Bouygues SA (OTC:BOUYF) Q3 2016 Earnings Conference Call November 16, 2016 3:00 AM ET
Karine Adam - Director of IR
Philippe Marien - Deputy CEO
Christian Lecoq - CFO of Bouygues Telecom
Giovanni Montalti - UBS
Stephane Beyazian - Raymond James
Jakob Bluestone - Credit Suisse
Frederic Boulan - Bank of America Merrill Lynch
Daniel Morris - Barclays
Josep Pujal - Kepler Cheuvreux
Nawar Cristini - JPMorgan
Dimitri Kallianiotis - Redburn
Jerry Dellis - Jefferies
Stephen Bechade - Citi
Nicolas Cote-Colisson - HSBC
Gregoire Thibault - Natixis
Eric Le Berrigaud - Bryan Garnier
Nicolas Didio - Berenberg
Ladies and gentlemen, welcome to Bouygues' Nine Months 2016 Conference Call. I'll now hand over to Karine Adam, Director of Bouygues Investor Relations. Madame, please go ahead.
Thank you. Good morning, ladies and gentlemen. I would like to remind everyone that you can find, on the Company's site at www.bouygues.com, the earnings press release; the presentation we will be commenting on during this conference call; an Excel file with historical key figures for the Group and each business; and the Company's financial statements.
Statements made on this call are forward-looking statements. Such statements reflect objectives that are based on management's current expectations or estimates, and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements.
I would like to turn the call over to Mr. Philippe Marien, deputy CEO of Bouygues.
Thank you, Karine. Good morning to all of you, and thank you for joining us. I would like to welcome everyone to our conference call to discuss Bouygues' nine-month results. With me in the room is Christian Lecoq, CFO of Bouygues Telecom, as Eric Haentjens has recently moved to Colas. Following my comments, we will be answering your questions. To begin with slide 4, we can highlight two points for the nine months. First, Bouygues Telecom's commercial and financial results are on track to achieve 2017 targets. Second, the construction businesses delivered solid commercial performance. The market in France is gradually stabilizing, and we continue to target growth in the international markets. In this context, we can confirm the full-year outlook, shared with you since February.
Turning to slide 5, we see the key figures for the nine months are in line with the first-half 2016 trend. Sales were down 3%, and almost stable like for like and at constant exchange rates down 1%, both in France and international markets. The Group's profitability continued to improve, driven mainly by Bouygues Telecom. The current operating profit for the nine months was EUR714 million, an improvement of 20% year on year, with current operating margin increasing by 0.6 points over the same period. Nine months' net profit attributable to the Group increased 3% year on year, and excluding exceptional items was up 29%.
Let us now turn to slide 6, to review the Group financial position. You can see that Bouygues has strengthened its financial position. Net debt was EUR3.9 billion at September 2016; a decrease of EUR993 million versus end September 2015, which compares to a decrease of EUR855 million between end June 2016 and end June 2015. As a reminder, in June 2016 Standard & Poor's upgraded the outlook on Bouygues' long-term credit rating from stable to positive. Please keep in mind that we have received EUR130 million from the disposal of our stake in the A41 motorway concession company in early November, and that we will pay EUR117 million for the second installment of the 700 megahertz frequencies in December 2016. With this in mind, we now expect net debt, by end 2016, to be stable compared to the end of 2015 amount of EUR2.6 billion.
I will now turn the review of operations, starting with the construction businesses. Let's begin with commercial performance in the construction businesses, on slide 9. The order book remained at a high level at EUR28.1 billion at end September 2016; down 1% year on year at constant exchange rates. This order book reflects good performance in gradual stabilization in France, as well as targeted growth in international markets. Moving to slide 10, we review the construction sector in France. We confirmed, in the first-half 2016, that we were seeing stabilization of the construction sector in France, and the third quarter continues with this trend. At end September, the order book in France is up 1% year on year.
Now let us look more specifically at each of the construction activities of the Group. First, growth continued in the residential market at Bouygues Immobilier thanks to low interest rates; the Pinel buy-to-let law; and wider access to the zero-interest loan program. Residential property reservations at Bouygues Immobilier were up 23% in the first nine months of 2016 compared to last year; in line with the first-half trend. For the full year, we should remain on that trend in a market expected to increase by 15% to 20% year on year. The good news in the residential market for 2017 is that the candidates in the French election want buy-to-let incentives to remain; thus, we are quite confident that the growth trend for 2017 should continue, but it is likely to be a slower pace since 2015 was the low point.
Second, in building ancillary works order intake at Bouygues Construction increased 12% for the nine months. Order intake at end September 2016 has yet to include two tranches of the Grand Paris that we won and highlighted in the first-half 2016 presentation: the RER Eole extension for EUR200 million, and the development of an eco-neighborhood around the future brand new station for EUR80 million. While the dynamic in the Greater Paris area is improving, thanks to Grand Paris tenders, as well as some private commercial projects, the market in the rest of France remains challenging and highly competitive.
Last, considering the road market, sales at Colas were stable in the first nine months of 2016, compared to last year. This stabilization is a good news, after two years of sharp declines. As a reminder, sales were down 14% in 2014, and 11% in 2015. Helped by new grants for local investments, voted by the French Government, for 2016 and 2017, local authorities began to invest slightly more in road management as the primary roads network has deteriorated. Colas organization is adjusting for the current levels of activity, and is well positioned for 2017 market conditions.
Let us now turn to slide 11, to look at international markets. International markets represent 58% of Colas and Bouygues Construction order book at end September 2016. The order book in the international market remains at a high level of EUR15 billion, down 3% at constant exchange rate. This slight decrease is mainly due to the timing of completion of large Bouygues Construction projects in Hong Kong. This includes tunnels, a metro line, and the Hong Kong-Zhuhai-Macau bridge. Bouygues Construction's pipeline is strong: up 28% year on year at the end of September 2016. In fact, in the next several months we expect a number of significant contracts to close in international markets, such as in Northern Europe, Asia, the Middle East, and Cuba. Regarding Colas, the order book increased by 3%, and 6% at constant exchange rates.
Let us now have a look at the key figures of the construction businesses, on slide 12. Nine-month results of the construction businesses were in line with the first-half 2016 trend. Sales were down 5%, negatively impacted by exchange rate and scope effects. First, exchange rate effect accounted for 2% in sales declines; second, Colas sold some Asian assets to its Tasco subsidiary, and its bitumen activity was discontinued in France. These scope changes had a negative sales impact of 1%. Like for like, and at constant exchange rates, sales were down only 2% related to a decrease in Colas activity in two geographic areas: first, in Central Europe, due to delays in the launch of road and motorway programs in the first half of 2016, and, second, in Canada, mainly in western provinces, due to the drop in oil revenues. Current operating profit for the construction businesses was up EUR49 million compared to nine months 2015, and current operating margin increased by 0.4 points year on year. The discontinuation of activity at the Dunkirk refinery provided a significant positive impact.
Now, let me turn over to Christian Lecoq.
Thank you, Philippe. Starting with slide 14, we maintained good performance in mobile during the third quarter. We won 227,000 new mobile customers in the third quarter of 2016, of which 129,000 were new plan customers, excluding MtoM. Since the beginning of this year, 770,000 mobile customers have joined us, and 947,000 since January 2015. As you recall, we set an objective of 1 million additional mobile customers at end 2017, versus end 2014. October commercial performance confirms that we will achieve this target, one year ahead of schedule. At the beginning of next year, we will release new targets for 2017. Please keep in mind that Bouygues Telecom's main objective remains the gradual growth of free cash flow, to which, in the medium term, the level we had obtained before the launch of Free.
It is important to note that this mobile customer growth was achieved while maintaining ARPU. Moving to slide 15, you can see the continuous progress of our 4G offers among our customer base. At end September 2016, we benefited from 6.5 million active 4G subscribers, 62% of our total customer base excluding MtoM, compared to 46% one year ago. Average data usage continues to increase, despite the lower usage of new 4G customers compared to early adopters. As you can see on the chart, in September, 4G customers used an average of 3.7 gigabytes of data. With a continuing penetration of data usage, mobile customers consumed overall an average of 2.3 gigabytes of data.
This confirms that Bouygues Telecom attracts high data users who will benefit from enhanced data usage, thanks to the quality of the 4G network. The good news is that the quality and the coverage of 4G will continue to improve. Looking at slide 16, Bouygues Telecom is strengthening its leadership in 4G for both coverage and densification. With close to 9,500 4G sites in operation at end September 2016, Bouygues Telecom leads all operators, including Orange, in number of 4G sites. We highlight this number not to show that we are the leader, but to emphasize that we continue to increase the number of sites, and to enhance our 4G coverage. We are committed to improving and think ahead, as other operators follow their own 4G network.
In order to keep its 4G competitive advantage over the long term, Bouygues Telecom is, first, strengthening its network in dense areas with a target of over 50% more sites in the next five years. At end June, we told you that one of two sites were already covered by 4G+; and, at end September, this ratio reached 65%. Second, Bouygues Telecom is rolling out its network sharing with SFR in less dense areas. Network sharing allows us to extend coverage, while optimizing both capital and operating expenditure. Overall, our original 4G coverage target was 82% at end 2016. As we already reached this target in September, we now expect to be at 85% at end 2016. We continue to target 99% 4G coverage at end 2018.
Let us now move to commercial performance in the fixed segment, as presented on slide 17. The growth plan is continuing in fixed broadband as Bouygues Telecom won 93,000 new fixed customers in the third quarter of 2016. Our total customer base amounted to more than 3 million fixed broadband users at the end of the quarter. At end September, 91,000 of our 448,000 very-high-speed customers were using FTTH; and in October, that number reached 100,000. FTTH is growing quarter after quarter, and contributed almost 25% of third-quarter net adds. With this steady commercial performance improvement, we are on track to reach our target of an additional 1 million fixed customers by 2017 versus end 2013 [ph].
Winning customers in fixed helps Bouygues Telecom expand and strengthen its positioning in households in an increasingly convergent mobile and fax and fixed environment. In Q3 2016, 70% of Bouygues Telecom fixed households had at least one mobile line contract, in addition to the fixed offer. As you may know, when a household is convergent it lowers churn. To gain new customers, Bouygues Telecom relies, first, on its own DSL network in strategic areas to access over 17.1 million households, with close to 1,800 central offices. 76% of our DSL customers are on our own network at end September 2016. Bouygues Telecom can also deliver very-high-speed access to almost 8 million additional households through either the Numericable-SFR network or the FTTH infrastructure, thanks to [indiscernible], our co-investment, as shown on the following slide.
Slide 18 highlights Bouygues Telecom's access to the FTTH network. As you can see on the chart, at end September 2016 8.5 million premises are committed as follows, 3.5 million in the very dense areas, managed through co-investment with SFR; 3 million in the medium-dense areas, through co-investment with Orange, by tranches of 5%; and 2 million premises in the public-initiative network areas, through a rental agreement with Axione. 1.7 million premises are marketed to date.
Marketing means that horizontal, vertical, and a connection to the concentration point have been installed and only the final drop to the home needs to be done. Bouygues Telecom targets to market 2 million premises by year end, and a total of 20 million premises by 2022. Turning to slide 19, good commercial performance over the last several quarters, as well as stabilization of ARPU, is leading to strong improvement in sales from network. Indeed, Bouygues Telecom's sales from network were up 5% for the nine-month period compared to last year. The chart shows that sales from network have grown consistently for five consecutive quarters. In Q3 2016, sales from network were up 6.6% compared to last year, after 5.5% in Q2 and 4.2% in Q1.
Slide 20 highlights the increase in sales for mobile network for the third consecutive quarter. In Q3 2016, mobile sales from network are up 5.9% year on year, thanks to growth in customer base and ARPU stabilization, as demonstrated in the two charts. Increase in the top line leads to improvement in EBITDA. On slide 21, EBITDA for the nine months of 2016 is EUR697 million; an increase of EUR132 million over the nine months of 2015. EBITDA margin is up 3.4 points to 23.1%. We are confident that the continuous improvement in EBITDA margin will allow us to reach our 25% EBITDA margin target by 2017. Please note that operating profit in the first nine months of 2016 includes EUR7 million of non-current charges. This charge includes EUR65 million mainly related to the roll out of the network sharing with SFR, partially offset by EUR56 million of capital gain from the sale of 230 towers to Cellnex.
Thank you, Christian. I would like to briefly comment on the financial statements. We have already looked at sales and current operating profit, shown on slide 5. Now, on slide 23, regarding operating profit, non-current charges in the first nine months of 2016 are the same items as in the first half, and they will stay consistent through year end. The EUR144 million for charges included mainly EUR69 million at TF1 related to transformation costs to LCI, as well as the impacts of both Newen Studios and the decree on French drama; EUR39 million at Colas, related to the discontinuation of activity at the SRD subsidiary in Dunkirk; and EUR7 million at Bouygues Telecom, as detailed by Christian.
Cost of net debt decreased EUR39 million in the first nine months, thanks to lower financial expenses. As a reminder, we reimbursed two bonds in October 2014, and July 2015, for a total of EUR1.8 billion. Turning to slide 24, you can see that income tax expenses increased in line with improvement in profitability for the nine months 2016, leading to an effective tax rate of 34% for the first nine months 2016. Moving to the associates and joint ventures line, the change is explained by three main factors. First, nine months 2015 included the sales of Bouygues Construction stake in the A28 motorway concession company.
Second, we faced a tough basis of comparison as Colas refinery results in Thailand, one of the main contributors, were strong in the first nine months of 2015. And, third, as announced in our press release, Alstom's net contribution was EUR36 million in the first nine months of 2016, versus zero in the same period of last year. On slide 25, you can see the net debt evolutions from end December 2015 to end September 2016. First, we received EUR847 million from disposals and acquisitions, of which EUR993 million came from Alstom's public share buyback in January 2016; and an outflow of EUR171 million was attributed to the acquisition of 70% of Newen Studios. Second, we hold a EUR118 million put option for the remaining 30% stake in Newen Studios, which is reported in the line others. Third, we paid EUR655 million in dividends. And, finally, we made the first installment payment of EUR117 million for the 700 megahertz frequencies.
The remaining variation is explained by operations. Turning to the detail of operations on slide 26, you can see that net cash flow in the first nine months of 2016 increased by EUR215 million year on year in conjunction with, first, the improvement in profitability of the Group; and, second, the change in TF1 business model, following the integration of Newen Studios. Please keep in mind that this structural change in net cash flow will not have any impact on free cash flow as CapEx will increase, accordingly. Capital expenditure rose by EUR194 million over the same period of time, for three main reasons. First, we have the change in TF1 business model, as just explained. Second, the pace of investment at Bouygues Telecom was increased, mainly due to the rollout of network sharing with SFR. For your information, the EUR1.075 billion Group net CapEx, as shown in this slide, includes the sale of 230 towers to Cellnex. And third, you may recall, the low level of investment at Colas in 2015.
Working capital requirement, the third item on the chart, increased EUR246 million at the end of September 2016, in the same period of last year, of which close to EUR200 million came from exchange rate impacts. We remind you that for the full year, we still expect a deterioration in working capital requirement of EUR350 million at Group level compared to last year. Finally, we will turn our attention to the outlook for the full year. As evidenced on slide 28, and as stated at the beginning of this call, we confirm the outlook shared with you in February. Our good performance to date strengthens our confidence in improved profitability for the Group in 2016. In the construction businesses, we expect profitability to expand, starting in 2016, thanks to stabilization in the French market, and targeted growth in international markets.
TF1 has already released its earning and outlook. But, as a reminder, in a less favorable environment TF1 has revised downward by EUR10 million the cost of programs, and implemented additional cost savings plans of EUR5 million to EUR10 million. We confirm the target of a return to long-term growth in sales and profit at Bouygues Telecom. First, we are confident with savings of at least EUR400 million in 2016 versus end 2013; second, we foresee net capital expenditure of around EUR800 million in 2016; and third, EBITDA margin is expected to be 25% by 2017. We anticipate around EUR270 million of non-current charges for the Group as a whole for the full year. This amount excludes non-current proceeds related to the sale of towers by Bouygues Telecom.
This concludes my presentation. Operator, please open the floor for questions.
[Operator Instructions] The first question is from Giovanni Montalti from UBS. Sir, please go ahead.
I have three questions, if I may. The first one, on your towers, if you can tell us how many towers you are left with and if you plan further disposals eventually, if you see any opportunity. Second, in terms of impact on your margin, what do you expect in terms of profit-and-loss impact for the telecom unit from the rental that you now need to pay on these towers? Thirdly, on CapEx, if you can give us a guidance for next year. Thank you. For the telecom unit, sorry.
About the tower, we sold 230 towers during the third quarter to Cellnex. I think that we already said that we have an agreement with Cellnex to sell a total of 500 towers. We expect to sell the remaining of the portfolio in Q4. At the end of these sales, we will still have a few hundred of towers owned by Bouygues Telecom. About the rental agreements, the rental agreement is for a duration of 20 years. And we didn't disclose any amount about the amount of the rent, but it's nice that it was a good operation for us. And your last question was about CapEx, level of CapEx, I think, for 2017. As I said during the presentation, our target will be, for next year, a free cash flow target. We will come back to you at the beginning of next year.
Sorry, if I may quickly follow up. On the towers, the few hundreds left that you have, I have not understood if you would be open to a disposal, if there is obviously a good --
We will see. We are open that any kind of opportunity for the time being. We have no agreement and no specific plan to do something, but --
You don't consider it as a core asset? Just to understand if this is something --
No, no, no.
It's correct. It's not part of our core asset. So we will see, according the various opportunities we will have in the future.
Sorry, if I may, on the CapEx for the telecom unit, are you going to give us a guidance on this one? Because if I look at the French market, every single operator has increased materially its CapEx spending because of the fiber migration. If I look at Bouygues Telecom CapEx, is basically stable or slightly down on the average of the last five, 10 years.
Yes, you're right. The general trend --
I wonder how long it is sustainable for Bouygues Telecom, considering the fiber migration, the capital intensity that is implied by that.
Yes, you are right, the general trend is an increase in CapEx. And the general trend also is the fact that for 20 years now we are always the only one able to maintain a relatively low level of -- or decent level of CapEx. So we will not change our strategy. Our strategy is to spend CapEx with a more flexible and clever attitude. Again, our general view is the fact that we have to increase our CapEx when asset is strategic and is differentiated CapEx. If it is not the case, we are able to rent, to share, to have other type of strategy.
Again, we have given target for 2016 in a net envelope of EUR800 million; and we will be on this target for the full year of 2016. After that, for the time being we -- our guidance is not EBITDA on one side and CapEx on the other hand, but the fact that we enter now definitely into a period in which our target, and our only target, is to increase our free cash flow to come back to the situation before the arrival of Free. We will manage in the future, and we will give you some details on that beginning of 2017, the two items to be able to deliver this increase of free cash flow. But, again, our only target is free cash flow. Our target is not a magic number of CapEx or an attitude to follow the full market, and is exactly what we have done for now, 20 years.
Sorry, I don't want to take too much time, apologies for this, but, just to understand, I appreciate your target is on free cash flow and you plan to increase your free cash flow generation. At the same time, the entire sector is going to face growing capital intensity. In France, we are seeing this pretty clearly. Since a year, or a 1.5 years, every single operator has increased CapEx. You are the one with the smaller scale and you have the lowest CapEx-to-sales, so that's pretty counterintuitive --
But what we have the best network, so there is
No, you have the best --
There is no --
No, sorry, if you let me finish.
[indiscernible] and so clear --
But if you let me finish, sorry. Again, and after I leave you, because I understand I've been taking too much time, but I know you have the best 4G network, but, in terms of fiber, capital intensity is going up. I understand that you think that you can do it with this money, let's say, EUR800 million, EUR850 million. But what is the key competitive advantage, or the things that you do differently, from every single other operator in France, that would allow you to keep the pace with the fiber rollouts that the others are doing, and, at the same time, save so much money and keep CapEx so low? If you just help us understand what you are doing so good that allows you to keep the pace with everybody else, keeps your CapEx as low as it is, and makes this sustainable for the medium/long term, without leaving Bouygues behind the curve in terms of fixed network rollout. Thank you.
Yes, just regarding fiber, the key point for fiber is to have access and the possibility to distribute an offer to the customers. The key point is not to be the owner of a full network in terms of fiber. Sp the key point is to have access to a network, partly our, partly through sharing that we do today, partly through the agreement we have with Orange in the medium-dense area through the 5% tranches. For us, the key point is not the amount spent; the key point is to be in a position to have access to sufficient part of network to serve clients. So the key point is to have the same path between our marketing approach and our accessible network. We will manage that in the coming months and years, with the target to improve our EBITDA.
Again, it's exactly the strategy we have followed for now 20 years. We have done that in the mobile network during the first period, and now we will do the same from fiber. Because, again, the network in terms of fiber is definitely not a differentiated asset; it's absolutely needed to have access to a network. But there is no difference between one fiber network and another one, which is a big difference with the mobile network. Again, we don't say that we will not spend any money on fiber. We say that we will plan our investment plan in line with two elements: the first one is our ability to serve our clients, and, the second, the general target we have to increase our free cash flow year after year.
Thank you very much.
The next question is from Stephane Beyazian from Raymond James. Sir, please go ahead.
Coming back on target of free cash flow for 2017, could you also accept to be less promotional, and why not consider price hikes on some of your products in 2017, in order to achieve this target of rapidly improving the free cash flows of the telecom business? My second question is regarding CanalSat. We've seen a couple of contracts from some of your competitors with CanalSat. Are you interested in such an agreement, either with CanalSat or with SFR Sport, for instance?
My third question, do you have any -- can you share a little bit more with us on the US construction business, especially Colas, and perhaps the split between the US and Canada, I think the momentum is quite different? And perhaps you have also some takeaway from the election in the US. Thank you.
Stephane, I will start with your third question regarding construction and construction in US. Definitely, and, in fact, we don't see it really now, because of the election of Mr. Trump, really big differences between Canada and US. Because, in fact, the two countries will base their restart, or their future plan, on infrastructure. Mr. Trudeau in Canada has decided to implement a very large stimulus plan, based on infrastructure. This is exactly the same for Mr. Trump, which has claimed -- who has claimed to double, in fact, the current infrastructure plan launched by Mr. Obama from $500 billion to $1,000 billion.
In both cases, it's good news for us; and mainly for Colas, you are perfectly right, because Colas in both countries are very local and totally integrated in the national networks. For us, we anticipate good news for the future in terms of works, either in US or in Canada. Now, we have to see how they will implement that, because the announcement is done now. We have to follow very carefully the real implementation of that. But, definitely, it's a good news for us, and, again, either in Canada and in US. Regarding your telecom question?
About the two telecom questions, the first one was about promotions. In the mobile market, promotions are only targeting on low-end plans. Keep in mind that on high-end offer there are no promotion, and we provide best value for money. You can see that, for example, in our mobile ARPU, which is stabilizing, thanks to a mix effect, reflecting high-end ARPU increase and B&YOU share growth in our customer case. Of course, we will continue to do some promotions, but maybe less aggressive, like we did in Q3, for example, because promotions are part of our strategy, since it allow us to attract new customers that stay, for the vast majority of them, with us the 12-month period of promotion. And they stay with us because we have very good 4G quality network. At the end of the day, it is very -- we are very happy to keep these customers.
On the fixed, we are the price makers in the market to grow rapidly, and we target a market share equivalent to the market share in the mobile. Today, we are not at this level of market share so we will continue to maintain the level of price we have now. Your last question was about CanalSat offers, TV by Canal with Free and with Orange. First, keep in mind that these offers are not really differentiating as they don't include, of course, the Canal+ premium TV channels, or it's sister, for example, the Canal+ Cinema. We already propose the same kind of offers for our [indiscernible] option to our clients, but we don't exclude, of course, [indiscernible] by Canal offer to our customer, if it presents an opportunity to us. For us, it's not the case today.
Your next question is from Jakob Bluestone from Credit Suisse. Sir, please go ahead.
Hi, Jakob Bluestone here, I've got three questions, please. Firstly, just following up on the stimulus or the infrastructure packages in the US, do you feel you have sufficient exposure to the US market already to be able to benefit from these plans? Or do you think you might potentially have to maybe acquire some US construction businesses to be able to get full exposure to this $1 trillion of infrastructure spending? Secondly, on the telco business, just going back to slide 18 and your fiber coverage, you say that you're able to market FttH to 1.7 million homes to date.
Just focusing on that 1.7 million homes, where you have horizontal, vertical, and adduction, if I look at your Capital Markets Day slides from about one year ago that number was 1.5 million homes, so it looks like the number of houses to whom you're able to sell fiber has barely moved in the last year. I was just wondering if you could maybe explain a little bit why that 1.7 million homes isn't really going up very much, and why you expect it to accelerate to 8.5 million homes, and maybe a little bit what the timescale for that acceleration is. And then, just a final question on your mobile service revenue growth. Obviously very strong revenue growth in mobile. Do you think it's possible for that 6% to accelerate further, or is it peak mobile growth for now? Thank you.
Regarding your first question on our US capabilities, definitely, through the footprint of Colas in the States we are able to take our fair share of this stimulus plan and this growth in terms of infrastructure. First. And second, you know that the ground of the strategy of Colas is always to increase its network of footprints and subsidiaries by acquiring, year after year, small-sized and medium-sized companies, if the perspective and the conditions are good. So we will continue to do that, not because of the stimulus plan, or the infrastructure plan, but because it's, again, the basis of the Colas strategy in terms of growth.
But, again, the starting point is the fact that we have a very nice presence in the States and, definitely, we will be able to take benefit from this position to take our fair share of this growing market. So there is no reason to change our strategy. But, definitely, if we see good opportunity we will see them, and we will be able to grow and to increase our network in the States. Regarding telecom questions?
Yes, telecom question, about FttH network, that's why the number of premises that are marketed is only [indiscernible] 0.2 million more than last year. But keep in mind that on less-dense areas, private initiative, the rollout by Orange is only at the beginning. I think we have less than 0.1 million premises area. And the public initiative area, we have zero at the time being, and it will begin. And if we look at the very dense areas, where we are sharing a network with SFR, the rollout is continuing. And this rollout is one of the remedies asked by the Competitive Authority to Numericable during the SFR purchase. And this remedy will be followed the Authority before the end of the year, so we expect that SFR will accelerate this rollout during the next year. About FttH, on the revenue growth, we expect to keep the same level of growth, around the same level, during the next year.
If I could maybe just ask a follow up, just on the US stimulus. I appreciate it's pretty vague at this point, but you've obviously gone through a number of these sort of --
Yes, for sure.
You've obviously gone through a number of these sort of infrastructure stimulus plans around the world. Generally, what is the lag from here to when you would typically expect to see revenues coming in the door? And how many years do you think that is?
For us, the key point is the starting point. Because you are perfectly right, announcements are always very vague, and we don't know exactly how it will run. So, for us, what is very important is to have a start. And the good news regarding the US is the fact that, in fact, the Trump plan, or so-called Trump plan, will be based by an increase of the previous one or the current one, which is EUR500 billion announced by President Obama. So the good news is the fact that we will have first basis, and so even if we will see some time to see the new multiplication by two we have a good start. That's my first element of answer.
If we look at the other type of stimulus plans like that, the French one, the French one will be started in 2008. And we have seen clearly the positive results between 2011 and today. But this plan was based only on huge projects, which is not the case either for the Canadian stimulus plan, or for the Trump or future Trump plan. And we prefer, definitely, to have a plan based on a series of small- or medium-sized projects because the time lag between the announcement and the launching is, obviously, reduced. So, in fact, we consider that we will see the first positive effect for Colas in 2017; and after, a real impact in 2018 and 2019.
The next question is from Frederic Boulan from Bank of America Merrill Lynch. Sir, please go ahead.
Hi, good morning. Thanks for taking the question. Firstly, on the Group, when you look at the net debt position as of the nine months and what you guided for the full year, there is still significant progress in the rest of the year. I assume there's a lot of working cap positives coming in Q4, but if you could comment on the main drivers.
Then, moving to telecom, we've seen, in terms of broadband, still Colas promotions from yourself with the Miami box. Can you explain a little bit your -- is this something we should expect to carry on in the long run? As you show, you are on track, but there's still quite a lot of growth ahead to deliver on your 1 million growth target. And vice versa, on mobile you seem to be doing extremely well, so is there a case to remove a bit the pressure?
And third question, around regulation, do you still expect the current fiber framework to be amended somehow by Arcep? Thank you very much.
Your first question was about broadband promotions. We did some promotions after summer, it was mainly focused on Miami offer. And the target of this promotion is to increase mainly our FttH net adds and to increase also our fixed mobile convergent, which action is lower in convergent households. So we are quite confident that these customers will stay with us at the end of the -- on the promotion. Well, keep in mind also that our price are among the lowest in the market. And our target is mainly on the fixed, to which the same market shares, and in the mobile also that we try to do.
Your next question was about mobile. I didn't catch.
Well, on mobile, the point is you're doing very well in terms of additions, but you've also done quite a lot of very heavy promotions since September. And you're way ahead on your growth target, so isn't it the case to actually focus more on value, instead of focusing on market share, here?
Yes, in Q3 we did not make any aggressive promotion. It was mainly targeting Only and B&YOU and, as I said before, it was to attract new customers that will stay with us after 12 months. So it's a good deal for us, thanks to our 4G quality network.
Your last question was about --
Yes, again, the proof that we are not very aggressive in terms of promotion is the fact that we have maintained our ARPU. And our ARPU is a pure one, if I may. So it's an ARPU taking into account all the promotion we do. So, in fact, we follow the market in terms of promotion, obviously, on the low-end segment, but, definitely, our attitude is not to be aggressive in terms of promotion. And the result of that is the fact where we save the value, because we are able to maintain a stable ARPU. And, again, this ARPU is a real one, so taken into account all the promotion we do.
Your last question was about fiber access regulation. Well, we are paying close attention to the following subjects. First, the fact that Orange has made an impressive progress compared to the competition, all the competitors, regarding the rollout, and the acquisition of FttH customers; and the fact that the Arcep has to make the rolling out of alternative operators easier. And we think that they need to adapt the modalities of access to FttH to Orange competitors.
For that, we ask for three things. The first one is a reinforcement of the control of Orange wholesale prices. The second one is that we ask that Orange should not be able to sell in advance compared to other operators when they also have an FttH network on this area, it will be -- should be on the same step. And last, on the remaining part of the very-dense area, notably, the less-dense area of the very-dense area, the rolling out has to be facilitated through co-investment possibilities.
Okay. Maybe on the debt side?
Yes, so regarding the debt, in fact, in Q4 we will have some elements and some comparison effect, and the result of that will be a stabilization, in fact, of net debt. If you take the lease element, so we will receive in Q4 the proceeds from the sale of the A41 motorway concession company, so plus EUR130 million. On the opposite, we will pay the second installment of the 700 megahertz frequency, so EUR117 million. So, it's neutral.
After that, we will have the full effect of the net change in working cap. And in terms of comparison with the variation of the Q4 2015, we anticipate a net variation around EUR500 million. Because you remember that we have a fantastic and exceptional positive effect in terms of working cap Q4 2015, so the variation is quite large, around EUR500 million. And remember that we have received, during the Q4 2015, the disposal of the Eurosport shares, around also EUR500 million, exactly EUR464 million.
So, in fact, the advance we have, around EUR1 billion roughly, we will lose that in Q4. But the good result at the end is the fact that we will not deteriorate our net debt and so we will be able to maintain the same level compared to 2015. Perhaps, if we have some -- if you are looking in terms of working cap variation, we will be a little bit better; but for time being, our best assumption is same level.
Your next question is from Daniel Morris from Barclays. Sir, please go ahead.
Thanks for taking the questions. A couple more, just clarifications on the telecom business. Despite the 20 million fiber-to-the-homes marketed target, can I just confirm that you're not actually planning to co-finance more than the 3 million in the mid-dense that you've already announced?
Second of all, you're obviously looking at free cash flow on a net CapEx basis. I just wonder, is there scope for the kind of asset disposals we're seeing in 2016 to be maintained for a number of years, in other words, into those mid-term targets, to get back to the historic free cash flow? Thanks.
About the FttH network, your question was about the 3 million premises in the less-dense area, a private initiative, we will see with the launch if we will order more. We can do that when we want, it's not a problem for us, and the regulation allows us to do that when we want. But at the time being, just keep in mind that on the 3 million we have already ordered there is only -- Orange has only rolled out 0.1 million, so we have some times to order more.
Your next question was about our free cash flow target, and, namely, if we want to dispose more assets. As Philippe said before, we are very pragmatic and we will see in the future what is necessary to achieve our free cash flow target.
But we are totally open minded on LTT. So, if there is a good opportunity to dispose some non-core assets or non-differentiated assets to reach our target in terms of free cash flow, why not?
Your next question is from Josep Pujal from Kepler Cheuvreux. Sir, please go ahead.
Yes. Good morning. I have three questions, please. The first one is on non-current figures, proceeds or costs. Could you measure the capital gain on the A41 that, I guess, that we will see in Q4?
On the towers, could we apply a rule of 3 to calculate the capital gain if you sell another 270 towers, so we apply the same measure than what you have shown for Q3?
And third, Dunkirk refinery, is it definitely closed in this subject in 2016, or are we going to still hear about it in 2017?
I have two other questions, do you want them later?
Yes, regarding Dunkirk, we will have almost achieved the plan in 2016. All the redundancy plan is signed and now we are just starting the implementation. The first departure are this month. So, except a very small amount beginning of 2017, we will have finished and achieved the plan in 2016. So no more material non-current charges in 2017, to be clear, regarding this point.
For the impact in terms of capital gain of the disposal of our stake in A41, the capital gain will be almost the same amount as the total proceed.
And about towers, the capital gain and the profit about the sale of the 270 towers will be lower than the ones that we have the first part of the deal, because they are not of the same type of towers. So you cannot apply a rule of 3.
Okay. Then, I would like to come back to -- maybe I missed the answer, but there was a question about this EUR8.5 million of committed premises for FttH, what was the time horizon? I have not heard the answer.
We don't disclose any information on this subject.
Okay. My third question is on the 5 gigabyte plan. Maybe it's too early to ask that, but you launched that recently. I wanted to know, how is it going? Is it gaining traction, given that the data consumption is increasing very strongly? Do you get the clients, the customers you expected on those new plans, or it's still a little bit early and it will be more back-end loaded?
About 5G, of course our network is compatible with 5G and we are --
Sorry, no, 5 gigabyte.
My question is if these new offers, these new plans versus the 3 gigabyte, those 5 gigabyte, are they gaining traction? You have -- is it going as expected? Clients are subscribing them? Can you give some figures on that?
I cannot give any figures. It's a good offer for us. It's maybe a little early to say more. And we will see that in this next quarter, how it works.
The next question is from Nawar Cristini from JPMorgan. Madam, please go ahead.
Thank you very much. Nawar Cristini from JPMorgan. So I wanted to follow up on the ongoing political changes that we are seeing in a number of countries. So we discussed the US, I wanted also to ask about the UK and France. Firstly, on the UK, you mentioned in the past that the market was booming and Brexit could help the market things to settle down, which could be good news. So could you update us on this, and on any early signs or impact that you are seeing from Brexit to date?
Secondly, in France, with the upcoming elections next year, could you discuss the key areas of focus that you will be watching next year? You mentioned that the buy-to-let initiatives seems to be encouraging from different candidates, are there any other areas of focus that we should be watching as well? Thank you very much.
So regarding France, we don't anticipate big changes vis a vis what we observe and what we see today. So we consider that we will be facing a good residential property development market, probably, with not the same growth rate, obviously, but with a good dynamic, thanks to what I said about the various plans, and despite the possible change in terms of governments.
The Grand Paris remains, definitely, the most important driver for the coming years in terms of infrastructure projects in France; and, probably, we will continue to see the difference between Paris area and the rest of France.
And thirdly, we hope to have at least a stabilization in terms of the road maintenance businesses, and, perhaps, a slight increase, but it's too early to say that. So for the time being, our best assumption is at least stabilization in terms of road activity. So in fact, we don't see any reason to have big changes in terms of trends in France compared to our current situation.
Regarding UK, again, it's too early to have a real view of the real consequences of the Brexit. The only factual point is the fact that for the time being there is no more new projects, private, for sure, because the investors are definitely in a wait-and-see attitude. So we have no more new projects in front of us in the pipe on the private side.
And for the public side, so the governmental projects or local authorities projects, it's too early to have something. Because, again, Theresa May has said that they want to increase infrastructure projects in the future, but for the time being it's not the case, it's too early, except some very visible and huge projects, such as Hinkley Point and nuclear power stations, and so on.
So probably, we anticipate some good news in the future in the UK, but for the time being it's too early to see that either in our backlog, or in the pipe of projects. So, no change compared to what we have said just after the Brexit.
The next question is from Dimitri Kallianiotis from Redburn. Sir, please go ahead.
Hello. Thank you for taking the question. My first question, regarding the US, I just wonder if you can give us some numbers in terms of how much revenues you generate in the US. I think you said last time it's about 3% international, so my guess is around just over EUR1 billion of revenues from the US, and I guess mostly coming from road building, but it would help if you could just clarify that.
Regarding your -- just to also clarify on the free cash flow guidance for next year, so the guidance is still, and correct me if I'm wrong, to be free cash flow positive after any sale of assets for Bouygues Telecom in 2017? And just on CapEx for FttH, just wanted to ask you how much do you think you will spend on fiber rollout this year, so in 2016, on FttH? Thank you.
So regarding US, for the time being, it's very difficult to quantify the impact of a possible future plan. The only factual point is the fact that North America, so US and Canada, for us, represented 21% of our construction activity international sales. So, that's a fact, after that.
And we consider that we will increase that in the future. Again, either in Canada and US, again, it's too early to have any good and precise quantification of that. But, definitely, we anticipate growth in this part of the world, but again not only US, but also in Canada, and the starting point is something around 21% of our international construction activity.
About the free cash flow target for Bouygues Telecom, we will release this target at the beginning of next year. Just keep in mind that our main objective remains a gradual growth of the free cash flow to which in the medium-term the level we had before the launch of Free. And for this year, we should be near zero.
So for the future, we will come back to you at beginning of next year.
And about the FttH CapEx, we don't disclose the breakdown of our CapEx.
The next question is from Jerry Dellis from Jefferies. Please go ahead.
Yes. Good morning. Thank you for taking my questions. The first question has to do with capacity on the telecom network, please. You've reported that 4G subs are using 3.7 gigabytes of data a month, and that's up 1.4 gigabytes in a year, and up by 0.5 gigabyte in just the last three months, so we're seeing accelerating usage from clients. I wondered if you could tell us something about capacity utilization on your network, and the extent to which that utilization rate might be increasing, please.
The second question is around 2017 free cash flow in the telecom business. You already have a hard target on the EBITDA margin of 25%, so is it excluded that telecom free cash flow might be temporarily flat, or even down next year, on the way to a mid-term return to the pre-2012 free cash flow levels?
And then, my final question has to do with the Group. Should we expect this improvement in construction profitability to bring with it a strong improvement in construction free cash flows? And is there any way in which you can quantify the potential uplift there, please? Thank you.
Yes, I will not quantify, at this stage of the year, the future impact in terms of free cash flow, but we will discuss that beginning of 2017.
In terms of free cash flow regarding telecom, again, our target is to increase, year after year, the free cash flow of the telecom business. The idea is not to have a deterioration, or a stabilization, to reach one day a big number; the idea is, and the strategy is, built to deliver, year after year, an improvement up to a very nice and good point. And again, we will discuss that together, beginning of 2017.
For the last question --
The question was about the capacity of our network. Just keep in mind that our network is, of course, designed to support a very big level of data consumption, and we are able to support the consumption we will have in maybe two, three, or five years. Just to remind you, also, that we have a very huge quantity of spectrum compared to the number of subscribers we have, so we are able to handle more capacity than our competitors.
And last thing, as we said during the presentation, we are densifying our network in the very-dense area to be able to support the data consumption increase.
So, no problem on this matter.
The next question is from Stephen Bechade from Citi. Sir, please go ahead.
Hi, yes. I've just got one question. Seeing as you're following a bit of a fiber-light strategy and you've got a very good mobile network, I'm interested by the soft launch of a hybrid LTE/DSL router that you've done. If you can just update us with how the soft launch has gone, and any expectations you have of this product in the future. Thanks.
So it was about the trial we launched a few days ago. Today, it's only a trial. The target of this 4G, I would say, fixed box is to propose to the clients that are not able to have a good DSL network, to propose them an Internet access. So we will continue. We will -- at the end of the time we see if we want to continue to commercial it. And if we did that -- if we do that, it will be only, of course, in the area where the Internet work is not good.
The next question is from Nicolas Cote-Colisson from HSBC. Sir, please go ahead.
Thanks. Hi. Just a very short follow-up question on margin trajectory in construction. I was wondering if the big plans in terms of infrastructure, as we should see with the Grand Paris, or the US, or Canada, do these infrastructure plans usually yield good margins, or not?
It's always difficult to have a general answer on that. What we can say is, definitely, these good opportunities in the coming years will be part of our strategy and our guidelines, which is to see and increase year after year of our margin in construction. So, definitely, these elements will be part of all the elements able to help us to increase, year after year, our profitability in construction. And for the time being, there is no reason not to have this profile, so increase, year after year, of the profitability of construction. But there is no reason to have a big increase one year because of these different plans.
I understand. And what about the -- you mentioned that in France there was a high level of competition outside Paris, so is that compatible with a Group construction margin going up in the medium term?
Yes, because to answer properly to this very high competition, the answer is to design more clever solution, to be on project in which we are able to bring something more than the competition. We have always the same strategy in a very competitive environment. The idea is not to lure for volume, to target volume, but to be able to offer the best solution, the lowest costly solution, but with a sufficient level of margin, by innovation, good solution, good design, and so on.
We have always the same answer. And our intention is not to follow this very competitive environment. It is the reason why for us, basically, the very high technological projects around the Grand Paris are more interesting for us than others.
The next question is from Gregoire Thibault from Natixis. Sir, please go ahead.
Gregoire Thibault, Natixis
Yes. Good morning, Philippe, Christian. I have three follow-up questions. Two on contracting, one on telco. Let's start with the contracting. It's on CapEx on contracting. We speak a lot about the CapEx on telco, but we don't speak a lot about the CapEx in contracting. Should we expect the CapEx to increase in the coming years, notably, at Colas? If you could give us guidance for the CapEx contracting.
Question number two, coming back on the UK market, you made some losses in 2015 for Bouygues Construction UK, where do we stand now? Are you back to breakeven, or even to the green territory?
And last one is on telco, to come back on the guidance, and to clarify a bit. I understood you will give us a guidance of free cash for Bouygues Telecom. You will be more specific in terms of net adds. But will you as well be more specific for the EBITDA margin targets, because if the volumes are better, mechanically, the EBITDA margin should be slightly better as well? Thank you.
Yes, so regarding the future guidelines, again, we will discuss that beginning 2017. So, we will see that at this time. But, definitely, our main idea is to generate more free cash flow at the Bouygues Telecom level. Again, our competition is not to be the best-in-class in term of EBITDA margin. Our target is to be a good operator in term of free cash flow generation. But, again, this discussion we will have -- we will have this discussion beginning of 2017.
Regarding CapEx in construction, yes, we have said, and we will remain with this trend, that we will have an increase in terms of CapEx for Colas, but taking into account that the 2015 figures were very, very low because of the French environment. So, definitely, we have to maintain a good level and a good standard in our equipment for Colas.
So we will have an increase in 2016, as mentioned previously, and since the beginning of the year. After that, there is no reason to have big changes, except if we have some contracts for which we need very specific equipment. Because for Bouygues Construction mainly, the CapEx follow, in fact, the, first, the region and second, the type of contracts we have.
Obviously, if we sign a great number of contracts with specific equipments, tunnels, and so on we will increase the CapEx. But it's not an issue because these CapEx are total financed by the advanced payment and the upfront payment. So in terms of free cash flow there is no negative impact if there is this type of increase.
Structurally, an increase into Colas because of the low level of 2015; and after that, according to the portfolio we will have in terms of big contracts, we could see, from one year to another, an increase in -- for Bouygues Construction, but, again, with no negative impact in terms of free cash flow, or in terms of our financial situation.
For the loss we have incurred in 2015 for Bouygues UK, definitely, the result of the very difficult situation regarding execution in UK, as we have mentioned previously. Keep in mind that these figures are only for Bouygues UK, so it's regarding only Bouygues Construction. And we have, in front of that, a good situation for the Colas activity in UK, and other services activity in UK.
So it's not the full result and the whole result of the construction of Bouygues in UK, but, definitely, it's not a good result. Mainly due to this poor situation in terms of execution, the result [ph] situation remains difficult in 2016, to be clear and we have taken all the measures during this year to be able to recover a nice situation in 2017.
The next question is from Eric Le Berrigaud from Bryan Garnier. Sir, please go ahead.
Eric Le Berrigaud
Yes. Good morning. Thanks for taking my questions. I've got three actually. The first one on the last project which should be included in Q4 in the order book, could you maybe be a bit more specific on that? Should we expect, for instance, Hinkley Point in Q4 in your order book? And regarding the order book in Q3, have you already included the project in Monaco, the Monaco extension? That's my first question.
The answer is, yes, for Monaco in Q3. And I will be no more specific for Q4, because it's unusual for us to pre-announce a contract. But be confident that we will have a series of very nice and large contracts in Q4 2017 and probably some projects that we have some noise around us in the future, 2016.
Eric Le Berrigaud
Okay. So it is fair to say that the order book should increase year on year in Q4, or -- versus last year.
For construction, yes.
Eric Le Berrigaud
Okay, thank you. My second question regards Colas, the EBIT margin of Colas, the current EBIT margin of Colas. You sold some Asian subsidiaries to Tasco.
Eric Le Berrigaud
Could you give us -- and I remember that the profitability was quite good for these subsidiaries. Could you give us the impact of that on your EBIT margin for the nine months, for example, for Colas, the impact of the deconsolidation of these subsidiaries?
I am not able to do that. I have not the answer now, so I suggest that you come back to Karine to have the precise answer. But, definitely, you see the net result in the line equity method entities for Tipco. But we will be able to provide, later on, the right answer.
Eric Le Berrigaud
Okay, thank you. And I've got a last one, actually. Just to understand, why did you sell your stake in A41? And, actually, I ask the same question for the A28. Is it just portfolio management, or asset rotation, or what is the rationale behind this?
The rationale is very clear. It's part of our business model regarding construction. Our model is not to be involved on a long-term basis in concessions, because we don't consider that, in our portfolio, it's a business that we want to do and to run. It is the reason why we are never a majority shareholder of this concession, first. It is the reason why we don't want to be involved in Brownfield concessions. So, our model is very simple, we are involved in all Greenfield concessions in the world, if we are able to bring something.
At the beginning, we take a minority stake in the concession company, we build the facility, we manage the facility during a certain period of time; and after that, our model is to sell our stake when the conditions are very good. So, in fact, we have run Cofiroute almost 40 years, something like that. For other concessions, is quite short. So we sell when we consider that it's the right time in term of valuation of our stake.
Eric Le Berrigaud
But, again, our model, our business model, is not to stay forever as a minority shareholder into a concession company. And it is fair to say that in 2014 and 2016, either for Bouygues Construction or for Colas, we have found very nice environmental and financial conditions to sell, with very good and nice multiples. It is the reason why we have organized the disposal of these stakes.
The next question is from Nicolas Didio from Berenberg. Sir, please go ahead.
Hi. Good morning. I actually have a few questions on telecoms. The first is on the variable ARPU in the fixed broadband. Can you give us a sense of how it is trending? And considering that you have one more countries added to the bundles, and the MTR going down, and all that kind of things, can you give us an order of the trend there?
The second is there is a bit of debate on the sector on the roaming impact next year. It's a bit noisy on that, and no clear direction, so can you give us your view on what kind of roaming impact we should expect for you?
And the third question is on the gross margin on the fixed. Can we have an order of magnitude of your gross margin on the fixed? And considering your strategy on fiber to be rather asset-light, shall we expect the gross margin on the fixed to go down in the medium term? Thank you.
Your first question was about the fixed broadband ARPU. Yes, I think that you can find figures in the presentation. There's an appendix about that. This ARPU is stable, and it is stable --
But the variable component of that, the incoming calls, the outgoing calls to countries, I mean the telephony part of that broadband ARPU?
Is very little, is very little. Very small about broadband. The MTR is very small in France, there's no huge figures on this point.
And what about the VOD and content stuff?
The VOD is a growing part of ARPU. We don't disclose those exact figures, but it's a growing part. But the main part is still the bundles. There's a monthly fee paid by the subscriber.
About the roaming, in fact, we expect a slightly negative impact on EBITDA, due to two facts. The first one is that that there is an abolition of roaming charges for any customers right at the end in 2017. And the change -- but the change has already been anticipated in the Bouygues Telecom's offers, because these offers are -- some of them are already including data roaming inside the bundle, in fact.
The second point is that -- about the tariffs bid between foreign operators. These ties will decrease so we will have, of course, the net revenue collected by Bouygues Telecom, who will also pay less to other foreign operators. And, as you may know, as France is a very nice country for other -- for people from other countries coming here, doing their holidays, we expect to have a strong rise of usage, thanks to the fact that there will be no more roaming charges for people coming from these countries. And so we expect to be able to do benefits from these developments. At the end of the day, it will be, for us, a slightly negative impact on EBITDA, but very little impact.
Yes. But we will be able to offset by our structural rules in the future. So it's no more -- it's not an issue for us in term of EBITDA variation.
About the gross margin, we don't disclose any figures about the gross margin. I think only that you know that our own charges EUR9 per month for the [indiscernible] network, per subscriber. And on fiber, we will, as Philippe said, manage our CapEx. And we see for on the fiber if we prefer to invest in infrastructure, or to end a part of this infrastructure. And, of course, if we have some more interest, it will impact our gross margin negatively, and the CapEx positively, on the other side.
We have no other questions.
Okay. So, thank you very much for joining us today. We will be announcing full-year 2016 sales and earnings on February 23, 2017. Should you have any questions, please contact our investor relation team and their contact information is on the press release.
So thank you very much, and have a good day. Bye.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation. You may now disconnect.
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