BOUYY - Bouygues SA (BOUYF) Q2 2023 Earnings Call Transcript

2023-07-28 09:53:10 ET

Bouygues SA (BOUYF)

Q2 2023 Earnings Call

July 28, 2023 03:00 AM ET

Company Participants

Jérôme Stubler - Chairman of Equans

Olivier Roussat - Chief Executive Officer

Pascal Grangé - Deputy CEO, Chief Financial Officer

Frédéric Gardès - Chairman and Chief Executive Officer, Colas

Conference Call Participants

Nicolas Cote-Colisson - HSBC

Mathieu Robilliard - Barclays

Nick Lyall - Société Générale

Mollie Witcombe – Citi

Presentation

Olivier Roussat

Good morning, everyone. Let us start this presentation of the half year results, we'll do this with Pascal Grangé, and then we will have a discussion with all the Heads of Divisions that have come here for the occasion.

Alright. So well, let us start with the main figures for the first half of the year. Revenues stood at EUR26.1 billion and a 41% increase reflecting the acquisition of Equans in October at the beginning of the year. We didn't have Equans on a like-for-like and constant exchange rate basis, the actual increase is only 3%.

COPA stands at EUR214 million at EUR727 million, net income attributable to the Group stands at EUR225 million up EUR78 million and we'll put some details on the net debt, net debt grew from EUR3.7 billion to EUR10.6 billion . Well, if you restate this for the acquisition of Equans that took place last October. So, restating it and also plus the amount paid to Free Mobile. I'll get back to that. And the buyback of our own treasury shares, the net debt would have being actually better -- the reason I said, I’d mention this thing with mobile is that, we challenged both the amount and the immediate execution of that amount, and as we do every time because of the seasonality of some of the businesses in particular Colas, the performance for H1 are not representative of the annual performance.

Let's move on to the highlights of this half year for the Group. On this slide you can see that we celebrated 60 years of the Minorange Guild’s creation that it was created to celebrate the best workers with the values of the Group, the notions of respect exemplarity, a job well done, availability, belonging team ship, teamwork and belonging to a company with building the future.

The guild members about 600 around the world involved in the building of complex works and there are 16 guilds right now bringing together 1500 members around the world, you have the energy guild Jérôme, you're supposed to -- you should come down to the front row, you can do this. Nobody will notice. As I was saying a guild members well, energy guild members especially those within Equans working for Jérôme [who's just strong] (ph) there's another point here.

Employee share ownership, we've completed the 12th operation of share ownership reserve to employees. We confess these are employees of the French subsidiaries as of the Group including those of Equans and this was greatly oversubscribed which displays the attachment of the commitment of our employees. This has brought about the creation of 6.8 new shares, but the dilution was fully compensated, because precisely with this in mind, the Group bought back and canceled shares in 2022.

So, employee share ownership accounts to 23.9% of the capital stock compared with 21.3% at 31 December last year. This confirms we're positioned at the first company in [CAC] (ph) in terms of employee share ownership. We have two representatives of shareholding employees on the Board, plus the two staff representatives which is statutory.

If you heard about VivaTech is a technological show, we showed a number of innovations and agreements with start-up companies in particular to reduce the carbon footprint of the building industry with Colas, we have a tool to analyze roads and all the data collected by our vehicles make it possible to use materials that can be reused or recycled.

Bouygues Construction developed a platform that can recycle some items such as false ceilings, doors and such like. We had a solution for energy consumption at Equans presented this we can store thermal energy in aquifer called ATES. So, that goes makes for a greener air conditioning for storage of electrical energy.

Bouygues Construction showed batteries for construction sites that are charged up at night so as to make them available during the day and using less expensive energy and smart charging by Equans, as a software that enables buses to be charged optimistically to optimize energy consumption and then Bouygues Telecom has brought about new innovations related to 5G. So we have tele-rehabilitation -- distance rehabilitation by Apizee that is for patients that need rehabilitation.

We have an autonomous droid delivery system presented by -- built by TwinswHeel. And then, we have the Box WiFi 6, for a Bouygues Telecom, and a 4K Bbox and a 5G box. So these are new innovations that give us an opportunity to rub shoulders with start-up companies and then offer new services and products to our customers and understand new trends and areas where we should try and make headway.

Let's move on to the operational review with the backlog, the order book for the construction business. It stands at EUR30.8 billion which gives us good visibility on future business. If you look at this in detail, that backlog starting with Bouygues Construction, where orders were taken to the tune were up 68% with many significant contracts especially overseas, but there's also good legacy business, that is the businesses where -- of course individual contracts are lower, but Bouygues Construction, was chosen to extend a metro line in Hong Kong. This is one of the territories where we've been working on recurring basis to the tune of EUR470 million.

We were also chosen to build two data centers in Australia for EUR350 million, but there's another country where we've made headway with the Riviera Tower, a 200 metre tall tower, EUR200 million contract. And then, the new deals which occurred in Q1 and in particular in Q1 we signed the Abidjan Metro contract for EUR770 million and EUR15.4 billion the order book is up EUR1.6 billion up 12%. This is mostly driven by the building business, [Bâtiment International] (ph) where the order book is up 29% and also, although less so by public works when orders are up 7%.

In the property business, Bouygues Immobilier is facing a challenging market, this has been going on for several quarters running. The backlog there is down EUR400 million, minus 21% standing at EUR1.4 billion. And then Colas, Colas its backlog is up, well the order taking is up 12% compared to H1 2022, with significant contract in rail but also roads with the renovation of the road in the U.S., the interstate 26 for about EUR110 million and then the number of major projects driven by Colas high in particular, the change -- the modification of lines in the London tune EUR250 million. So, the backlog is up 9% at EUR14.1 billion with orders in road up 5% and rail up 21%.

So, let's look at the revenue and COPA, revenue from the construction business stands at EUR12.2 billion, up 3% of which 4% on the like-for-like and constant exchange rate basis, thanks to Colas and Bouygues Construction remember that Bouygues Immobilier is unfortunately off. Revenue for Bouygues Construction is up 5% because of the international businesses. The revenue of Bouygues Immobilier including the share of co-development is down 12%. We assumed this on co-development. We do this with other developers to share the risk. This is a portion of the business that uses Bouygues Immobilier's resources, without that, without co-development revenue would have been down 14% and not 12%.

Colas' revenue is up 4% and 6% on the like-for-like and constant exchange rate basis, it's driven by two main businesses namely road and mostly in EMEA areas, but also Canada and a lot in the United States. And rail as I said, that order book is growing fast. COPA now that is current operating profit from activities is down EUR7 million now. You have to remember what I said this is a seasonal business. This is not representative of annual performance, because Colas, of course, has a slow business in the winter months. So, this is not a reflection of the expected performance for the year. COPA in Bouygues Construction is slightly down over one year, EUR120 million and COPA margin is 2.5%, but this is related to the non-linear rhythm pace of construction projects.

So, this again is not representative of the expected performance, but as business is down in the property business Bouygues Immobilier’s COPA with co-development stands as EUR15 million. If you look at COPA without including that, we were able to contain the drop in COPA. And finally Colas's COPA stands at minus EUR127 million down EUR29 million over one year. There are positive effects due to the measures taken that we showed after the H1 results in 2021.

Let's move on to Equans. This has been consolidated since Q4 2022. We have the integration therefore of Equans, but we changed the scope of Equans because since January of this year we've also integrated [Bouygues Energies and Services] (ph) business. So, the comparisons with H1 2022, of course, are relevant because well back then Equans was not in our books in the first half of 2022. In-line with what we announced at Capital Markets Day with Jérôme and Etienne Jacolin, our strategy is to go for profitability rather than volume.

So, we're very selective in our contracts, we have an order book of EUR26.4 billion at the end June 2023 up 2% compared to December 2022 giving us good visibility on future business. This is a buoyant context. We have dynamic order taking EUR9.5 billion, 38% in France, 62% abroad. We have data centers in particular built in Germany and the U.K. And one item we've been monitoring is what you call the underlying margin of the order book which is estimated in such a way that we can ensure good performance in the end.

Equans’ revenue stood at EUR9.1 billion in H1 2023, EUR3.1 billion in France, EUR6 billion abroad. Again this is a very positive momentum around the world. COPA stood at EUR243 million so that's 2.7% profit margin. Now from activities, that margin has improved compared to Q1 2023. That reflects of course the seasonality of the business, but also efforts as part of the perform plan connected by Jérôme which is bearing fruit.

And as regards Equans, we confirm the outlook 2023, Equans in 2023 enjoyed a slight growth in revenue because of a selective choice of deals of contracts, current COPA is expected to be anywhere between 2.5% and 3%, and the conversion of current operating profits COPA to cash flow before the WCRs is estimated anywhere between 80% and 100%.

TF1, Rodolphe, give you the presentation yesterday, TF1 confirmed its agility in managing its programming costs while confirming its leadership in ratings on commercial targets, while cutting costs on operations and so the performance is good. As expected revenue is down in H1, was down in H1 and TF1, on a like-for-like basis, it stood at it was down 9%. The media was hit by its scope effect because we disclose of Unify [indiscernible] on a constant basis, it was down 6%. The advertising revenue reflected lower investment by advertisers in the context of the retail business has suffered headwinds.

So, we are down 5% on a like-for-like basis, and constant exchange rates in Q2 2023, so less of a drop than in Q1. There's also a decline in revenue at Newen Studios down 16% because of cyclicality of the delivery of program but also the termination of the Salto business and then COPA margin on H1 stood at 14.7%. So we caught up with some of the slowdown in Q1 and that is because of the good performance of the media business, the COPA margin for that stood at 21.6% in Q2, up 0.4 percentage points compared to Q2 2022. And then we should note the sound cash generation of TF1 including free cash flow after WCR at EUR155 million up EUR34 million compared to H1 2022.

Finally, the outlook for TF1, the outlook is maintained, new different outlooks for different businesses, but on the media area we should be able to go back to 2022 levels in H2 and that will be of course partly due to the broadcasting of the Rugby World Cup in September. There's been a recent announcement of the resumption of the iconic series pretty well live, but that will be broadcast on TF1, that will be streaming on the MYTF1 platform, and that is a clear illustration of the channels strategy to move towards a digital transition under Rodolphe.

The TF1 will consolidate its leadership in 2023, with a corporate margin close to that of 2022. And TF1 as a group will still generate sufficient cash to have stable or even growing dividends over the next few years. We will continue with Bouygues Telecom. First, good news, Bouygues Telecom is number one on WiFi for the fourth year running. This rating is conducted by nPerf, and for the first time we are number one on the fixed business on all technologies and that will enable Bouygues Telecom to be just not number one on WiFi, but also on the fixed line business, and you should also know that some of our competitors advertise last year's rating and we remind them that this is 2023, they better use the figures from 2022 rather than 23. You can imagine that those who are announcing their performance did better last year than this year.

The second interesting information about the fiber technology is that Bouygues Telecom is investing to give more comfort to the clients. We've invested in the XGS-PON technology, thanks to which we can have a better throughput four times faster, so that we can reach up to 8 gigabits. This technology is available today in Paris, and progressively it's going to be deployed in the other major cities.

Now, the commercial momentum is continuing for Bouygues Telecom, as you can see on the right hand side, at the end of June, the operator had 15.3 million customers with a mobile plan. This means up a 109,000 customers during the first half year, including 82,000 during the second quarter, which is a good performance given the market today. The momentum was continued as well at FTTH with a gain of 270,000 new fiber customers including a 122,000 during Q2. The fiber-to-the-home clients, FTTH clients reached a total of 3.3 million that represent 69% of the fixed installed-base, to be compared to a 58% a year ago. And that's what you can see on the bottom right hand side. Therefore, the customer base now has posted a good performance. Now, we have 4.8 million customers that is up 86,000 customers for this first half, including 40,000 for Q2.

The performance of fiber is to be explained, thanks to the deployment of FTTH, weekly come has already commercialized 32 million FTTH premises and is about to reach his objective, which is 35 million FTTH premises for the end of 2026, when we presented the Capital Markets Day two years ago for Bouygues Telecom. The key figures now for Bouygues Telecom, the good commercial momentum goes together with an increase in value, growth in value, which is still our strategy we want volume and growth simultaneously.

At the end of June, sales billed to customers was up 6%, and that's thanks to a solid customer base and a growing customer base and an increase in ABPU. In ABPU, that is the amount that's charged or billed to the customers for mobile lines, ABPU is going up EUR0.30 for the year to reach EUR19.7. In fixed lines, ABPU is up EUR1.8 year-on-year to reach EUR30.5. So, the services sales during the first half of 2023, is at EUR2.9 billion, therefore up 4% year-on-year. And this is still penalized by the incoming sales due to the drop in the incoming uses that we can charge or bill, but this is no impact on EBITDA after leases.

Overall sales is up 5% during the period, and benefited from the other sales, which is driven by the works sales. EBITDA after leases was up 12% year-on-year, thanks to a growing sales and thanks to a good monitoring of our costs at Bouygues Telecom. The EBITDA after lease margin is improving to reach 31.5% nowadays, therefore up 2.1 points in a year.

I'd like to draw your attention to the fact that during Q4 ‘22, we re-qualified or restated for the full year that is 2022, the annual fixed fees that is frequency bands 900 MHz and 1,800 MHz. And, that means we are now aligned on the three main competitors, and the effect was a positive effect of EUR23 million on EBITDA after leases during Q4. The growth rate for EBITDA after leases for Q1, Q2 and Q3 2023, all things being equal benefited mechanically of this re-qualification, and this effect will be offset as of Q4 which will be a good basis for comparison.

COPA was up EUR57 million to reach EUR366 million. Operating profit was up as well in the same amount. And then gross capital expenditure excluding frequencies that reached EUR857 million, which is the level we had in 2022.

Now, what about the outlooks for Bouygues Telecom? Well, the outlook has not changed. Bouygues Telecom for 2023, full season increase in sales, sales billed to customers and also EBITDA after leases nearing EUR1.9 billion, and gross capital expenditure excluding frequencies at approximately EUR1.5 billion.

We will now continue with more figures with Pascal Grangé.

Pascal Grangé

Thank you, Olivier. A few additional details on the accounts at 30 June, regarding the income statement on Page 26, it is well, you have had details about revenue and COPA that was already presented.

We have PPA depreciation Colas [fund] (ph) and Bouygues Telecom, we also recognized a PPA depreciation of EUR26 million Equans in H1 in-line with the forecast we announced at Capital Markets Day, we announced EUR50 million for the year, as a whole non-current that is non-representative of a business stand at minus EUR80 million in H1 2023, compared with minus EUR44 million in H1 2022.

Bouygues Construction recognized a non-current charge of EUR46 million, this is related to a dispute in Singapore for building delivered in 1997 changing regulations in a country where it is present. Equans recorded EUR19 million in non-current charges because of the implementation in Q2 of the management incentive plans we announced at Capital Markets Day, plus legal fees as part of our disposal plans.

TF1 also recognized EUR19 million in non-current charges. This is related to the optimization of the plants and property. The strengthening of the career plan for our employees and the acceleration of the digital transition, these non-current items for TF1 are related to the implementation of an optimization plan to reach EUR40 million in savings. In operating expenses starting in 2025, EUR10 million or EUR15 million of which will be reinvested in the acceleration of the digital transition. Net financial debt is up EUR76 million and this is related to interest expenditures, related to the acquisition of Equans.

Regarding the income statement at the bottom line, also includes EUR155 million tax charge compared with EUR103 million in H1 ‘22. We have an effective tax rate of 39% compared with 30% in H1 2022. This higher rate is related to tax deficits abroad which do not give rise to the recognition of deferred tax assets in the share of, the net income of companies on an equity basis is up EUR54 million because of the of Tipco's contribution and the stop of losses at Salto. As a result the net profit attributable to Group stood at EUR225 million, up EUR78 million compared to last year.

As you can see on Page 27, net debt at 30 June, 2023 stood at EUR10.6 billion compared with EUR7.4 billion at 31 December 2022. This EUR3.1 billion increase is related to the usual seasonality of our business, but it also includes the paying of EUR310 million to Free Mobile on 16 May including EUR308 million plus interest as part of our dispute on smartphones and mobile contracts. Let me remind you that we strongly challenged both the ruling and the validity of its immediate execution. It should be noted that variation in capital requirements related to business and others is up EUR209 million reflecting the efforts made by all businesses. The ratings remain strong, A minus negative outlook for Standard & Poor's and A3 stable outlook for Moody's.

And the following pages, let us look at the changes in net debt in 2023 on Page 28. The change in net debt on H1 2023 is not to be compared with H1 2022 because H1 2022 had a positive impact related to the fair value variation of pre-hedging swaps introduced as part of the financing of the Equans acquisition. The good news this year is the positive improvement in WCR changes and the others businesses standing at to reach EUR291 million.

The changes compared with December 31, 2022, as follows includes: Net acquisitions and disposal minus EUR62 million for acquisitions and disposal at Colas Equans and the buyback of shares at TF1. The capital increase for employees plus EUR150 million. The buyback of shares and the liquidity contract minus EUR29 million. The variations of residual swaps not including taxes on completed swap operations minus EUR44 million. Dividends [EUR741 million] (ph) to EUR310 million paid out to [fema board] (ph) operations standing at minus EUR2.1 million, I'll get back into the details now.

Let us start-off with the net cash flows standing, not including the taxes on netted on completed swaps including the payback of lease obligations stood at EUR1.2 billion up EUR158 million compared to H1 2022.

CapEx, net CapEx not including frequencies stood at EUR1.1 billion up EUR67 million over the year that change reflects mostly the integration of Equans. Various WCR related to others and business and various businesses was marked by the usual seasonality, but the change is minus EUR2.1 billion compared to minus EUR2.4 billion in H1 2022. So, this is an improvement of EUR291 million. This completes this presentation. Thank you for your attention.

Alright then, we will conclude with the outlook. Well, that's pretty straightforward. We confirm the outlook, revenue close to that of 2022, improvement in COPA, current operating profit from activities that is based on the 2022 pro form integrating Equans as if the acquisition had taken place on January 1, 2022.

Let's move on to the Q&A. We'll have two parts to that. First, we'll take questions in the room and then there will be questions online and we will, of course, take these questions as well with the representatives of all the businesses of the group.

Don't speak all at once. There will be a chance for all of you to speak. Holidays are coming. Maybe the presentation was too clear and called for no questions, which is good news. It means that we are communicating better and better. It really was crystal clear. That is alright. Are we allowed to take calls from the outside, yes. We will take [indiscernible] we can take questions online.

Question-and-Answer Session

Operator

[Operator Instructions]. The first question comes from HSBC, Nicolas Cote-Colisson.

Nicolas Cote-Colisson

Hello. I have lots of questions starting with Equans. Have you noted a change in the commercial attitude of your competitors since you took over to Equans? Do they manage to retain their customers or are they losing them out to you. I realized that this question applies to many of your competitors. Second question about WCR, actually I looked at figures for H1 2023 compared to 2022, there's a significant improvement almost EUR600 million not including Equans. If you have details about the way in which you were able to achieve that EUR600 million gain not including Equans, can you drive -- draw consequences for the rest of the year. I realized the seasonality from one half year to the next, but can you expect seasonality at Equans as well because last year in H2 there was a EUR400 million gain on WCR.

And then final question on telecoms. On the price environment the average ABPU is up in the fixed line business much less so in the mobile business. Can you comment on your ability to raise prices in one but less so in the other?

Olivier Roussat

I'm turning to Jérôme, on the attitude of our competitors, we were seen as being the company offering lower prices beforehand. Well, yes, we are in a position to raise our prices in as much as our competitors seem to be ahead of us in terms of profitability and of course this makes it easier for us to gain on profit margins. We're not losing out on market shares. In fact, we're gaining market shares. It should be pointed out that the fact that we've joined Bouygues has stabilized our customers -- the Equans customer base and so this makes for better orders.

Looking at our competitors, the fact that we are going for profitability rather than volume. This is good news for the industry because it means that rates are going up. And so they're not bringing them down on their side. On regards -- regarding seasonality, we are in line with the plan announced on the 30th June.

On WCR, well, this may be disappointing. You know that for many years WCR has been going up and down. In the construction business, WCR is not a relevant indicator because it is subject to significant fluctuations. It was unfortunate last year it is more -- it's happier this year nonetheless this is not a reflection of what will happen by year's end.

What really counts is not so much variation WCR, but rather the efforts made by all our teams on the ground to make sure that bills should be collected on quickly and once well first bills to be drawn up and then collected on and then of course that a contract should include good payment clauses.

So, they're not lessons to be drawn from H1 except, of course, we're happy that the situation is better now than last year but we're continuing these efforts in all parts of the group precisely to optimize WCR by years and as we do every year and that is why we do not give guidance on this indicated because it is -- it fluctuates too much based on our contracts in various businesses.

All right and then the question about rates. On the fixed line business, we were the least expensive operator we're gaining ground here, but we're also getting on prices in the mobile business. Well the price environment of the market says Bouygues is such that now we are facing less promotions than last year both in the fixed and the mobile business which is, of course, it's a positive factor because we have a stabilization of prices regarding the different movements in mobile and fixed businesses.

It should be pointed out that [BRIC] (ph) Telecom has two features in both in -- well, we have the lowest in store capacity and so new customers that join us represent, of course, a larger portion and so they have one year sort of promotion deal and then the prices go up.

So, the transition from year one to year two is felt stronger at [BRIC] (ph) Telecom than our competitors because the share of new customers is bigger. It's true that we had a lower ABPU on the fixed line business than our competitors and we are catching up on that compared to the rest of the fixed line business, which is not the case for mobile.

Okay. Next question.

Operator

Thank you very much. [Indiscernible] The floor is yours.

Unidentified Analyst

Hello. Well, I wanted to talk about the dispute with freight EUR310 million. This is for the time being an exceptional item. It's probably part of what you can pay overall. So, what's the total risk, please?

Olivier Roussat

Well, no. This is a huge amount. This is something for which we're going to the courts. So no. This is okay. That's the amount. It shouldn't go too far. Okay. So you've paid them. You've paid the money. Now you have to get the money back. Yes. Yes. And that's why we told you twice. I told you Pascal told you that we contest the ruling and also the provisional execution of this decision. And when we reach appeals, we will get back a big part of this some. Thank you.

Operator

Thank you. Mr. Mathieu Robilliard from Barclays. The floor is yours.

Mathieu Robilliard

Hello. Thank you for this presentation. That was very clear. However, I have a couple of questions to ask. I have a question about construction. You have signed many contracts during Q2. I wanted to know the decisions you made between volumes and the return, the profit level you gain on these contracts.

Second question on Colas, your rail performance is really good. And several years ago, you had slightly pulled out from some rail activities that were not profitable enough. And my question is to know, if you've changed your vision or if these contracts, however, is still profitable and the risk level is not too high.

And the third question has to do with the telecom business. Well, of course, there are promotional offers that are less aggressive than a year ago yet have the impression that during Q2, there was a slight deterioration [indiscernible] for instance with a EUR10 offering with 40 gigabits that's quite aggressive.

I wanted to know more about this. Can you give us more color on that? And also, what can you say about a determination on the side of the competitors. And can you tell us more about the beginning of Q3?

Olivier Roussat

I'll answer this quickly. Well, we didn't want to say we want volumes and not margins at [indiscernible] because the Copa objective in 2023 is quite close to the one we had in 2022. And then if we look at the activities that were discontinued at Colas Rail. It wasn't the project activities. These were activities that had to do with transportation when Colas Rails was a rail operator for freight. And this is something that we discontinued in 2018 or 2019.

Now today, the Colas Rails business is a project based activity to develop, for instance, Edmonton and the route around Edmonton and the two contracts that Frédéric won in the Philippines from an overhead metro line.

And then there's maintenance activities we signed off a UK maintenance contract with a good profit, good margin that we signed off at the beginning of the year. And then the telecom activities. Are we really lowering prices in the mobile business?

I think that's your question. We'll answer that. Well, if you look at the mobile market. Today, the situation is much more favorable in terms of promotional offers than a year ago, but we have to segment our approaches. If you look at the mobile offerings that we have, that is in the digital world what we sell on the web.

That's where there are more promotions we have different segments, different customers, the digital offers today that have quite a lot of data package, a 100 giga or more are at EUR16. A year ago, they were at EUR10. So, there's a big gap between EUR16 and EUR10. And then sometimes you have less data offerings and of course, the price is a lower.

It's EUR10, but then it's different user profiles or categories. So, we create value for consumers that use a lot of data. And we have price competition, but the prices have remained stable.

Mathieu Robilliard

Thank you. Can I ask another question about telecom. We've seen an improvement in ABPU. And if you look at Q3 and Q4. Would you say that there will be an acceleration in these improvements for fixed lines? You were saying seven on the back book, and this is not going to have an impact on all of the subscribers. This is not yet factored in all of your contracts. So, what about the rest of the year? Is there some type of ramp up to expect?

Olivier Roussat

Well, I'm not going to give you too much information because I don't want the competitors to know what we're going to do with our installed base and flows and pricing for Q3 and Q4. So, you'll have to attend the February meeting so that you know what we've done during the second half of 2023. Thank you very much.

Operator

Thank you. Now we'll go to the English speaking. We'll take our next question from [Jakob Bluestone] (ph) from BNB Paribas. Your line is open. Please go ahead.

Unidentified Analyst

Hi, good morning. Thanks for taking my questions. I've got two, please. Firstly, on Equans, I guess this is we're sort of gradually getting the first quarterly disclosures for the business. I was hoping if you could help us understand the intra year phasing for revenues and profits for the business.

I mean, Q2 revenues were up sort of EUR350 million versus Q1. Your operating profit was about 50% higher in Q2. So, can you maybe just help us understand what is sort of the low earnings quarters and which are the high earnings quarters? And what is it that drives the seasonality of that business. Is it just people want more air conditioning in the summer? And that's why you have high revenues in the summer? Or how exactly does that seasonality actually work for that business?

And then just secondly on the telco business, you've reiterated the EUR1.9 billion of EBITDA after leases for Bouygues Telecom, which is about 9% growth. You did 12% in the first half, if you maintain that, even if you adjust for the EUR23 million spectrum fee, you would end up closer to EUR2 billion of EBITDA than EUR1.9 billion. So, I guess my question is, is the guidance for telecoms EBITDA conservative or are there some headwinds some other headwinds other than the sort of Q4 spectrum comp effect that we need to be aware of. Thank you.

Olivier Roussat

So, we will start with the answer from Bouygues. We let time to give some time to Jérôme to prepare the first answer. Please Bouygues.

Pascal Grangé

For EBITDA between the two half the year as Olivier said in his introduction, [Raude] (ph) described this again. If you compare the first half 2022 with the first half 2023 and then if you take the data to compare the second half, please remember that at the end of last year, we restated the cost of our frequencies and this was a burden on EBITDA.

Now they're in the CapEx line and we do what the other operators do. And therefore, there's this base effect to take into account the half last year in 2022, the frequency costs were still in the EBITDA line. It's no longer the case on the first half of this year. So that's a positive effect.

Conversely during the second half, the two second halves are equivalent in terms of the reset and the frequencies. That's the base effect to take into account to look at the changes in EBITDA from one half to the other half.

And therefore, our guidance is EUR1.9 billion for EBITDA. The fourth quarter can be compared. Yes. The fourth quarter can be really compared on a like for like basis. Jerome now we have time to answer the question.

Jérôme Stubler

That's true. There's a seasonality effect on our business or in our books. And as I said earlier on, we're in line. During the first half, there's a seasonality effect, which is such that we expect an overall improvement for the year.

Unidentified Analyst

If I can maybe just follow-up on the second point. I guess my question was just in the way that Colas, for example, has very low profitability in the winter. And then high in the summer. Is there a similar seasonal pattern within Equans where some periods are low earnings and some are high or is it just sort of more steady throughout the year?

Olivier Roussat

Well, as part of outdoor works, and this is of course subject to seasonality, seasonality of outdoor works. To a lesser extent, if we compare this with the Colas group. So, there's a very [less impact] (ph).

Operator

Thank you very much. We'll take our next question from Nick Lyall from Société Générale. Your line is open. Please go ahead.

Nick Lyall

Good morning, everybody. Could I ask two questions, please? Firstly, on the broadband subscriber growth, it seemed a little bit slower this quarter and also last quarter. Could you comment on that, please? Is this just seasonality? Or do you think the markets slowing a little bit, which was suggested by one of your competitors?

And then secondly, on the debt, your bonds are pretty long term, but there's quite a lot of bank and syndicated loan debt coming up. So, what sort of coupons are you paying on the bank and the loan debt? And could you give us a bit of a hand on your expectations on interest cost, please? Thanks very much.

Pascal Grangé

Regarding volumes in the market what we find and we will see it in accepts numbers the volumes both for fixed and mobile is lower than last year and the previous years. There are two things on the mobile business, the higher rates have or may have stabilized the market in terms of overall volume. We were at both in Q1 and Q2, you have the stabilization still is pretty good on the fixed business, volume is a bit lower than in previous years.

This has to do with rates but also because we passed the high growth peak both in fixed line and the fiber business during the COVID years, we’re back to more reasonable numbers but compared to last year, yes, there's some decline on the very high speed and the fixed line businesses.

Regarding the bank debt and in particular the bonds, we are well covered, well hedged for rates, interest rates because the maturity is average maturity is nine years and over nine years the coupon we've been paying an average is 3.15. And the average economic price taking into account the hedging is less than 2%.

What's the next question?

Nick Lyall

Sorry. In the syndicated loans, in particular, there's no risk on the very short-term debt. I realize your bond debt is very long dated. But on the bank loan and the syndicated loans, there's no risk there in terms of interest rates or refinancing rates, is that?

Pascal Grangé

No. There's not much of a concern because the average maturity again is about nine years then the longest start 20 years. So, the timetable is well distributed over the next 20 years so there's no immediate risk of a sudden increase in interest rates should that happen this would not have a major effect on our income statement.

Operator

Thank you. The next question come from Mollie Witcombe analyst Citi.

Mollie Witcombe

Yes, thank you. I have a first question on Colas. You said that the order book, the backlog was up 11% on a like for like basis, but can you help us understand just how much of that is due to inflation and how much is due to actual volumes. The same question for Equans, but on revenue.

Frédéric Gardès

Well, Frederic will give us the beginning of an answer there. So if you look at volume rather than unit price. So, it's difficult to give you a breakdown between the share of inflation and volume. Inflation will account for 5% and the balance is basically more sales.

Jérôme Stubler

We look at our growth when you leave out inflation, you still have a residual -- significant residual growth in our numbers.

Mollie Witcombe

May I also point something out about Equans. I believe you said that your performance plan would be what EUR20 million per quarter, but I find that you stood at about EUR8 million. Is that because of the margins were below expectation or is there something else going on?

Pascal Grangé

Pascal will spell it out. The central scenario is about EUR60 million a year, but the implementation of the plan should be gradual over the years. So in H1, you really have less than what you would normally get in a quarter. So, we're not disappointed in the performance we are in line with expectations. Yes, Equans’ integration is going well. The perform plan that was devised by Jérôme and his teams is being rolled out including with the inclusion of Bouygues Energy in [70 BYES] (ph) into Equans in H1 and things are going exactly according to plan.

Operator

Thank you. We have no further questions online. And so we will have other questions from the audience or the closing remarks. Well, since there are no further questions. I wish you a happy holiday and we will see you again in February next year. Thank you.

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Bouygues SA (BOUYF) Q2 2023 Earnings Call Transcript