an immediate interest on more than 1,500 sites, but the access to the site is still blocked. On top of that, INWIT also refuses our request for 5G upgrades on the sites where we are already installed. Now we hope that the sale of TIM shares to [audio distortion] will change the situation. For the moment it's not the case, we haven't seen any real difference. Of course, also for us it's a big, let's say, deterrent to this current situation to look for further opportunities with INWIT. Of course, we are looking at the other TowerCo sites or to build our own sites instead of looking for INWIT ones. That's the situation, which basically hasn't really changed. Great. Thank you very much. The next question comes from the line of Sam McHugh from BNP Paribas Exane. Please go ahead. Yeah, good afternoon, guys. Nice to hear from you. A few questions. In Italy, you stated you hope to see broadband growth accelerate. I presume having FiberCop coverage is pretty key to that. I wonder if you give us an update on when you would expect to add FiberCop coverage in Italy. The second question, in France, you used to give us some B2B disclosure. I don't know if you would give a sense of what B2B revenues and EBITDA are doing in France at the moment. The last one is just, so look at the free cash flow growth or the profile of the business. I guess excluding the one-off tax, you were pretty flat year-over-year, or sorry, flat in terms of absolute free cash flow. As we look out for this year in full and next year, you know, what is the outlook for equity free cash flow looking like on a 12-18 month view? Should we expect it to start heading into more positive territory? Thanks very much. Thank you for the question. Regarding Italy, I confirm that, as of today, we address only 25% of the Italian homes with Open Fiber. The name of the game is to get interconnected with FiberCop in order to get a larger footprint. We're working on that topic. We have a commercial agreement, and then we have to make sure that commercial agreement goes live. Nicolas, regarding our B2B disclosure and the cash flow. B2B disclosure, we don't detail anymore the B2B. We have reshaped our group silos. We have three. It's geographical split. Given the size now of Italy on one side and Poland on the other side, it was totally rational to have a unique silo of B2B France. In terms of where is the B2B going? It's going as expected. It's a strong double-digit growth. Clearly, you can go above 20% growth for that activity, and it's totally aligned with our willingness to achieve in the next three years, around EUR 400 million-EUR 500 million on that activity. In terms of free cash flow, the operational free cash flow is growing as expected, and it will keep growing, driven by the strength of Poland on one side, with integration and the synergies on UPC. The strength of France on the other side. Italy, the drag will go down more and more with the size of the business growing. There can be a bit of volatility, depending of course on the price of energy, but that will not change the trend. In terms of the move from operating free cash flow to equity free cash flow, no specific expectation on tax, fully expected with each country, regular tax and no taxes in Italy. After all the M&A activity is something that cannot be planned years in advance. Is there anything specific holding up the FiberCop launch in Italy? It just seems like it's dragged on a long time. I don't know if there's any specific difficulties actually ramping up and launching on it. Benedetto? Yeah. No specific difference. We are working on it. It's of course a big, let's say, effort from all the teams to launch on a new footprint. We are working on it, but everything is on track and we are implementing it right now. Okay. Super. Cheers, guys. The next question comes from Marc Luet from Citi. Please go ahead. Hi there, guys. Just a few clarification points around liquidity. You basically said that the EUR 5 billion plus that you have will be used to take out some of these near-term maturities. Do you guys have a rough liquidity balance that you'd be looking to kind of maintain or keep over the foreseeable future? Is the first question. Second is on the working capital swings. I just missed what the drivers were. Do you expect that to reverse or change in the second half of the year? Is the second question. Third is just on Italian, just some headlines around some involvement with a peer, Telecom Italia. Just wondering if you had any updates on that as well. Thank you. In terms of liquidity, clearly, we have changed totally our position given the volatility and the difficulty sometimes of the market. We decided to have a very secured approach. That can be a bit costly. There is a bit of cost of having some liquidity on the balance sheet. That is totally reflecting our very secured approach. What we wanted is to benefit from the strong perception and the strong rating and the good financing condition that we have on the bank lines. That's part of the term loan and the refinancing of the RCF. We also secured a specific line, mid-term, that is there in order to absorb the bond maturity if the market is not fully open or not at a condition that we think are worth issuing bonds. It's a totally secured approach in order to have a fully covered business plan, both in terms of financial amortization and also in terms of CapEx for the group. Okay. To clarify, you don't necessarily intend to issue more senior secured or unsecured debt? No, it's not what I said. What I said is that we will, as each year, we will monitor the market. If we see that there is a good opportunity, we will finance ourselves on the market. If not, we have already secured all the liquidity that is necessary. I think it's very important to be in volatile condition oversecured in terms of liquidity. Okay. In terms of working cap, it's a mix of different effects. There is something that could be recurrent, the Free Flex offer. The more successful we are on the Free Flex offer, the more weight on the working cap because people get the handset and they paid over time, over 24 months. That is something that can be pursued in H2, in light of the commercial success. There are some one-off. One is linked to the BTS program that is on the working cap, but that will mechanically with the site sold over time go down. The last point was on Italy. I'm not sure because the line was a bit jammed. If you could repeat the part on the Italian question. I was inquiring about kind of M&A potential in Italy. Are you happy with your footprint thus far? I mean, I know which bits but would there be any intention to do any other kind of acquisition or stake purchases, or are you happy with the amount? No, no, of course we're happy with our operations, and we start to have a critical size. Now we have more than nine million customers on mobile. It has always been our intention to be a convergent player, and there will be major synergies and cross-selling between our mobile and broadband activities. We do consider that we should launch B2B business, B2B activity in 2023 in Italy. Now you know the competitive landscape of Italy, which is kind of unique in Europe with five mobile players where you have on average three or four mobile players in the rest of the European countries. If there is an opportunity for consolidation, we will look at it. Thank you. The next question comes from Jakob Bluestone from Credit Suisse. Please go ahead. Hi. Thanks for taking the questions. I had a question on energy costs. Could you maybe just give us a sense of what would be the step-up in OpEx for next year at the current rates? And then just secondly, you mentioned earlier that B2B in France, it sounds like it's doing fairly well. Could you maybe just help us understand, you know, why the contrast between your performance and Orange's, which was a bit more challenged this quarter? What do you think is the sort of main difference? Thank you. Okay. I would start with B2B. Probably one of the big differences is that Orange has to defend a very strong dominant position in the B2B market where we just launched our operations. That's why we are gaining market share. I must insist that we're gaining market share not only on the SOHO segment, but also on large French corporation and international corporation. That's why we still consider that we can generate between EUR 400 million and EUR 500 million of revenues in the years to come on that B2B segment. At the same time, there is one difference with the three other players. We are positioned on the cloud business. When I say cloud business, I do not mean the real estate dimension just with the data center, but really on the software segment with our subsidiary Scaleway, where we start to have due to our unique positioning, you don't have any pure European player on the cloud business on the software part, the one that is important. You have still more than 95% of the business that is owned by the three four main U.S. players. On that segment, we also have a niche positioning with a very strong revenue performance. On energy cost, what I can tell you is that we are fully hedged in 2022. Regarding 2023, we are hedged above 75% at a higher underlying price than 2022. Most of the hedging was done during Q1 so it has nothing to do with the price that you can see on the market. For example, last Friday, I think that the price in France was at EUR 1,000 for one megawatt hour. This is not our case, fortunately. We are looking at our different options in order to increase our hedging positioning for 2024. Clearly, there will be inflation on energy costs, but under control for us. Thank you. Before moving to the next question, as a final reminder, if you'd like to ask a question, please press star one. The next question comes from the line of Laura Homsy from MFS. Please go ahead. Hi there. Thanks for taking my question. Most of them have actually been answered. Just one clarification and apologies if you mentioned that earlier. The EUR 500 million RCF drawings that were made during the quarter and I understood then repaid just after the quarter, was that repaid using the new EUR 1 billion loan facilities? Secondly, just in terms of tax payments, I appreciate that EUR 200 million was sort of some non-recurring, so to say, or regarding the asset disposal. However, what is sort of your expectation for full year cash taxes this year and maybe sort of going forward? Thank you. That's totally right. The line of the liquidity were signed in July. Clearly they will replace a part of them, the RCFs that was drawn end of June. This is why we drew the RCFs knowing that we were discussing those lines in Paris. That was to make the bridge. In terms of taxes, we are in three countries. We pay tax only on two countries. We are not profitable at net results, and we have some tax carry forward losses in Italy. The tax rate in France, the basic one is 27%, when you add up the tax for big companies, and 19% in Poland. If you exclude the one-off, we should be between EUR 300 and EUR 400 for this year. Understood. That's very helpful. Thank you. That's all I have. Next question comes from the line of Andrew Webb from JPMorgan. Please go ahead. Hi there. Thanks for taking my questions. Just a couple from me. I was just wondering if you could expand a little bit on the structure of the RAN sharing agreement in Italy. Is this going to be structured as a JV? And do you therefore expect to pay equalization costs there? Looking at the Polish infrastructure partnership signed with InfraVia. These additional 2 million homes, it sounds like this is going to be a 50/50 JV. Is this therefore going to be sort of an on-balance sheet CapEx rollout? I believe you retain a 30% stake in the Polish tower company. Is this something that you're still expecting to monetize in the near term? That's it for me. Okay. Regarding the RAN sharing agreement in Italy, Benedetto will give you more details, but yes, it's a 50-50 JV with full ownership of the 50% by Iliad Italia. Benedetto? Yeah. Basically what the project provides for is that there will be a new co to which Wind Tre will confer a part of that network, so the one in the most rural areas of Italy, around 25% of the population covered. Iliad would buy 50% of this new co, and then there will be, of course, co-governance, and it's really a 50% joint venture entity. In terms of amount, we will buy the 50% to Wind Tre, and the total amount is a bit below EUR 300 million, and it's a 4-year payment linear. On the Polish infrastructure, it's a two-layer. The first one is the existing 4 million footprint upgrade from HFC to FTTH. The second layer is the pure greenfield rollout of the fiber in the zone. There is a 50-50 JV that will own the full infrastructure, HFC and fiber, and that will carry the upgrade and the rollout. That infrastructure will be fully open on equal footing, exactly the same financial terms for everyone. Hopefully, it will have more than one tenant, and that will maximize the value of each partner. We are owner of 50% of the JV, when the deal will be closed, and InfraVia will be owner of 50% of the JV. Of course, as a co-investment entity, we will not carry the CapEx of that entity. Concerning the 30% stake, you're totally right. It's a stake that we have that has very good value on the balance sheet, and that I think we can start to monetize beginning of next year. Great. Thank you. We currently have no questions coming through. To ask a question, please press star one now. There are no further questions. I will hand back to your host to complete today's conference. All right. Thank you so much for attending our H1 results. I do hope to talk to you, like, over the next few weeks. Otherwise, we will announce our Q3 sometime in November. Thank you. Bye. Bye. Thank you for joining today's call. You may now disconnect.