Good day, welcome to iliad first quarter 2023 results presentation. Please note this call is being recorded. For the duration of the call, your lines will be in listen only. However, you will have the opportunity to ask questions, and 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'll be connected to an operator. Presenting today's call, we have Thomas Reynaud, CEO, and Nicolas Jaeger, Deputy CEO in charge of finance. I will now hand over Thomas Reynaud, CEO. Please go ahead, sir. Good afternoon, everyone, and good morning to those of you listening from the U.S. I'm here in our headquarters in Paris with Nicolas Jaeger, our group CFO, with Nicolas Didio, Head of Investor Relations. We have also our country managers, Nicolas Thomas from Paris in France, Jean-Marc Harion in Warsaw for Poland, and Benedetto Levi in Milano for Italy. I presented our 2022 results just a few weeks ago, which was an excellent year for iliad in terms of commercial momentum, revenue growth and financial discipline. I'm proud to say that the first quarter of 2023 continued the same strong trajectory, if we see a greater impact of inflation. At the end of the day, there are five important points to keep in mind. The first one, we maintain our top line growth at a quite high level of 8%. Our commercial momentum remains strong, both in terms on volume and value. We improved our financial strength with a better leverage and a strong liquidity position. More important, we are taking very strategic decision to fuel the future growth of the company. Based on our own data, iliad has maintained its position as the number one in terms of revenue growth among the top 15 European telcos. We are clearly leading the pack with 8% organic growth, way ahead of most of our competitors. Next to business highlights. We've been very active since the start of the year in terms of growth initiatives and corporate action. I will only mention three decisions, but three important decision. In France, we announced the acquisition of ITrust, one of the French leading cybersecurity specialist in France. It's super important in order to strengthen our portfolio of product in our B2B activity with hosting, cloud connectivity and now cybersecurity. Clearly, it's gonna be a real accelerator to the group in this very important segment for us now, which is B2B. It was a really smart move. At the end of March, we finally closed the FiberCop transaction in Poland. We announced that transaction 15 months ago. It was a long closing, but it was a very important one for us. Clearly, this is the creation of the biggest open access broadband network in Poland, and our ambition is to roll out fiber to 50% of the Polish homes. Finally, in Italy, we decided to launch our B2B activity. It's a first move, with the launch of our mobile B2B offer. Clearly it opened a new segment of the market in Italy. Probably Benedetto Levi, our CEO, will give you more insight over the last few weeks of a commercial activity. Just a few words in terms of corporate governance. A few months ago, we created a new committee at the board level, which is in charge of all the CSR ESG matters. I really want to insist on one topic. As a private group, you know that we took private the company in 2021. We have no obligation to have a board of director with independent board member and much less an ESG committee. We are, as we always mention from day one, since the take private of the company, we are totally committed to the best practice in terms of governance. We consider that super important. That's why out of the nine board members, four of them are independent. We now have that ESG committee with two independent board members out of three. Moving to the operational review, starting with a quick update on our sales performance. Clearly in the first quarter of 2023, we added 615,000 net new subscribers. We are gaining customers everywhere in France, Poland and in Italy. In France, our sales momentum is very strong in a market that was clearly weak. Our performance in mobile put us in the pole position, in the number one position in terms of net adds with 172,000 new net adds. Clearly, the launch of our Free Flex offer during the summer of 2021, as you can see on the left side of that chart, was a game changer for us. We had also a very good performance in terms of the broadband net adds with 42,000 new net adds. Let's move to Poland. We saw some seasonality in terms of the mobile trends in Poland. Play performance for Q1 was strong in mobile postpaid, while prepaid nearly stabilized. Keep in mind that we had a very strong performance in 2022 in terms of prepaid. It was a consequence of the war in Ukraine, with the flow of Ukrainian to Poland, where we provided free of charge services to more than one million Ukrainian. At the same time, some of them decided to take some prepaid offers with Play. Our ARPU is up by 3.2% on the pro forma, clearly it's a good sign that we managed to grow both in terms of volume and in value. Looking at the broadband perspective, it's in line with our commercial priority, which is to focus on the UPC footprint. We took the decision to stop marketing on Vectra's footprint and to concentrate our effort on the UPC footprint and on the extension of the UPC footprint. Our convergent offers that were launched last year are yet to deliver their full effect, but I'm quite optimistic about the fact that putting together UPC Polska with Play will be a game changer. Finally, moving to Italy on slide 11. For the 20th quarter in a row, we are number one, and congratulations to the iliad Italia team with almost 300,000 new net adds and also good performance in terms of broadband net adds, plus 22,000 new net adds on broadband. Keep in mind that in Italy, we only address the fiber market, the fiber footprint that is still very limited compared to France or other countries such as Germany. Nicolas, on our financials. Thank you, Thomas. Good afternoon, everyone. Let's move to slide 14. As highlighted by Thomas, the group remains the European leader in terms of organic revenue growth with 8% over Q1. Performance is very solid in the three countries. Italy posted another quarter with double- digit growth, achieving almost 13% and even 18% if we focus on mobile revenues bill to subscriber. This growth is mostly driven by subscriber gains and also to a mid-single digit ARPU improvement. France, it has been the best organic quarterly trend over the last five years, just below 8% of revenue growth, well balanced between fixed and OLS. Thank you to the good net adds momentum and also to handset sales that have been increasing with the Free Flex offer that has been launched now for the 18 months. We are also very particularly happy by the progress of Free Pro that has grown over the period with a lot strong double digit, and our B2B business is growing above 20% over the quarter. Let's jump now to Poland. Poland saw a sequential improvement of the revenue trend, almost 7%. It's the end of the MTR headwind that is fading up, and the organic growth is driven by good customer momentum, but also and more importantly, with ARPU increase with a strong more for more strategy. Let's move now to slide 15. It's the EBITDA. EBITDA grew by almost 10% on a reported basis and 4% on the organic pro forma. The main contributor is clearly Italy, followed by Poland and France. As expected, the inflation of energy price is clearly the reason why the EBITDA is growing at a slower pace than at the revenue base. We had in France, in Poland, strong inflation on the energy bill exceeding 100% and close to 60% in Italy. Part of this increase is driven by more network, more 5G, but most of it is linked to the price. We of course hedge the direct consumption in most of our countries, like the industry, but at higher level than in 2022. If we look now at the recent evolution of energy cost, we are confident that the headwinds from energy will fade progressively in 2024. Good news is that even with those inflation push, the strong top line growth has allowed us to absorb those negative impacts. If we now move on slide 16, the group CapEx increased by 14% organically, just above EUR 550 million. We tend not to focus too much on a year-on-year variation of quarterly CapEx. There can be some significant difference in terms of phasing of payments, as it is cash CapEx. If we look very carefully, Q1 2022 to next to Q1 2023. France is increasing rather sharply. One of the reason is that we are rebuilding the Freebox inventory. As you know, last year we experienced a strong growth but also some shortage on some component. To rebuild those stocks, we've increased the production in Q4 and in Q1. Bear in mind that we had a slight positive one-off in Q1 2022. On a pure comparative basis, mechanically, you don't have that in Q1 2023. Poland has a slight increase mechanically with the consolidation of UPC, the CapEx will increase progressively over the year with the rollout of the 5G network. We had to step down in Italy, due to a phasing out of some rollout, and we have not seen so far a strong CapEx kick in on the JV area. Overall, the 2023 CapEx number should be relatively below 2022 for Italy. On the operating free cash flow side, with all those movements, the number is just EUR 20 million below of the one of last year, with a very positive trend of Italy, that used to be a EUR 54 million drag last year, and that is now a positive contribution at the OCF level of EUR 5 million. Strong generation of Poland and mechanically lower contribution on that quarter from France, given the fact that there is the CapEx that we just discussed. We don't expect a CapEx in France in 2023, way different from the level of 2022. Let's move now on slide 17 with the free cash flow bridge. We already discussed the group operating free cash flow. Let's focus now on the other items. We had an inflow of EUR 47 million on the working cap. That's the positive impact of the implementation of more stringent measures regarding delayed received payments, also to a positive effect of the VAT part in Italy. Financial interest are EUR 62 million. They are up EUR 39 million year-on-year, reflecting mechanically higher leverage post the acquisition of UPC and of course, a higher interest rate. Tax cash are very low at EUR 23 million. They are lower than last year. There's some seasonal effect. Q2 should be higher. The main block is Block A on the chart of EUR 178 million. It's twofold that are within that block. The first one is the one-off payment for the first installment of the JV with WindTre. The second one is the cash-in for 50% of the sale of FiberCop in Poland. There has been no dividend in Q1. There will be dividend payment at iliad SA in Q2, and the number per share is EUR 5 per share. If we now move on to slide 18. Slide 18, you have a mechanically, a slight deleveraging of the group, as we generated EUR 300 million of cash over the quarter. The leverage at iliad SA is going down by 0.1 turn, trending to 3 x. Clearly, we are standing by our willingness to go as quickly as possible below 3 x. At the holding level, deleveraging is also going on, we are reaching 4.2 x. Clearly, we also stand by our ambition to be as quickly as possible below 4 x. Important metric also to underline, interest coverage ratio of both level, iliad SA and iliad Holding are very, very strong with almost 11 x at the SA level and above 6x at the holding level. If you move to the next slide, the average maturity of the debt is four years for an average cost just above 4%. Mechanically, it's likely increasing quarter after quarter with the refinancing of the debt of the group. The gross debt is hedged at 75%, we have 75% of the overall gross debt that is fixed rate today. The liquidity profile is very solid. We have almost EUR 5 billion of cash and undrawn facility, we can cover easily our financial bond redemption for the next two years and our strong CapEx program. This conclude my presentation, I open now the floor to the Q&A session. Thank you. If you would like to ask a question, please press star one on your telephone keypad. To withdraw your question from the queue, it's star two. Again, please press star one to ask a question over the phone. We will take the first question from Mathieu Robilliard from Barclays. Please go ahead. Good afternoon. Thank you for the presentation. I had three questions, please. The first one is on Italy. We saw last week, a deal between EQT and CK Hutchison to create an Italian mobile NetCo, which is very different from what we've seen in the past 'cause it's not about towers, it's about the active infrastructure, as you know. I was wondering if this new entity, all by EQT could be something that you use yourself, in terms of deployment of your network or access to other infrastructure. I also wanted to understand how it impacted the JV you have with WindTre, for the rural areas. The second question was about cybersecurity. You flagged that you made an acquisition on B2B, and obviously this is an area where we're seeing quite a number of telcos investing and seeing growth opportunities, and it is a growing market. I guess my question is, what are your attributes there? I mean, I understand obviously that on the one hand, you have the Google, Microsoft, the big OTPs that are very strong in some of these areas, then you have the big telco companies. What can iliad sell and how can you differentiate yourself and make profitable revenue growth would be a generic question. Then lastly, maybe on France, you mentioned that the market net adds were weak, and indeed we saw that from the regulatory data. I was wondering if that was due to a change in any of the dynamics in the market. Obviously, prices are a bit higher. Are you seeing maybe a market plateauing in terms of volume, or you think it's transitory? Thank you. Thank you, Matteo, for that question. I will start with the last one regarding the mobile market momentum. It's true, and it started last quarter, that we saw a slowdown of the growth of the market. At the same time, our performance is still quite high. We are the number one in terms of net adds, and we manage to have more or less the same level of recruitment than Q3 2022, Q4 2022. Above all, we saw a 50% increase of our net add compared to last year, Q1 2022. We are not affected by the slowdown of the growth of the market for the time being, which shows the strengthening of the quality of our network and the fact that we get a good commercial setup in terms of offer and in terms of distribution platform. On cybersecurity, but basically on B2B, we provide connectivity, hosting, cloud services, and we consider that we need to complement our lineup of offers with cybersecurity. There is a big difference with our cybersecurity offer and the one that you mentioned from Microsoft, Google. It's a sovereign cybersecurity platform that is not subject to U.S. law, which is not the case. And you know that the question of digital sovereignty is more and more important, so it makes a lot of sense. When I see the growth of our high-end segment in terms of B2B, with large corporation, and we get a growth rate of above 50%, it was really important for us to get that cybersecurity break. Clearly it makes a lot of sense. In fact, that transaction, that acquisition of ITrust follow one year of commercial cooperation with that company. It's after one year of commercial cooperation of a common pitch to large corporations that we decided to buy the company. Clearly it will fuel our B2B sales. Regarding the last topic with the move of equity on the WindTre network, at this stage, it's too early to comment. We will keep our optionality in the Italian market when it comes to get access to a different wholesaler, either passive wholesaler, INWIT, other teleco such as Cellnex. We'll see if EQT will make some passive equipment at the disposal and not only active solutions. Quite open and we need more information from them before having any kind of conclusion. Great. Thank you very much. We will now take the next question from Luigi Minerva from HSBC. Yes, good afternoon. A couple of questions on Italy, if I may. The first one is on your recent launch in the B2B segment. It's a mobile product, and it seems to be focused on the SOHO segment. I'm wondering if what are your ambitions there, and if you are interested in extending your product also to SMEs, large corporate and the public administration. Secondly, on the fixed line, broadband, strategy and performance. I'm wondering if the wholesale partnership with Open Fiber is affecting your ability to deliver on broadband. If so, how can you fix it, and improve it? Thank you. Our ambition is at least to get 12% of the B2B market, the same level that we have today on the B2C market. For more insight, Benedetto. Yeah, sure. We launched less than two weeks ago on the B2B segment. The first feedbacks are extremely positive, and I confirm what Thomas just said. Our ambition is of course, very big on the B2B as it is on the B2C. We definitely see room for expansions in terms of target, even though already our current offer actually is suitable also for SMEs, it's not really exclusively on sole. Yes, we believe the potential is high and the first feedbacks are extremely encouraging. Definitely, yes. On the second question, and also actually the partnership with Open Fiber is going well. That's not affecting our ability to connect our customers or to grow. We implemented FiberCop, their footprint as well, and we are about to also launch on the software footprint. Actually, no impact from Open Fiber. On the opposite side, we are pretty satisfied on how our things are going. Also from an operational point of view, there again, we see very positive feedback from our FTTH customers so far. Thank you. We'll now take the next question from Georgios from Citi. Please go ahead. Yes, good afternoon, thank you for taking my questions. The first one is a follow-up on Mathieu's earlier question on your response around the market being a bit softer, but you're having very solid performance despite that. I was just wondering if you could comment a bit about the rest of the year. I mean, clearly in the first quarter, some of the other operators had some clear back book moves, which you managed to drive up without having to do that. I was wondering if the strong KPIs were also a result of that, and if the market volumes remain low, whether that could have a bigger effect on you for the rest of the year. Whether you expect the NPS gap to grow and therefore, strong performance to be there regardless of volumes. I'm just curious to hear your thoughts on the development of the market in Q2 and H2 in particular. The second question is a bit more strategic. I think in the last conference call you discussed the importance of scale. Clearly there's some reports and yesterday confirmation from one of the major telcos in Europe that they are looking at strategic options for their Spanish asset. I just wanted to ask you if the past, my understanding is that you wanted relatively big sized markets to make a difference for iliad, whether Spain would be of interest to you if there was a process and an asset available. Thank you. I will take the first question. In terms of market size, especially when it comes to volume in France, you're right. What we are seeing is a market that is growing less rapidly than it used to be. There could be different driver for that. Price hike over the board from our competitors. Maybe there has been a huge catch up of penetration with the COVID period, and maybe now this is over. It's mechanically a slower market. We are quite confident with our growth for the next quarters to come. We are not seeing any big slowdown in terms of momentum on our side. Both on fixed and on wireless, we have good drivers. On fixed, we are pushing very hard the rollout fiber. We are keep leading at the penetration ratio in France. That will drive mechanically some uptake. On wireless, the quality of the network is improving quarter after quarter, and that's driving also significant momentum on our side. We made public that we will keep our pricing structure on S2 and 20 as it is, which creates mechanically some good momentum on. Sorry, we had a small technical problem. I will come back on the question of scale and potential M&A. As I mentioned, we don't have any issue in terms of scale. We're gonna generate this year more than EUR 9 billion of revenues. In the next few years, we will be above EUR 10 billion of revenues. Clearly, now being an international company and adding Poland and Italy to France clearly improve our French operations. In terms of M&A, we are always open-minded, but we're not gonna make an acquisition just for the sake of it. If we decide to move and to make a strategic move, we will do so only if it makes sense in terms of industrial rationale, in terms of capacity to turn around the asset, in terms of financial discipline. Keep in mind that last year we made an offer for the asset of Vodafone Italia, but at the same time, keeping our financial discipline. Very clear. Thank you. As a reminder, to ask a question, please press star one. We'll take the next question from Nicolas Cote-Colisson from HSBC. Hi. Thanks. Hi, everyone. On the CapEx in France, you mentioned EUR 100 million extra essentially led by box inventories. Seems quite high as it would cover a few quarters of demand. Can you elaborate a bit more on that? Do you feel you need a new box to replace the long-lived Freebox Revolution? I was just wondering if this inventory build-up is linked to a new box to come out anytime soon. Thank you. Thank you, Nicolas. Behind the variation is not only the inventory and the box stuff. As I said in Q1 2022, there has been some cut-off effect, positive cut-off effect. We had a low point in terms of CapEx. That's one element. You had this, a low base of comparison. The specific element that we've had in Q1 this year is some inventory build-up that is not linked to a new box. I will leave the question for the new box to Thomas. No, of course, when it comes to new box, we never comment. Nicolas, we have a change on that. Clearly we are always working on the next generation box. Okay. For sure. No, thanks for the answer on the inventories. We will now take the next question from Peter Jurik from Tresidor. Please go ahead. Hey, guys. Thanks for taking my questions. Quite a few of them have been answered, so I just have a couple left for Italy. The first one is in Italy broadband acquisitions. Recently you were talking about an expected pickup in trend there. You're no longer constrained on the ability to have microchips and boxes, I presume. You know, Q1 didn't see that big of a pickup versus prior quarters. If you could comment there on whether or not you still expect a speed up and a pickup. The second question is also on Italy. You know, could you comment a little bit on the market dynamic that you're seeing there? You know, I think previously it was there were quite some strong win back offers. I don't know if strong is the right word, but how has that developed, you know, and how have you managed despite that to, you know, continue to have a very strong pace of acquisitions? Have you kind of lowered prices in some manner, to counteract the win back offers or anything like that? It would be useful to hear comments on that as well. Thank you. Okay. Thanks. Clearly, the Italian market is probably the most competitive market in Europe. There is a kind of a double game by the three big players on the one side saying that, they want to increase ARPU on the other side. A lot of win back activity in, I didn't see any slowdown of the win back activity. A strong MVNO such as PosteMobile fueled by some wholesale deal at a crazy price. It's a super competitive competitive market clearly. I don't see any turnaround of the mobile market in terms of pricing. The good news is that in that context, even with below the line offers, even with a strong win back attack from our three competitors, we maintain to keep a pretty decent rhythm of net adds with almost 300,000 net adds in Q1. Benedetto, regarding the broadband momentum. Yeah. On FTTH, we are actually the leader in the, in the Italian market in terms of, net adds this quarter, as well. It's, in general a market which is, lagging behind the main other European countries really in terms of, take-up and adoption. As I said, the fundamentals are extremely good in terms of, satisfaction. We are already leader, but we definitely have a bigger ambition and a plan with the extension of the footprint and also, let's say the acceleration of our, commercial, activities on the fixed. We plan to definitely increase our base. As I said, we are already number one in that market. I'll take that to mean that presumably we'll be seeing slightly faster net adds on broadband. I'll look forward to that. Maybe a third question, if I could add. You know, you guys won the Bouygues case, and I think you're going to be getting something like EUR 300 million. Could you give us a sense of what you plan to use those EUR 300 million on? Is that just deleveraging or is it just cash on balance sheet waiting for potential acquisitions? Any plans there? No, you're right. We won a legal, a case. There's as you know, Bouygues has make an appeal on that. We'll keep the cash on the balance sheet. We are happy to have the cash on the balance sheet, and it's mechanically positive for the net debt of the group. Which you do not see on the... Yes, it's not on the Q1 numbers, huh? Yeah. Yeah. Makes sense. Okay. All right. We'll look forward to the appeal. I guess, given that they've appealed before and it's been kept, I don't expect that cash to leave, but let's see. Thank you very much. We will now take the next question from Sam McHugh from BNP Paribas. Please go ahead. Yeah. Thank you very much. Just two short follow-ups, actually. First on the Bouygues compensation, is it right that you also have a case outstanding against Orange? I don't know if you have any update on the progress of that case. Secondly, when you asked about Vodafone Spain, you know, financial capacity is pretty easy to judge, but you also mentioned about having a path to turn around the asset. You know, when you're looking at assets and, you know, you and Xavier are sitting around thinking about it, what are you looking for, as evidence that you could turn around assets versus how they're being run today? You know, what do you think about conceptually? What are the ingredients that you need to consider M&A? Thanks very much. All right. My comments were general comments. They were not comment on a specific asset or a specific country like Spain. It's important to highlight that point. No, I will not give you the playbook of our M&A strategy, but clearly, we don't want to put a flag on each country just to put a flag or to do a transaction, just to do a transaction. We will move only if it makes sense, first in terms of industrial project, if it makes sense in terms of improvement of quality of the offers for the subscribers, and obviously if we stick to our financial discipline, both in terms of leverage, with the balance sheet of iliad and in terms of value creation. Now I think that we have an entrepreneurial mindset that is different from other telecom management. We are probably more down to earth, probably less smart, but more down to earth, more pragmatic, and get a passion for telecom. You know that we're doing things in a different way than many of our European competitors. For example, it's kind of a unique, we will design some of our network equipment. We design our own Freebox. We get a different perspective in terms of distribution strategy. For example, with our Simbox, which is a SIM card dispenser that enable us to get national coverage of Italy, just in three or four months after the launch, thanks to those SIM card dispensers, or in terms of in-housing 100% of our IT. We're doing things differently, and in some cases it can make sense to apply those recipes to some to some assets. On your first question, we have also open cases and legal action on the subsidy of our competitor, but we do not comment on them. Thanks, guys. Again, as a reminder, to ask a question, please press star one on your telephone keypad. We now have a follow-up question from Mathieu Robilliard from Barclays. Please go ahead. Thank you. Just the last one from me. When we look at Italy, obviously very strong revenue growth. EBITDA is obviously now positive this quarter, at least your breakeven operating free cash flow. You're definitely on a good trajectory. At the same time, you say it's a very competitive market and doesn't seem it's going to change. My question is: How far are you from earning a decent return on capital in this country? I mean, is it two, three, five years? Is it a question of doubling revenues, or do you think you're closer than this kind of timeframe? No, I think that, we are fully in line with what we had in mind, initially, even if we paid our spectrum at a little bit more higher price than we anticipated three or four years ago. Clearly, with the EUR 1.5 billion revenue base in our operational model, we consider that we can get a decent return on capital employed. Within which timeframe, if I may ask? You see the trajectory of the company and our growth rate, so you can do the math. Thank you very much. That will conclude today's question and answer session. I will hand back over to your hosts for any closing remarks. Thank you so much for your attention, this morning for our Q1 results. We are fully available with Nicolas, Benedetto and Jean-Marc for any additional question. It's been a great quarter, and we do hope that we will keep that momentum for the next few years, a few quarters, and we will meet at the end of August. Thanks. Thank you. Thank you. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. You may now disconnect.