During the recent earnings call, Bouygues (EPA:BOUY) (EN:EN), a French industrial group, presented a robust financial update for the first nine months of 2024. The company's Deputy CEO and CFO, Pascal Grange, expressed a positive outlook for the year, citing a strong construction backlog, improved financial performance, and a reduction in net debt. Bouygues Telecom (BCBA:TECO2m)'s new B2C brand, B.iG, is set to enhance the company's market position, while the group's overall sales saw a slight increase driven by its construction and telecom sectors.
Key Takeaways
- Bouygues Construction's backlog increased to €31.8 billion, up 7% year-on-year.
- Equans, a Bouygues subsidiary, saw a COPA increase of €96 million to €1,719 million.
- Bouygues Telecom introduced a new brand, B.iG, and reported strong fixed performance.
- Group sales rose 1% to €41.5 billion, with net debt reduced to €8.5 billion.
- TF1 Group's COPA margin declined, but the company confirmed its 2024 outlook.
- The company reported a net cash flow of €2,520 million and a high liquidity level of €13.9 billion.
- Full-year 2024 results will be announced on March 6, 2025.
Company Outlook
- Bouygues anticipates a slight increase in sales and operating profit for 2024.
- Equans confirmed its guidance for the year, with a 3% sales increase to €14.1 billion.
- The completion of the La Poste Telecom acquisition is expected by the end of 2024.
Bearish Highlights
- Bouygues Immobilier's backlog declined by 18% due to difficult market conditions.
- TF1 Group's COPA margin decreased to 12.4%.
- Macroeconomic uncertainties are affecting Bouygues Immobilier's recovery visibility.
Bullish Highlights
- Bouygues Telecom's strong growth in FTTH, with 159,000 new customers in Q3.
- The company's financial structure remains robust, with net gearing reduced to 61%.
- Positive margin improvements at Equans attributed to strategic pricing and contract management.
Misses
- Working capital requirements worsened by €2 billion since December 2023.
- The impact of the Paris Olympics on roaming revenues was minimal.
Q&A Highlights
- Colas' one-off improvement in Q3 is not expected to recur in Q4.
- No significant changes in raw material costs are anticipated.
- Increased D&A expected in Q4, with a return to previous levels.
In summary, Bouygues maintains a strong financial position and is optimistic about its future growth prospects. The company is navigating through various challenges, including market conditions and energy costs, while continuing to innovate and expand its digital presence. Bouygues is set to provide a full update on its 2024 performance in March 2025.
Full transcript - None (BOUYF) Q3 2024:
Operator: Hello, and welcome to the Bouygues Nine Months 2024 Results. My name is Laura, and I will be your coordinator for today's event. Please note, this call is being recorded. [Operator Instructions] I will now hand you over to your host, Pascal Grange, Deputy CEO and CFO of the Bouygues Group to begin today's conference. Thank you.
Pascal Grange: Good morning, everyone, and thank you for joining us to discuss Bouygues nine months 2024 results. With me today is Christian Lecoq, CFO of Bouygues Telecom. Following our presentation, we will be answering your questions. Let's start with our highlights. I would start by saying that we confirm the Group outlook for 2024. Then I would point out four elements: First, the very solid backlog in the construction businesses provides visibility on activity. Second, Equans sales, COPA, margin from activities, and net cash improved year-on-year, reflecting the continued successful execution of its strategic plan. Third, Bouygues Telecom achieved a strong performance in Fixed and continued to face a competitive environment in Mobile. The operator launched a new brand named B.iG on the B2C market early October with an offer dedicated to households. And this morning, Bouygues Telecom announced the launch of the B&YOU Pure fiber offer, specifically dedicated to digital customers. Moreover, the completion of the La Poste Telecom transaction is expected before the end of the year. Christian will talk about that later on during the call. And fourth, the financial structure remains robust with a net debt of €8.5 billion at end September 2024, improving compared to end September 2023. Let's now have a look at our three key figures on Slide 5. Group sales were up 1% at €41.5 billion in the nine months 2024 compared to the nine months 2023, mainly driven by Equans and Bouygues Construction. Like-for-like and at constant exchange rate, group sales increased by 2%. In the nine months of 2024, the group COPA increased by €96 million compared to the nine months 2023 and reached €1,719 million. This increase was primarily led by Equans, where COPA improved by €97 million year-on-year and in a lesser extent by Bouygues Construction and Bouygues Telecom. Bouygues Immobilier COPA decreased by €50 million over the period in relation, in particular, with the strong decline in activity, but also the adjustment in margins at the end of the operations, including some commercial discounts made to customers. Net profit attributable to the group was €687 million, a level slightly higher compared to the nine months of 2023. Please note that this net income group share does not include, into account, the future increase in the tax rate for 2024, which would result from the new French Finance Act. Last, net debt was €8.5 billion, an improvement compared to the €10.2 billion at end September 2023. I will provide you more details about these figures later during this call. Let's begin with the backlog in the construction businesses on Page 8. The backlog at end September 2024 was at a very high level of €31.8 billion, up 7% year-on-year. This backlog provides visibility on future activity. International backlog was up 6% year-on-year, notably driven by significant projects awarded at Bouygues Construction, reflecting a good momentum in civil works. And backlog in France was up 9%, sorry, year-on-year, driven both by Bouygues Construction and Colas. Turning to Page 9. You see that the increase in the construction business' backlog was driven by Bouygues Construction. Let's go now in details. At Bouygues Construction, order intake amounted to €10.1 billion. Momentum remained good in the normal course of business, which represented around half of the total order intake during the first nine months of the year. Order intake also included several major contracts in Q3, notably the Torrens to Darlington highway contract worth more than €2 billion, but also the Ryde Hospital, both in Australia as well as a hotel in Dominican Republic and a residential building in Florida. Backlog at Bouygues Construction was up 18% year-on-year, driven by civil works up 43% year-on-year and building slightly up year-on-year. At Colas, order intake reached €9.8 billion. In Roads, order intake was slightly up year-on-year in France and was down internationally in relation notably with the completion of major projects and some delayed projects in North America and with the repositioning of activities in certain countries. In Rail, order intake was down year-on-year, but this is not representative of business activity because of an unfavorable basis of comparison and the disposal of Colas Rail Italy. Moreover, at September, the nine months order intake did not include yet the contract to renovate Line 1 of the Cairo Metro. Colas backlog was almost stable like-for-like and at constant exchange rate year-on-year due to the disposal of Colas Rail Italy, whose backlog was around €400 million. Backlog, as published, was down 4% year-on-year, with Roads down 5% year-on-year and Rail down 2% year-on-year. Last, at Bouygues Immobilier, the general market conditions remain challenging with noted French residential unit reservations showing improvement year-on-year, but this situation, obviously, does not make a trend. For its part, commercial property market is still at a standstill. As a result, Bouygues Immobilier's backlog was down 18% year-on-year. Let's now look at the construction activities sales on Slide 10. Sales were up 1% year-on-year and up also 1% like-for-like on a constant exchange rates. First, Bouygues Construction sales were up 5% year-on-year, essentially driven by international building. Second, at Colas, sales were stable year-on-year, supported by a solid performance in Rail, where sales were up 5%. Road activities were stable year-on-year with a slight growth in France and a slight decrease abroad. Last, at Bouygues Immobilier, sales were down 13% year-on-year, reflecting the difficult market conditions of both residential and commercial property markets. Let's go through COPA on Slide 11. Current operating profit from activities of the construction businesses reached €476 million, a lower level than in the first nine months of 2023, resulting from the strong decrease in Bouygues Immobilier's contribution. COPA at Bouygues Construction improved by €29 million compared to the nine months 2023 with a margin improving by 0.3 points year-on-year. Please remember that Bouygues Construction COPA was particularly strong in Q4 2023, an effect that we don't expect at the same extent for Q4 2024. At Colas level, COPA was €306 million, almost stable year-on-year with a stable margin from activities of 2.6%. As a reminder, 2023 third quarter COPA notably benefited from a significant positive one-off related to the sale of a land asset in the U.S. Let's now turn to the review of operations for Equans on Slide 13. Equans commercial activity was robust with a dynamic order intake of €14.1 billion, including notably the award in the third quarter of some major contracts such as a project of electrical and mechanical work for the health sector in Canada and the fit-out of a data center in the U.K., each worth around €140 million. The order intake margin is on the up, highlighting the ongoing positive impact of the Perform plan. Equans backlog stood at €25.8 billion, up 4% compared to end December 2023 and slightly down year-on-year. Equans pursues its selective approach to contract strategy in a supportive environment and is continuing its gradual exit from the new build activity in the U.K. Equans sales stood at €14.1 billion, a 3% increase versus end September 2023, thanks to good overall momentum in France and abroad despite the disposals completed at the end of 2023 and the impact of the gradual exit from the new build activity. Sales were also underpinned by the strong growth in specialty businesses, notably in solar, data centers, and smart factories. COPA reached €474 million with a margin from activities of 3.4%, improving by 0.6 points compared to the nine months 2023, underlining the continued successful execution of the Perform plan. To end with Equans on Slide 14, let me just add that 2024 guidance is confirmed with Equans aiming for sales figures close to yet slightly above that of 2023. Sales will factor in both the effect of growth in Equans markets and the scope effect related to the asset-based activity disposals at end 2023 and the selective approach to contract strategy. As a reminder, Equans is aiming for 2025 onwards, an acceleration in organic sales growth to align with that of market peers. In 2025, the current margin -- operating margin from activities close to 4%; and in 2027, a current operating margin from activities of 5%. The cash conversion rate before working capital requirement of between 80% and 100%. Turning to Slide 16. Let's talk briefly about TF1's results, which were released on the 30th of October. First, the TF1 group audience remained strong with its main target audiences in the nine months 2024. Second, in the nine months of 2024, total sales were up 3% year-on-year. Media sales increased by 4%, with Advertising revenue up 5%, driven by TF1+ up 40%, confirming the platform appeal to advertisers and with linear up 2% year-on-year. Q3 linear advertising revenue remained steady in July and August despite the broadcast by France Télévisions of the Olympic Games and was down in September in relation with an unfavorable basis of comparison due to the broadcast of the Rugby World Cup in Q3 2023. Newen Studios posted revenue down 3% year-on-year with JPG, which has been acquired end of July, contributing to Newen Q3 2024 sales for around €8 million. As mentioned in the previous quarters, Newen Studios will deliver flagship shows in Q4 2024, such as Marie-Antoinette and Memento Mori second seasons. COPA amounted to €198 million, close to nine months 2023 level. Q3 2024 benefited from the divestment of a brand license and a decrease in the programming costs. As such, nine months 2024 COPA margin was 12.4% and remained down versus nine months 2023 margin. Turning to Slide 17. I will end on TF1 Group by saying that 2024 outlook is confirmed despite a more challenging economic environment for the rest of the year. TF1 aims at keep growing in digital, building on the promising launch of TF1+, maintain a broadly stable current operating margin from activities, and continue to generate solid cash flow, enabling the TF1 Group to aim for a growing dividend policy over the next few years. I now turn the call to Christian Lecoq for Bouygues Telecom performance.
Christian Lecoq: Thank you, Pascal, and good morning to everyone. Let's begin Page 19 with the commercial performance in Fixed. FTTH continued to experience strong growth in volume with 159,000 new customers in Q3 for a total of 408,000 new customers joining us since the beginning of the year and for a total of 4 million FTTH customers. As you can see on the right side of the slide, we had a total of 5.1 million fixed customers at September 2024, with an increase of 82,000 customers in Q3. Performance was also strong in value with a fixed ABPU up 2.3% year-on-year at €33.2 per client and per month. FTTH performance is a result of a high penetration rate and a strong FTTH footprint. With 79% of our fixed customer base on FTTH, up from 71% one year ago and also with a national coverage of around 90% and 37.5 million FTTH premises already marketed. We expect around 40 million premises by end 2026. Regarding Mobile on Slide 20. The market environment remains competitive. At end September 2024, Bouygues Telecom reached 15.8 million mobile plan customers, excluding MtoM, thanks to its good performance of 170,000 new customers in Q3, leading to a total of 246,000 new customers since the beginning of the year. Mobile ABPU was down €0.2 year-on-year at €19.6 per client and per month. The decline in mobile ABPU was expected due to sustained competition in low-end segment and the persistent pressure on purchasing power, leading to the migration of some customers to more affordable mobile plans. Turning to Slide 21. Let me remind you that the B2C mobile market is undergoing changes in 2024 due to a slowdown in volume growth and increased competitive pressure since the second quarter, particularly on online mobile entry plans. Therefore, Bouygues Telecom launched in October its innovative marketing strategy featuring its newborn B.iG. This launch is a strategic pivot towards household exclusivity. As explained early October, B.iG proposes a new definition of households extended to those who do not live under the same roof. B.iG offer is built on three main pillars: First, B.iG savings to address customer concerns about the cost of living by offering a sustainable unique degressive pricing structure. On Mobile, B.iG provides progressive discounts for all the lines, including in the pack subscribed and already held. On Fixed, we provide a reduced and stable price. Second, B.iG solutions. Our offer includes multiple services that respond to household needs like the Giga Boost option, which allows to get 20 additional gigabytes boost on eligible packages for free and up to three times a year. Third, B.iG tranquility. We offer an exclusive support to facilitate household life with, for example, the possibility to use multibank accounts. B.iG is available in all Bouygues Telecom's distribution channels. With this bond, Bouygues Telecom aims to enhance our customer satisfaction and reduce churn for profitable growth. This new strategy is a big opportunity to catch up with household exclusivity and capture mobile packages with the households. Turning now to Slide 22. Bouygues Telecom announced this morning the launch of B&YOU Pure fiber, the first Internet-only fiber offer in the market designed for a specific segment of digital customers. With this offer, Bouygues Telecom wants to address a specific segment of digital-savvy customers and only looking for high-performance connectivity with no other additional services like a Fixed-line telephony or TV service. As of today, no existing offers respond to this customer need. Our offer consists of: first, a powerful Bbox with high-speed Internet; second, a fair and attractive prices with no commitment; and third, an offer available exclusively online from subscription to aftersales service. Let's now have a look at key figures, as you can see on Slide 23. Bouygues Telecom achieved a 5% growth in sales billed to customers year-on-year. Sales from services were up 4% compared to the nine months of 2023. Total (EPA:TTEF) sales was stable year-on-year, affected by the decrease in other sales, down 13% year-on-year, which mainly consists of handsets, accessories and build-to-suit sales. EBITDA after leases increased by €55 million compared to nine months 2023 and reached €1,506 million, thanks to the combined effect of growth in sales billed to customers and the sustained efforts on cost control. OpEx continued to increase due to strong growth in the FTTH customer base. The Q1 operating profit from activities of €603 million was €18 million higher than the nine months of 2023, reflecting the growth in EBITDA after leases mitigated by the increase in D&A over the period. Please note that in Q3, we reviewed some depreciation periods of certain assets, leading to a positive one-off effect in Q3 2024 for an amount slightly below €20 million. This effect won't recur in Q4. Last, you can notice that gross CapEx reached €1,084 million in nine months 2024, which is in line with our full year outlook. Moving to Slide 24. We are confirming our 2024 targets that are an increase in sales billed to customers, an EBITDA after lease of above €2 billion, and a gross CapEx of around €1.5 billion excluding frequencies. Turning to Slide 25. Let me add a few words on La Poste Telecom's transaction. In its press release dated 29 May 2024, Bouygues Telecom stated that it had been informed by SFR and La Poste or divergences between them concerning the terms and conditions of the transaction provided for in the exclusivity agreement signed by Bouygues Telecom with La Poste Group for the acquisition of La Poste Telecom. Bouygues Telecom was informed that these divergences have been resolved on 4 November 2024. In addition, as the necessary administrative authorizations have been obtained and SFR has waived its preemption rights, the parties have agreed to complete the transaction before the end of the year. Bouygues Telecom will adapt its guidance to factor in the acquisition of La Poste Telecom in the month following completion of the transaction at the latter. And now Pascal, I'll give you back the floor.
Pascal Grange: Thank you, Christian. I will now briefly comment on the financial statements on Slide 27, starting with the P&L. We have already discussed 9-month sales and current operating profit from activities at the beginning of this call. Let me add a few comments this morning. First, other operating income and expenses, which do not reflect operational activity were negative at €177 million in the nine months. This amount notably includes the noncurrent charges in relation with first, the Equans management incentive plan, which represented €75 million in the nine months of 2024, split between Equans and Bouygues SA. I remind you that the management incentive plan only started in the second quarter of 2023. As such, the amount recorded in the first nine months of 2024 is higher than that of the first nine months of 2023. A change in regulation in the U.K., where Bouygues Construction operates, which represented €33 million in the first nine months of 2024. Let me also remind you that some noncurrent charges were recorded at Bouygues Immobilier level for €27 million, mainly in relation with the Employment Protection Plan launched in April. Some noncurrent expenses were also recorded for lower amounts at TF1 and Bouygues Telecom. Second point, cost of net debt stood at minus €185 million compared to €231 million in nine months 2023. This improvement is mainly explained by the combined effect of the increase in cash and its remuneration given that debt is at fixed rates. Third point, the tax charge was recorded for minus €392 million. This higher tax charge versus last year is explained notably by the constraints related to international taxation, our presence in many different countries and the large range of tax rates applied in each of them. As already mentioned at the beginning of this call, this amount does not take into account the future increase in the tax rate for 2024, which would result from the new French Finance Act. And fourth point, contribution of associates decreased from €50 million to €5 million, notably due to the continued investments made by joint ventures of Bouygues Telecom and the decline of Tipco Asphalt contribution, a Colas joint venture based in Thailand. As such, net profit attributable to the group was €687 million, slightly up year-on-year. Bouygues has taken note of the 2025 French Finance bill as presented by the French government to the Council of Ministers on 10th of October. The Article 11 of the bill provides for an exceptional levy on the profit of large companies in France. Should it be voted in its current form, it will represent, according to Bouygues's best estimate, a tax charge of around €110 million for 2024 payable in 2025. And it would represent a tax charge of around €60 million for 2025 payable in 2026. Let's now turn to Slide 28 to describe the net debt evolution between end December 2023 and end December -- November 2024. As you see, the net debt increased by €2.2 billion since the end of 2023. This change includes: first, acquisition net of disposals totaling minus €214 million, including acquisitions at Colas, Bouygues Telecom and TF1, also disposals at Colas, purchase of TF1 shares and investment in joint ventures by Bouygues Telecom. Second, capital transactions and others for minus €66 million, including treasury share buyback and exercise of stock options. Third, payment of dividends for minus €813 million. And last, minus €1.1 billion from operations that I will comment in the next slide. Turning to the breakdown of operations for the nine months 2024 on Slide 29, you can observe that. First, net cash flow, including lease expenses stood at €2,520 million, an improvement of €248 million compared to nine months 2023. Second, net CapEx, including frequencies was €1,601 million, an amount very similar to nine months 2023. This led to free cash flow before working capital requirements at €919 million, improving year-on-year by €254 million. Regarding working capital requirements, you see on the chart that since December 2023, it deteriorated by €2 billion and that last year over the same period, it had deteriorated by €2.2 billion. And what you don't see on the chart is that between end September 2023 and end September 2024, working capital requirements improved by €1.1 billion. We started 2024 with a very high level and at end September, we are still at a very high level. Fourth quarter, sorry, is always a good quarter; however, we cannot expect a 2024 fourth quarter as strong as in 2023 as fourth quarter last year was very exceptional. But as you know, it is very difficult to predict working capital requirements as we do every year, we will remain proactive during the last two months of 2024 to manage the working capital. Last, please remember that the change in cash level had benefited in fourth quarter 2023, not only from the change in working capital requirements, but also from disposals that we won't have this year. I will now turn our attention to the financial structure on Slide 30. The group maintained a high level of liquidity at €13.9 billion, which comprised €2.7 billion in cash and equivalents and €11.2 billion in undrawn medium- and long-term credit facilities. As you can see from the graph on the right, the debt maturity schedule is well spread over time. And I remind you that our next bond redemption is in October 2026. Please note that we put in place at Bouygues Telecom level the necessary credit lines anticipating the future acquisition of La Poste Mobile. Moving to Slide 31. Net debt was €8.5 billion at the end of September 2024, a strong improvement compared to end September 2023. As such, net gearing was 61% compared to 74% at end September 2023. Last, I want to highlight that the group benefits from a particularly strong financial position and that our financial credit ratings remain strong. I will now conclude this presentation on Slide 33. We are confirming the group outlook for 2024. Equans will continue to improve its results in line with its strategic plan -- Perform plan and Bouygues Immobilier will continue to face a challenging market environment with low visibility on the timetable for recovery. And last, in an uncertain economic and geopolitical environment and after a year of strong growth, Bouygues is targeting sales and current operating profit from activities for 2024 that are slightly up on 2023. Thank you for your attention. Operator, please open the floor for questions.
Operator: Thank you. [Operator Instructions] We will now take our first question from Nicolas Cote-Colisson of HSBC. Your line is open. Please go ahead.
Nicolas Cote-Colisson: Thank you. Hi everyone. Three short questions, if I may. The first one is on taxes. So thanks for precising the numbers, so the €110 million and €60 million. Any offsets or cost-cutting actions you may take to limit the impact on free cash flow in 2025, 2026? My second question is about Bouygues Construction. You mentioned a normal course of business representing 47% of the order intake. It was kind of higher in H1 and Q1, too. Does it say anything about the macro environment in France? And the third and last question is on Bouygues Telecom and your pricing strategy in fiber. So I saw the new offers at B&YOU today. I'm just wondering why do you need to do that when your net adds seems on track and your ABPU is still up? I'm just wondering what makes you confident that volumes are a better strategy than value at this stage? Thank you.
Pascal Grange: I will answer the two first questions, and Christian will answer to the last one. First question about tax on mitigation actions. In fact, we are optimizing our organization anyway. So when you add a new tax a few months before the end of the year, we don't have any specific action in order to mitigate that. We will have an extra charge for that this year. That's for sure. The second question is related to the relative part of the contracts -- small contracts in the order intake of Bouygues Construction. In fact, as we have registered during the third quarter, a huge contract in Australia, it has changed the percentage, nothing else at this stage.
Christian Lecoq: Nicolas, regarding the question for Bouygues Telecom. With this offer, this B&YOU Pure fixed offer and Pure fiber, we want to analyze a new segment for us. This offer is specifically designed for digital customers as in only available on the web. And regarding the customer care and aftersales, except during the first month, it could be also only on the web and not on the -- with physical customer care. Or online - or sorry, with - you cannot call a customer care. I remind you also that with this offer, you have no TV, no phone, and so it's a very specific offer for digital customers.
Nicolas Cote-Colisson: And how large do you think this market is in France or the addressable market?
Christian Lecoq: So small, small market. Between 10 -- probably around 10%.
Nicolas Cote-Colisson: Okay. Thank you.
Christian Lecoq: Between 10 -- probably around 10%.
Nicolas Cote-Colisson: Around 10%. Okay. Thank you.
Operator: Thank you. And we will now move on to our next question from Rohit Modi of Citi. Your line is open. Please go ahead.
Rohit Modi: Hi, thank you for taking my questions. I got three. Firstly, on your guidance on COPA, you already have 6% increase in COPA in first nine months. I understand there is a bit of one-off, but you're still guiding a slight increase. So do you expect like being conservative in the 4Q? Or do you expect there could be a slowdown in the 4Q? Second, on Telecoms, on the Mobile service revenue growth, which has been negative. And apologies if you have already mentioned this in previous quarters, but just wanted to understand your base grows by 4% year-on-year. Mobile ABPU is down only 1%, but then service revenue is down 1.3%. I'm not getting the math around it. If you can just give a bit more color around it. Thirdly, on B.iG brand, you have launched it almost - it's been almost a month since you have launched it. Any color around how you're seeing the take-up, where you're taking the -- mainly where the net adds coming from, it's from your own base or it's a mix of getting from other operators as well, would be great? Thank you.
Pascal Grange: For your first question, considering the group guidance in terms of COPA. In fact, COPA is not particularly linear during the year. So especially at Bouygues Construction level or Colas level. So in fact, we expect to be at the high end of slight increase, but we will see at the end of the year. Nothing specific should induce us to see a slowdown during the last quarter.
Christian Lecoq: About your question on ABPU, I remind you that the ABPU is average billed per customer and not average revenue per customer. So it is the revenue billed to customers divided by the number of clients, and we do not disclose the revenue billed to customers for Mobile. That's why you cannot do the math. About Mobile service revenue, I remind you that it includes 3 things: First, the revenue billed to customers, mentioned before. Second, the incoming revenue coming from incoming calls and incoming SMS, and you know that this revenue is declining year after year just because there is - the prices are set by the telecom regulation - telecom regulator and the prices are going down year after year and also clients migrate from SMS and go to WhatsApp or other app. It has no impact on our EBITDA because at the same time, there is less revenue, but also less cost. The third thing that is included in the service revenues is the amortization of the handset subsidies, which is included in our service revenues. So Service revenues is not -- the trend in terms of service revenues is not exactly the trend in terms of service - revenue billed to customers, mainly because of the impact of incoming call and incoming SMS negative trend. You had another question about the B.iG results. Today, it's still too early to observe the first results. I just remind you that our main goals are more long-term goals. We want to reduce churn, and this will take time to be visible. And we want to aggregate Bouygues Telecom's customers' households and capture households from competitors. So we are happy for the moment with what we see, but we cannot, for the moment, take any conclusion with that. We need some time to see - to look at the impact on churn.
Rohit Modi: Thank you.
Operator: Thank you. [Operator Instructions] Thank you. We will now move on to our next question from Augustin Cendre of Stifel. Your line is open. Please go ahead.
Augustin Cendre: Good morning and thank you for taking my questions. I've got three, if I may. The first one is on Equans. I noticed that in Q3, you had quite a strong margin improvement. I've got 75 basis points on my numbers. I was wondering whether, of course, that is sustainable, I imagine it's not. But could you also give us some insights into what is driving this strong margin improvement this quarter? My second question is on Immobilier. I can see that your reservations are up in the first nine months and in Q3, yet you keep your cautious guidance. So in your opinion, what's necessary for you to turn more positive? Are you just waiting for the macro to improve or essentially rates to drop durably? Or do you believe that some changes are needed by the state as well? And finally, on TF1, you mentioned a brand disposal, which contributes positively to the COPA this quarter. How much did that represent in terms of -- in euro terms or if we can get some sort of estimates of how much that could contribute? Thank you.
Pascal Grange: In fact, first question, considering the improvement of margin at Equans level, in fact, we are implementing our Perform plan and we presented during the Capital Markets Day. So in each segment, we are improving pricing, purchasing non-profitable contracts, selectivity. So in each segment, we are progressing and this induced - the progression you have mentioned. What is very satisfactory for us is the fact that we can be selective and having an increase in our turnover already. And you remember that we were anticipating to stabilize during the two first years, the turnover, and we do more than that perfect because we are effectively selective, and you see that in the results. So we are on track for our guidance. We consider that we feel comfortable to have this improved month being sustainable. I don't say that we will have a constant level of improvement of this margin quarter after quarter, but the trend is very satisfactory for us. Secondly, at Bouygues Immobilier, we have seen effectively during the first part of the year an increase in reservations. But the macroeconomic is not so satisfactory. We have a lot of questions to be settled before being sure that we are at the lower point of the curve. So we will see. And you know that the P&L mechanism ends at the end of the year. So we will see what, are the different effect of the governmental policy and the macroeconomics on this particular market, knowing that at the end of the day, the level of our activity in this Immobilier business is very small compared to the size of the group. And third question about TF1, the disposal of this brand represented approximately €27 million during the last quarter.
Augustin Cendre: Thank you.
Operator: Thank you. And we will now take our next question from Mathieu Robilliard of Barclays (LON:BARC). Your line is open. Please go ahead.
Mathieu Robilliard: Good morning. Thank you for the presentation. I had a few questions. The first one was on Equans. I noticed that one of your competitors disappointed a little bit on its sales whilst you continue to grow nicely. And I was wondering if the fact that you outperformed was due to the different geographical or business mix or whether you feel you are gaining market share across the different business lines compared to some of your competitors. Then I had a few questions on telecoms. Coming back to the guidance...?
Pascal Grange: Sorry, we have some difficulties to hear you. There is some noises, which makes the question difficult to understand. Sorry, could you repeat, please? I'm sorry for that. Hello?
Operator: Pardon the interruption, Mathieu, if you can still hear us. Kindly - Mathieu has dropped. While waiting for Mathieu to re-queue, we'll move on to our next question from Stephane Beyazian of ODDO. Your line is open. Please go ahead.
Stephane Beyazian: Yes. Thank you. I was just wondering whether you could - I know it's a little early, but give a little more color on the success of B.iG and how hard you are pushing and to what extent you think that is a significant product in your customer base over the years to come and whether you think this is potentially extending a little bit the competition to the high street brand because so far, competition was very much in the low end of the mobile market. But with these savings, isn't there a risk that you're actually bringing some price reduction also to the high street bands and the box market?
Christian Lecoq: So regarding B.iG offer, we have two main targets with B.iG offer. The first one is to reduce churn, the churn of our clients by enhancing customer satisfaction, by doing then a new and attractive offer with multiline convergent homes with a unique pricing, with rebates on the mobile lines, with no more increase of the price. After the first year, the price would remain stable and unchanged for customers subscribing to our fixed offer. We are also increasing progressive discounts that apply to each line subscribed and already had. That means that if one client inside the household would like to leave, it will impact all the other clients with less important discount. And so it's a good way to -- for us to reduce churn. This is our first target. Our second target, as we have explained at the beginning of October, Bouygues Telecom is the operator in France with the lowest number of, I would say, exclusive household. That means that all the lines inside the households are in the same -- with the same operator. With Bouygues Telecom, Bouygues Telecom is the operator with the lowest number of exclusive households, less than 40%, when other operators are at higher than 50%. And so we want to attract the mobile lines of the households that are not with us today, and that will also help us to increase our momentum, especially in the mobile. So this is our two main targets. This will take time, as I said before, to see the results of this strategy to achieve this target more than a few weeks, more than a few months. And so that's why I cannot give you now any figures or any impact about this offer, even if we are quite happy with - it was a good commercial launch with no IT problem, no difficulties with our distribution channels. So everything is on track now to achieve what we want to do.
Stephane Beyazian: Did it contribute to your third quarter numbers in good numbers or...?
Christian Lecoq: No. We launched this offer at beginning of October. So as October is in the fourth quarter, it will not contribute to the third quarter figures.
Stephane Beyazian: My mistake. Thank you.
Operator: Thank you. [Operator Instructions] Thank you. We will now move on to our next question once again from Mathieu Robilliard of Barclays. Your line is open. Please go ahead.
Mathieu Robilliard: So. Thank you. Apologies. Clearly, I need to move to a Bouygues Telecom mobile contract. I'll consider it more seriously now. Hopefully, it's better now. So I had a question on Equans. I saw that one of your competitors disappointed a little bit on sales, whilst you did very well on sales still. I was wondering if that was due to a different geographical or business mix or whether you think you were gaining market share in some segments. So that's the first question. The second question was on telecoms. Earlier in the year, you guided for a slight growth for the 2026 EBITDA versus the 2023 EBITDA. Actually I just wanted to confirm you're talking about the growth in absolute terms there? This is not a slight CAGR. It's literally a slight growth between '23 and '26, low single digit, I guess. So that's two questions in one. And then again, on telecoms, did you benefit in any way from the Olympics in Paris in terms of your roaming revenues? Was it a good driver? Or was it very small? And I was also curious to understand a bit more what, are the different moving parts in the others? I realize it's handsets. But as you flagged, you had a BTS program there. And I wonder if a lot of the volatility that we've seen over the past quarters is due to a slowdown in BTS. And I was wondering how it looks like. So quite a few questions there? Thank you.
Pascal Grange: Starting with Equans. In fact, we are dynamic in all our geographies, except where we decided to withdraw. And I mentioned, in particular, our asset-based activities and our activity in the U.K. consider as new build activities. But elsewhere, we consider that all our markets are quite active. And so no specific reason to this growth. Only the fact that the transitions we are helping our customers to move from where they stand and to make efforts in for the energy transition, in particular, makes the market quite active.
Christian Lecoq: Mathieu, regarding your first question on 2026 EBITDA target, yes, we said that it would be a slight growth compared to 2023, either in a percentage or absolute volume. I don't see the difference between that. I remind you also that in 2025, we will be impacted by the energy cost. We hedged our energy position in 2020 and 2021 until the end of 2024. So for the moment, we have not been impacted by the energy rising cost, but it will be the case for us in 2025, which is probably different compared to other operators that have been impacted strongly in 2023 and 2024. And it has not been the case for us, but it will be the case in 2025. Your other question is regarding the other sales. We do not forecast the other sales. For us, it's not a KPI for us because no margin, no sales impact, no margin impact. And so that's -- there is some volatility due to the fact that it is the end at some time on some kind of -- some projects and the beginning on some others, and it's very difficult to monitor the other sales, what will be the other sales the next year? Regarding roaming, yes, we had a very small positive impact in July due to the Olympic Games. So we had more visitors coming to the Olympic Games, but at the same time, less visitors coming to visit Paris in France. And compare - if we look at the year forecast, the first semester was not very good in roaming compared to last year. It's a few million euros, but it was a bit less than 2023. And July was a bit higher, but very, very small, probably €1 million or €2 million more. So very, very small impact.
Mathieu Robilliard: Thank you. And if I can confirm for 2025 EBITDA, the energy cost headwind, I have in mind that it's around €70 million, 7-0 million impact.
Pascal Grange: €80 million. We said €80 million.
Mathieu Robilliard: Great, thank you very much.
Operator: Thank you. And we will now take our next question from Eric Ravary of CIC. Your line is open. Please go ahead.
Eric Ravary: Yes, good morning. Two questions. First one is on Equans, the 3% organic growth in Q3. Is it mainly price increases or also positive impact on volumes? And second question is on Colas. So I calculated an improvement of the COPA margin in Q3, roughly plus 60 basis points adjusted for the one-off that you had in Q3 2023. Could you give some explanations behind this significant improvement? And are you expecting the same trend for Q4? Thank you.
Pascal Grange: As far as Colas question, first, we have effectively a one-off in 2023, we didn't have during the third quarter of 2024. No, in Colas life, a lot of thing happens every quarter, so you couldn't expect the same improvement during the fourth quarter than we had during the third. A lot of questions, seasonality, weather condition, market. So no, we are not expecting - we are expecting levels, which are very homogeneous during the fourth quarter.
Eric Ravary: Okay. But on raw materials, are you noticing a decrease on oil products?
Pascal Grange: In fact, in raw materials, there are different effects. The market is good in France, so that's a good thing. But in the same time, the circular economy increased the level of reemployment. So in a nutshell, we consider that we will be stable in raw material. That is the question for Colas. As far as Equans question, let's say that probably, we can consider that the organic growth is half of the total growth in inflation is half, and in real term, the growth is half.
Eric Ravary: Okay. Thank you.
Operator: Thank you. And we will now take our next question from Nicolas Mora of Morgan Stanley (NYSE:MS). Your line is open. Please go ahead.
Nicolas Mora: Yes, good morning everyone. Just a couple from me. Actually, coming back to Colas because we had quite a challenging start to the year, especially in some areas you were starting to restructure, Africa, the U.K., North America not being great. I mean the underlying improvement in Q3 is quite impressive, but it's not actually really matched by revenues. So just wondering what Q3 gave you or in terms of profitability that you didn't have last year? Or are your cost cutting or downsizing exercise is finally yielding some results? Are you seeing some geographies being particularly strong with high margins? That would be the first one. And then on construction, same thing we had quite a pedestrian start to the year and suddenly a step-up in Q3. I mean the business has always been volatile, but usually more skewed to Q4 and the end of the year. I was just wondering whether there was anything to mention within construction, which we had to take in mind. And last point, sorry, on Colas, you've disposed of the Colas Rail business in Italy. Is there any proceeds, any capital gains we should be aware of, which might hit in Q4? That would be it? Thank you.
Pascal Grange: Starting with your last question, no proceeds we forecasted for the last quarter at Colas level in Q4. In our construction activities, you can have some move from one quarter to another, so there is no specific to induce from the improvement of the third quarter for the last quarter. And let's say that we are continually trying to improve our organization. So - but there is nothing very specific. You can say that in France, we have a quite good level of margin today due to the fact that we had an increase - you know that we were expecting an increase of activity before local elections in 2026. We have - the start has been a bit - the starting point has been a bit delayed for that increase. We see that today, and we have good results in France, for instance.
Operator: Thank you. And we will now take a follow-up question from Nicolas Cote-Colisson of HSBC. Your line is open. Please go ahead.
Nicolas Cote-Colisson: Just a short one on D&A and Bouygues. So you mentioned a change in amortization period and an impact - a positive impact of €20 million on the D&A. So what pace of D&A should we assume in Q4 and next year? Is that closer now to €330 million? A bit of guidance would be helpful? Thank you.
Christian Lecoq: Okay. And sorry, Nicolas, I do not have the figures in mind. Well, right, you have a positive impact in Q3, because we changed some amortization period. You will not have this impact in Q4, and you should expect an increase in D&A in Q4 without this impact.
Nicolas Cote-Colisson: So we should be back to what we had previously?
Christian Lecoq: Yes, probably, probably. But I remind you that the D&A gradually increased due to the fact that, for the moment, the D&A level is lower than our CapEx level. We increased our CapEx level in 2021. Our average duration period is between eight or nine years. And so it will take probably eight to nine years to reach the same level of CapEx in terms of amortization.
Nicolas Cote-Colisson: And what is the - what were the assets where you extended the lifespan?
Christian Lecoq: We changed the lifespan of some optical equipment in the fixed business.
Nicolas Cote-Colisson: Okay. Thank you.
Operator: Thank you. That was our last question. I will now hand it back to your host for closing remarks. Thank you.
Pascal Grange: Thank you for joining us today. We will be announcing full year 2024 results on 6th of March 2025. Should you have any questions, please contact our Investor Relations team. Their contact information is on the press release and on our website. Thank you very much for attending the meeting.
Operator: Thank you. This concludes today's call. Thank you for your participation. You may now disconnect.
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