ORANGE : 2016 full-year results

• Commercial momentum remained strong in the 4th quarter, led by fibre (393,000 net additions) and retail convergent offers (239,000 net additions). There were 3.3 million fibre customers at 31 December 2016 (+75% year on year) and retail convergent offers counted 9.2 million customers (+10% year on year). The growth of mobile contracts continued to be strong, with 620,000 net sales for the quarter (+5.3% year on year). 4G in Europe was up 58% year on year with 28.1 million customers at 31 December 2016. Orange Money had 28.9 million customers at that date.
• Revenues were 40.918 billion euros in 2016, a 0.6% increase after falling 0.1% in 2015 and 2.5% in 2014 (on a comparable basis). In the 4th quarter of 2016, revenues rose 1.0% after rising 0.8% in the 3rd quarter and 0.3% in the 1st half. The improving trend continued, led by Europe (particularly Spain), although mobile services were still impacted by decreased revenues from national roaming in France and roaming price reductions in Europe.
• The Group's adjusted EBITDA was 12.682 billion euros in 2016, an increase of 1.3% (+158 million euros) on a comparable basis, in line with the objective of a higher adjusted EBITDA in 2016 than in 2015. Adjusted EBITDA from telecoms activities (12.694 billion euros) rose 1.3% (+164 million euros). The adjusted EBITDA margin rate from telecoms activities was 31.0%, an improvement of 0.2 percentage points in relation to 2015.
• Group operating income was 4.077 billion euros in 2016, a decrease of 665 million euros compared with 2015. Operating income from telecoms activities was 3.992 billion euros, a decrease of 750 million euros. Orange Bank had operating income of 85 million euros in 2016.
• Net income was 3.263 billion euros in 2016, an increase of 10.3% compared to 2015 (+305 million euros). Net income attributable to equity owners of the Group was 2.935 billion euros in 2016, versus 2.652 billion euros in 2015.
• The Group's CAPEX (6.971 billion euros in 2016) increased 3.0% on a comparable basis. CAPEX related to telecoms activities (6.956 billion euros) rose 2.8% and was equivalent to 17% of revenues from telecoms activities (+0.4 percentage points compared with 2015). Investments in fibre were up while 4G and 4G+ deployment continued, in line with the goals of the Essentiels2020 strategic plan.
• Net debt was 24.444 billion euros at 31 December 2016, a reduction of 2.108 billion euros year on year, related in particular to the sale of EE in January 2016. The ratio of net financial debt to adjusted EBITDA from telecoms activities was 1.93x at 31 December 2016 versus 2.01x one year earlier, in line with the objective of a ratio of about 2x in the medium term.

Orange has set an objective for 2017 of adjusted EBITDA that is higher than the level achieved in 2016 on a comparable basis, lifted by the strong commercial momentum supported by CAPEX, and continuing efforts to transform the cost structure.
The Group maintains the objective of a ratio of net debt to adjusted EBITDA from telecoms activities of about 2x in the medium term to preserve Orange's financial strength and investment capacity. Within this context, the Group is maintaining a policy of selective, value-creating acquisitions by concentrating on markets in which it is already present.
The Group confirms the payment of a dividend of 0.60 euros per share for 2016. An interim dividend for 2016 of 0.20 euros per share was paid on 7 December 2016 and the balance of 0.40 euros per share will be paid on the 14 June.
The Board of Directors will propose to the Annual General Meeting of Shareholders in 2018 a dividend of 0.65 euros per share for 2017, and plans to pay an interim dividend for 2017 of 0.25 euros per share in December. This dividend increase of 5 euro cents reflects the improvement in the Group's profitability, begun in 2015 and clearly confirmed by the results of 2016. It is also an expression of the Group's confidence in the continuation of this momentum and the constant search for the right balance between funding investments necessary for the development of the Group's operations, sharing value with employees, and providing returns to shareholders.
Commenting on the 2016 results, Stéphane Richard, Chairman and CEO of Orange Group, said:'In 2016, we are reaping the benefits of our strategy of differentiation through investment and customer experience with the return to growth in our revenues and EBITDA. This is due to the efforts of our employees who I would in particular like to thank.
Our investments are driving our commercial performance, led by very high speed fixed and mobile broadband and despite a level of competition that is intense and unprecedented, particularly in France. Our fibre customer base grew 75% with 3.3 million customers by the end of 2016 and our 4G customer base in Europe rose 58% with 28 million customers.
But they also enable us to improve the experience we offer our customers with, in particular, the opening of 136 new sites using our 'Smart Store' concept.
Lastly, the acquisitions made over the year have added to our geographical footprint in Africa and strengthened our Enterprise activities in IT and specialist services, particularly in cyber security.
The confirmation of an improving trend allows us to consider a redistribution of the value created with, for our shareholders, a proposed increase in the dividend for 2017, a year that will be key for the Group with the launch of Orange Bank during the first half.'

The entire press release is available on the enclosed PDF file

Excluding machine-to-machine.
The Group's annual financial statements for 2016 include the activity of Orange Bank from the last three months of the year. Orange Bank's net banking income is recognised in the Group's other operating income. Adjusted EBITDA, operating income and CAPEX are shown separately for the telecoms activities and Orange Bank in the tables on pages 4 and 5.
Net financial debt as defined and used by Orange does not include the activities of Orange Bank, to which this concept does not apply.
Subject to the approval of the Annual General Meeting of Shareholders.
The ex-dividend date is 12 June 2017 and the record date 13 June 2017.