BOUYY - Bouygues SA (BOUYF) Q4 2022 Earnings Call Transcript

Bouygues SA (BOUYF)

Q4 2022 Earnings Conference Call

February 23, 2023 04:30 AM ET

Company Participants

Olivier Roussat - CEO

Pascal Grange - Deputy CEO and CFO

Frederic Gardes - Chief Executive Officer of Colas

Benoit Torloting - Chief Executive Officer, Bouygues Telecommunications

Jerome Stubler - Chairman, Equans

Conference Call Participants

Mathieu Robilliard - Barclays

Eric Ravary - CIC

Alexandre Roncier - Bank of America

Samuel McHugh - BNP Paribas

Jakob Bluestone - Credit Suisse.

Jeremy Dellis - Jefferies

Presentation

Olivier Roussat

(Starts Abruptly) which led us to imagine that there would be geopolitical tensions, which will be the case. High inflation, interest rates that rose quite sharply and high ForEx volatility and like our various businesses to the necessary steps to adapt to this new environment.

So our group sales rose 18% over the year to EUR44.3 billion. The current operating profit from activities, COPA, as we call it, rose by EUR284 million to slightly over EUR2 billion. The net income attributable to the group was up EUR67 million. This is the bottom left. On the left-hand side, you'll see that we are restating the right-hand bar chart for the Alstom disposal. That was a one-off. So our net profit restated that is actually up EUR67 million.

Mechanically, of course, the group's net debt increased with the acquisition of EQUANS acquisition estimated at EUR6.5 billion. Then we bought back our own shares during the year for a total of EUR224 million. So if we factor out these two items, our net debt would actually have been decreased or improved to prefer by EUR241 million over the year. So the guidance that we gave you when we started 2022, we expect a new increase in sales and an increase in our current operating profit. That's not including EQUANS, of course.

On these two slides, you'll see how we fared. Sales were increased to EUR40.6 billion. That's not including EQUANS, i.e., organic growth of 8%, a sharp increase. This was driven by good commercial performance and, of course, by inflation, particularly at Colas. Our current operating profit was strong at 4.5% of sales, enabling us to boost our current operating profit by EUR152 million to EUR1.845 billion. Now these results have enabled the Board to decide to propose to our AGM on the 27th of April.

The payment of a dividend of EUR1.80 per share. Remember that this dividend rose in 2021 from EUR1.70 to EUR1.80. On the second part of the slide, we've highlighted the fact that we have canceled over 8 million shares in 2022, decreasing the total number of shares in circulation from EUR382 million to EUR374 million aimed at compensating the potential dilution on capital transactions in favor of employees, which could take place in 2023.

A few words about our sustainable and responsible initiatives, particularly the view to reducing our carbon footprint. Just an update on the various measures we've taken on this chart. You'll see where we stand in terms of SBTi approval. Our target is to have all our businesses and activities approved and certified by SBTi. We began with reconstruction. We're going to believe Colas. Bouygues Telecom was approved in 2022. And then Bouygues Construction, Bouygues Immobilier and TF1 were all filed in last year, but they are currently in the process of being approved.

SBTi-- the SBTI process is taking longer because of the large volume of applications made. And finally, EQUANS is currently calculating its global carbon footprint and will file for STBi approval in 2024. There will also be proposing how to reduce its carbon footprint in that filing. Now going to review our various operations beginning with Construction and Services.

When we talk about Construction and Services, in this part, we have the Big Energy Services backlog, which, from this year onwards, will be booked to EQUANS. It will longer be booked to our construction business, which we will simply call construction, not construction and services. So our backlog is at a record level, standing at EUR33.8 billion, that was at the end of December 2022.

Moving on to Slide 13. If you look at the content of this backlog, it always includes -- still includes Bouygues Energy and Services, but not EQUANS. At EUR20.6 million, we have a good visibility for the future. That was at the end of 2022. For construction and civil works, this has increased despite less large projects in 2022, fewer awarded than in 2021 anyway. And the Energy & Services backlog is actually down 4%, which is evidence of the selective approach we've taken to projects.

At Bouygues Energy and Services, we have placed emphasis on margin rather than volume. And we talked to you about that at greater length this afternoon when we present our various indicators. Over the full year 2022 Bouygues Construction -- so its order intake increased by 9% compared with 2021, largely driven by what we call normal course of business, which goes to sure how competitive we are, particularly in the provinces.

And in the second half of the year, this was driven by large projects like Quai des Vernets in Switzerland in Q3 for EUR475 million and Qiddiya, which is an attraction park in Saudi Arabia in Q4, for EUR559 million. Real estate is a complex environment, which became increasingly tense since last summer. Bouygues Immobilier is still benefiting from the catch-up on building permits, which had dried up since the municipal elections in 2020.

Let's say, the bottleneck is gradually being released. Now the amount of time it takes to get works underway is getting shorter. The increase in interest rates have also had our boarding on the use re-rate, which does have an impact on reservation. So Bouygues Immobilier has decided to postpone certain offers, which means that mechanically, the stock available for sale has been reduced and potential reservations are necessarily fewer.

Broadly speaking, this is a wait-and-see market. And as a result, Bouygues Immobilier's backlog is down 17% over the last 12 months. It should be mentioned that very few commercial property projects being launched in so far as companies have not yet got a clear vision on their needs, particularly in terms of teleworking. Let me conclude with the backlog at Colas at EUR11.7 million, up 9% on 2021. This, of course, benefits from an order intake that rose 6% on the previous year.

The backlog in rail projects has increased substantially. The Birmingham extension, construction of Phase 1 of the Cairo metro line four of the five year continuation of the Network Rail contract of the railway lines in the south of England. Broadly speaking, the situation has been contrasted by region, particularly on taking of the level -- the low level of activity in Eastern Europe because of the conflict in Ukraine and an environment that was very much affected by inflation, which had a major impact on bitumen prices.

Moving on to the financial performance of Construction and Services. And now Page 14, incidentally. Sales reached EUR30.5 billion, up 9%. Now out of that 9%, it would be 4% organic growth, mainly driven by Colas. Colas' sales figure rose sharply by 17%, that will be 9% at constant scope of consolidation and constant exchange rates, driven largely by the impact of inflation, but inflation does play an important role.

Bouygues Construction's sales figures up 3%. Construction and civil works was 5%, particularly under the impact of international operations, while Energy and Services remained stable due to two reasons. First of all, the selective approach we are taking to projects and the transfer of our nuclear activities [indiscernible] carried out by Bouygues Energy & Services, that's been now transferred to BTP or construction civil works.

Bouygues Immobilier sales figure, which includes our share in joint development is up slightly. I mentioned this notion of joint developments because this is something we do to share risk with other developers. And of course, this has an impact on the resources we use. So it's perfectly natural to take them into account. They are more representative of how the business is developing, but factoring out this share, our sales would have been down 4%. Current operating profit from activities that are COPA, as we call it, totaled EUR918 million.

Bouygues Constructions COPA rose sharply to EUR413 million. And its operating margin rose 3.1% from 2.7% in 2021. Now this is all the more remarkable that the year was marked by high inflation and a lot of uncertainty. The COPA margin, activities margin or operating margin of our construction civil works business rose 40 basis points to 3%. Bouygues Energy and Services reached 3.6%. This is what we call the [indiscernible] plan. We'll tell you more about this afternoon.

So despite this backdrop of lesser activity, Bouygues Immobilier generated its [COPA] (ph) up slightly by EUR1 million. If you factor out this COPA from joint developments, it was actually down EUR6 million. Colas has a COPA of EUR468 million, up EUR21 million over the year. The COPA in Q4 was up EUR21 million to EUR468 million. This was thanks to the plans of action implemented. Frederic Gardes told you about these when we presented our interim results last July.

Before moving on to EQUANS, I propose we now look at a video about the construction of the wind farm -- the offshore wind farm built by Bouygues Construction of Fecamp. These are the concrete foundations that were put into the sea in Q3 of last year.

[Video Presentation]

There was quite a beautiful achievement, a beautiful project conducted by Bouygues Construction in its civil works division. Let's move on to Slide 17, sorry, with the key figures for EQUANS. This is rather a special year for EQUANS because a number of things happened during the year first, we had to finalize the actual scope of EQUANS being the conglomeration of several companies within Engie.

Then, of course, we had to separate these from Engie. And then there were some antitrust work. We had to get authorization from the European Commission, then pulling out Bouygues Energy and Services, BES, from Bouygues Construction, so as to merge it with EQUANS and that was done in January 2023. And then 2022 was also a significant year because that's the first year where we could recognize the transformation plan that started in 2021. EQUANS has -- now EQUANS, not including Bouygues Energy & Service, EQUANS has an order book of EUR18.7 billion at end 2022. So this gives us good visibility on future business.

EQUANS contributed to the group's revenue because it was acquired on October 4. And so we had just about all of the fourth quarter to ourselves at Bouygues and so it brought in EUR3.8 billion in revenue and EUR130 million in COPA, in current operating profit activities of 3.5%. The proforma data of the EQUANS as if the acquisition had occurred on the 1st of January 2022, would have produced a revenue of EUR13.8 billion, COPA of EUR278 million, COPA margin of 2%.

And so if you compare this with the announcements of Q4, you can see that the COPA margin was marked by seasonal effects, particularly felt in 2022. And then the net debt at EQUANS, which was receded about EUR400 million at the time of acquisition was up to EUR24 million at end 2022. That's an outstanding performance by the teams led by Jerome and Adrian. I will not go into the details of EQUANS' figures this morning because this afternoon, we will have a whole session dedicated to EQUANS, its scope, it's market, the structure of the company and the action plan that is being implemented so as to generate the performance expected in financial terms for EQUANS.

And so let us move on to TF1. Now you had a presentation of the numbers by Rodolphe on 14th of February. TF1 had a good operating performance in 2022. Revenue was up 3% at EUR2.5 billion. Newen Studios was very much involved in this. It delivered a number of beautiful productions, one called [indiscernible] and that was shown on TF1, but also Marie-Antoinette and Liaison. Advertising revenue was stable on the constant scope in 2022, up 2% on the constant scope in Q4, and that was thanks to the good performances of the broadcasting of the World Cup -- Football World Cup and that was also helped by the French national teams performance at EUR322 million.

COPA is down compared to 2021. But in 2021, there was the publishers tax credit COVID-related, then that was EUR29 million. If you restate that, for that factor, it was up -- that COPA was slightly up. In any case, the COPA margin stands at 12.8%. So what are -- what's the outlook for top management decided to review the situation appointed Rodolphe as Chairman of the Board of Directors after Gilles Pelisson stepped down. So while Gilles now is the CEO of TF1. And so we can only thank Gilles for this transition -- this fine transition with Rodolphe Belmer's arrival. The DTT channel will continue its work. TF1 will be able to maintain its leadership with current operating profit, COPA close to that of 2022. TF1 made an announcement concerning its dividends policy, saying that we are looking at stable or growing dividends for the coming years. And the Board of Directors will propose a dividend of EUR0.50 per share at the next AGM.

Let's move on to Bouygues Telecom now and take a look at the objectives, the targets set in 2022. For 2022, we were looking at revenue build to customers up -- upwards of 5%, and that was achieved because now we stand at 6%. It was looking at EBITDA growth after lease of more than 6%. Now it is, in fact, 9%, not including the restatement of new frequencies. It stood at EUR1.750 billion. So that target was met. And then growth capital expenditure was expected to be contained within EUR1.5 million, not including frequencies, and that was achieved as well.

If you look at the total number of customers for both mobile and fixed, we have 15.2 million mobile contract customers, not including machine-to-machine, so that's up 450,000 customers over the year. Regarding FTTH, we have an additional 674,000 customers over the year, including more than [200,000] (ph) in Q4. And that growth was done outside the dense areas that is outside the natural catchment area as it were, in areas where we had traditionally a little business indeed.

Finally, the FTTH footprint, as it were, has grown. Now we are in a position to market as many as 27 million premises. The objective was 25 million. And so we were able -- sorry, we were looking at 27 million, and we actually were able to have as many as 29.7 million, so an additional 2.7 million over target. The target -- the Internet now has becoming -- has become a sine qua non at home, what with COVID and telework and whatnot. So when you refer to the Internet at home, it's not so much the Internet as WiFi.

So it is indispensable to have high-quality WiFi. And if you can do that, it means that you have the good quality end-to-end. This is how a customer can assess the quality of their Internet access providers. And Bouygues Telecom has remained a leader in connectivity in terms of quality, it is the number one WiFi operator for the second year running, that is -- that recognizes, of course, the quality of operations provided by Bouygues Telecom, but also the quality of the equipment designed and offered by Bouygues Telecom.

And by the way, at the bottom of this slide, you have the type of equipment we're referring to here. You have to remember that Bouygues Telecom was the first operator in France with vertical boxes so that signal propagation can be better, of course, when the box is vertical, signal propagation is better than when the box is hoizontal. By the way when the box is horizontal, people tend to put things on top of it. In any event, on this picture, you have the WiFi boxes, the WiFi 6E model. We have an eco-design box, and that is certified by a german company called TUV, that's WiFi 6. We have a 5G box as well, and that is 95% made with recycled plastics.

And then on the right-hand side of the slide, you have a box offered by Keyyo, which makes it possible for NTP companies to have not just fiber, but also backup 4G access to provide a good continuity of service. This one is horizontal, but you have little antennas at the back to that send the WiFi signal.

Now let's move on to Slide 25. The commercial momentum is robust. ABPU is up and we have more customers. And so revenue is up. ABPU was up EUR0.30 over the year, year-on-year to EUR20.1, not including roaming, and that's mobile. For fixed, we are up EUR1.1 year-on-year to EUR29.5. So revenue in 2022 stands at EUR5.8 billion, up 3% over the year. Let me point out that the delta between the service revenue and build to customer is the revenue from interconnection with other operators, that is down. That is down because there is less use of inter-operator traffic for voice and text messages, but that is offset by new OTT applications.

We have others -- other sales out of 7%, mostly with contract work. And then EBITDA is now up 9%, thanks to good cost control. It stands at 30.4%, and we restated the way in which we look at license fees for 900 megahertz and 1800 megahertz frequencies. In 2009 when we were granted these frequencies, the license fees were recognized as operating expenses of charges, but now we line up with the common practice, which is to say that all -- that is all operators do the same.

This is seen as frequencies that were purchased. And so they are depreciated below EBITDA. And so therefore, this means that EBITDA is up EUR23 million. And of course, the EBITDA to revenue ratio has improved as well. We -- COPA was up EUR93 million, operating profit is up EUR72 million at EUR735 million in 2022. Bouygues Telecom disposed a fewer, sold fewer data centers, and so there's less noncurrent profit.

Looking at the outlook for 2023 for Bouygues Telecom, well, we will enlarge a customer base, we will maintain capital expenditure to have more comprehensive mobile networks. We're looking at more revenue. EBITDA after lease about EUR1.9 billion and growth capital expenditures should stand at about EUR1.5 billion, not including frequencies.

I'll give the floor to Pascal Grange, who will give you a detailed presentation of the accounts.

Pascal Grange

Good morning, everybody. Thank you, Olivier. I'm going to tell you about the group's consolidated income statement. I'm not going to dwell on the top lines of this income statement because they've already been commented by Olivier Roussat and explained business by business.

Let me comment the lines below COPA. So in addition to the PPA amortized at Cola, TF1 and Bouygues Telecom, Bouygues as a for the very first time amortized a further EUR13 million PPA arising from EQUANS in Q4. In 2023 for the full year, this PPA amortization should represent somewhere in the region of EUR50 million for EQUANS, but we'll look into this at much greater detail this afternoon at our Capital Markets Day.

Nonrecurring items totaled a negative EUR90 million against a positive EUR40 million last year. The main reason for this is that the Bouygues Telecom data centers generated substantial income last year. We have still sold a number of data centers for some EUR70 million, but we also have nonrecurring expenses concerning M&A transactions and nonrecurring provisions subsequent to regulatory changes.

The cost of net debt rose to EUR198 million, of course, arising from the acquisition of EQUANS, as Olivier said earlier on. So just for your information, for 2023, we expect financial expenses to increase because of the full year impact of the acquisition of EQUANS. We believe that this expense will be in the region of EUR130 million before tax or if you prefer, the net expense after tax will be of the order of EUR96 million.

Moving down the income statement. We have booked a tax expense of EUR424 million, which is virtually stable by comparison with our tax expense in 2021, giving us a global effective rate of 27% after 29% in 2021. So very comparable. Finally, EUR252 million decrease in the net profit of joint ventures and associates between the end of 2021 and the end of 2022. This was mainly due to the fact that Alstom did not contribute to 2022.

Last year's performance was highly impacted by the capital gains from EUR219 million in sales of these data centers. There's also the dual impact of the Salto platform this year. We have the loss of the activities in 2021. Of course, the decommissioning costs in 2023. Overall, this will represent both the loss and the provision will represent some EUR46 million in 2022. So overall, it seems with net income group share of EUR973 million after EUR1.125 million last year. This is a decline of EUR152 million.

But if we were just to factor out the impact of the capital gains on Alstom shares, the net results from group share would actually have improved by EUR67 million. Now we have also dropped proforma statements for the group for 2022. This is based on epothesis of nonconsolidating Q4 for EQUANS, but the -- based on the epothesis we would consolidate EQUANS over the full year. This has the number of attendant consequences in terms of financial expense and, of course, in terms of amortization of the PPA.

So this acquisition generates additional COPA for the group, of course, but also additional net income. If we factor out the impact of PPA, which has nothing to do with the economic performance of EQUANS scope of consolidation. So at this point, EQUANS, obviously, on a proforma basis, EQUANS would actually dilute our margin on activities. As we saw earlier on, EQUANS profitability is not quite as good as that of the Bouygues Group as a whole.

Now this also has a positive impact on not just COPA, but also on net income group share, that's before amortization of PPA. Let's now look at the group's financial structure and its net debt. As Olivier pointed out, the group's net debt at the end of the period amounted to EUR7.4 billion after EUR941 million at the end of December 2021. I want to point at two important points. The impact of the acquisition of EQUANS, which was EUR6.5 billion. We've already communicated about that.

And the debt was estimated at the time of the acquisition at EUR400 million. There's another factor that we also want to isolate. This is the buyback of Bouygues shares, which, last year, totaled EUR224 million. Again, Olivier has already commented the buyback. Now if we factor out those two items, EQUANS and the buybacks, our debt would actually have been reduced by EUR241 million. That's a calculation, obviously.

Now the group's net gearing, obviously, rose to 53%, while it was only 7% last year. But that was an extraordinarily low level as a lot of analysts pointed out at the time. Even at this substantial increase in net debt, the rating agencies have confirmed our good ratings. S&P have given us an A- with a negative outlook. And Moody's have given us an A3 rating with stable outlook.

Over the next couple of pages, I'm going to tell you how our net debt has evolved over the period, not talking about EQUANS or the buyback of our own shares. In other words, how we got from EUR941 million to EUR700 million, which would have indicated if we factor out those two items. I want to point to several things out.

First of all, net acquisitions, that's net of disposals, totaled EUR85 million. Now there are a number of TF1 shares that were bought up by Bouygues, also the disposals of TF1 over the period. But the biggest single factor is the acquisition by Colas of Hasselmann. Hasselmann is a German company specialized in the construction of railway tracks and infrastructure.

We also paid for the 5G frequencies and paid the annual fees on the 900 megahertz and 1800 megahertz frequencies for a total of EUR109 million. The dividend payout was EUR777 million. These are dividends paid by Bouygues SA, but there are also dividends paid by TF1 to its minority shareholders. Now the very important factor that we mentioned several times in 2022. This is the intake of EUR723 million net of taxes.

This is the amount we received from interest rate swaps closed out in 2022 to -- well, largely in 2022. The overall impact of the swaps on our net debt was EUR831 million. Another important factor is the operations and our operations generated EUR214 million. This is what I would now like to focus on in our next slide, Page 32. Well, the first factor of change here is our net cash flow, that's including lease obligations. It was EUR2.088 million last year. It rose this year to EUR3 billion.

Now this is because of the increase in the volume of business and of course, the COPA. Net CapEx was well under control at EUR2.08 billion, EUR2.09 billion. Our investments in Bouygues Telecom were maintained at the level we said they would be at, there was a slight increase to as I mentioned earlier on. We sold a fewer assets at Bouygues Telecom. The final factor I want to draw your attention to is the change in working capital requirements, which was a deterioration of EUR727 million.

Now our working capital requirements are never stable from 1 year to the next. Some years, it's up some years, it's down, sometimes there are objective factors. This year, at Colas, for instance, the cost of bitumen rose, which means that for an identical same level of stock, the value of your inventory increases. There is also the change in levels of business, as a result of which customer receivables are higher than they were in the previous year, for example.

I'd also like to point out that this EUR727 million the change in the year as we compared with a positive change of EUR321 million last year. And I think I remember it was EUR550 million. So you can see how working capital requirements fluctuate from one year to the next, which is perfectly natural and in particular, in construction.

Concerning working capital requirements, I would also like to point out that -- at the end of the third quarter of 2022, we identified the issue. I told you that we would drop a plan to considerably improve the figure at the end of Q3. This is what we did because in the fourth quarter, there was a sharp -- a very sharp turnaround in Q4 with a double-working capital requirement improving by EUR2.3 billion.

That brings me to the end. And Olivier, you have the floor, once again.

Olivier Roussat

Thank you, Pascal. And now let's consider the outlook and our priorities for 2023. No surprises there. The number one priority is, of course, to successfully bring EQUANS on board. And indeed, the merging as it were of Bouygues Energy & Service, with the EQUANS and outside Bouygues Construction, then you have a performance plan that will be introduced this afternoon to us to improve EQUANS' own financial performance.

Then we will, of course, be there to support the various businesses in various ways. And then this number three priority is to continue a line of action for climate and in particular, our efforts to reduce our carbon footprint and indeed reduce the three piece scope, which is, of course, the heaviest as it were in the company.

What's the outlook for the company? Well, there's lots of unstability -- instability, high interest rates, the volatility of currencies. And so in that context, we're looking at revenue that should be close to that of 2022, but also improvement in copper that is current operating profit from activities. Now when I say that the figures should go up, we are looking -- we're working on a basis of a proforma of 2022 on the assumption that EQUANS was acquired on the 1st of January 2022.

So we're looking at a revenue of EUR54.4 billion and current operating -- COPA of EUR2.164 billion. That's the pro forma. A few events -- coming events this afternoon here at 14:00 hours Capital Markets Day. 25th April we'll have -- 27th April, sorry, the AGM, and then there will be a number of other events on our site.

This completes the presentation. Thank you for your attention, and now we'll be happy to take your questions along with members of the Bouygues top management.

Question-and-Answer Session

A - Olivier Roussat

This is a call from HSBC. I see that there's no guidance for Bouygues Construction, even though Q4 was pretty good. How do you see international domestic demand for big projects? And where do you stand in terms of your ability to pass on higher costs to your customers? And then is there normative margin level for Bouygues Construction in view of inflation precisely?

I have another question on WCI. As you pointed out, you returned -- well, you reversed the trends of gains of the previous years, but that does reflect the positive performance of EQUANS to EUR210 million. So proforma the situation seems more challenging. You said there were gains in 2021 and then factors that deteriorate WCR in 2022, can you give us detail, some color as to how these factors might change in 2023?

Well, let me take the question about 2023. Pascal wants to take the microphone out of my head. Well, well, please go ahead, then Pascal. Be my guest. You do need a microphone, Pascal?

Pascal Grange

Well, I can take part of the question. You have to go to the bottom of the step. Otherwise, nobody can see you. That's where you can be seen. Thank you. So you had a question about the -- what the market on major infrastructure projects? Well, that market remains buoyant in France. Well, we have the Greater Paris project. You have some issues of transportation infrastructure in the north of France as well in Toulouse, their airports, where we might have a chance that also the mobility and energy services abroad, low-carbon energy, you're looking about at solar power plants, wind turbines as well. You had the Fecamp project, plus nuclear, of course, and we are involved in the Hinkley Point nuclear power plant in the U.K., but that's the U.K. But there are other countries where we do have a presence. Likewise, for mobility projects, metro trains and other forms of transportation. This is a market with a high demand for big projects.

Right. Regarding the normative level of margins, well, of course, the market is not in a normative environment for the reasons I cited. And so there are a number of things that will be done it because we do want to be more selective in terms of projects to be -- to do whenever we can in business line to be -- to target our offers more accurately. We've been working with key account managers at Bouygues [indiscernible] where we do all sorts of things to protect margins. But at this point, again, this is not a normal environment. Too many things are going haywire as it were and there are things over which we have little control indeed.

Mr. Gardes, you want to add something.

Frederic Gardes

Yes. As regards WCR, you rightly point out that there are fluctuations from one year to the next, and that's the very reason why we're not giving guidance year-on-year. Otherwise, we would be making assumptions on things we have no control of. But it is part of the group's DNA to work on WCR. We may remember at Bouygues Construction, there were a number of steps taken to keep that under control. In provisional terms, all I can say that our people are working on that and not just at TF1, in all businesses, Colas, Bouygues Immobilier or indeed, TF1, where all our teams are mobilized to address the WCR level, but we are losing ground and on license fees because the 5G licenses are paid off over several years. And so year after year, that means that -- of course, the -- this comes to the detriment of the WCR. But -- so we cannot give guidance, but we're not anticipating any major challenges there.

Unidentified Speaker

Thank you. But you will discuss this, this afternoon. But regarding EQUANS, how can you read the Q4 WCR performance is a lot of seasonal factors you could well imagine a positive contribution.

Frederic Gardes

Well, yes, we'll be discussing this, this afternoon in greater detail, but one thing is for sure. If you look at our plans for EQUANS, we want to improve WCR, the improvement in Q4 was, of course, significant, and there are a number of seasonal factors. Nonetheless, the medium-term trend for WCR is improvement within the EQUANS scope.

Operator

Thank you, sir. And the next question comes from Mr. Mathieu Robilliard from Barclays. You have the floor, sir.

Mathieu Robilliard

Well, thank you for this presentation. I did have a couple of questions. Number one, regarding your rating, you said that in the presentation earlier on the S&P rating and looking at the statement published in September, you said that top management was considering a number of smaller acquisitions, but that would add up -- that would be a -- that might also go with an asset sale. Can you give us details on that? Or is that just general expectations? Or can you give us details? That was one question. The other question is about the telecom's guidance. Are you including well, the higher -- the increase in rates, but how does that reflect if you have higher prices? So how will that reflect on the accounts? And then the final question on Colas' backlog in France. There seems to have been adjustments at the end of the year was that -- what's the part of volume in that and what's the part of price?

Olivier Roussat

Okay. So we'll have a three person answer. Under the S&P rating, well, a reference was made to disposals on the S&P statement. Well, in our company, inevitably, there will be some small acquisitions, considering the number of businesses, we can expect some external growth, but nothing major on the map. Regarding now, what you're referring, I believe, to asset-based -- EQUANS' asset-based activities when we bought back EQUANS scope. There were some asset-based activities that were -- as it were acquired on that occasion, and we may well dispose of these assets.

Indeed, we started the process a few days ago, just to test the water as it were to test the markets, but we'll tell you more about this, this afternoon. But I think that is what S&P was referring to. On telecom, well, the guidance is in line with our own expectations on revenue in view of our plans for the year. Of course, the -- with a larger base, we can expect larger revenue. That's basically all we can say. And that's basically it. And then Frederic will give us the answer to the third question.

Frederic Gardes

Yes, on the Colas' backlog in France. Regarding Colas Rail, that has declined a bit, but that's because we've been very selective with the deals that we do take on roadworks as there was a -- well, a small decline in volumes in industry in 2022, but that was offset by higher prices. So all in all, we remain stable. The roadworks order book is looking up. And well, in fact, it's stable if you restate that inflation. But we are on a positive trend right now. And so we have no concern about markets now.

Mathieu Robilliard

Thank you.

Operator

Thank you, sir. And the next question comes from Eric Ravary from CIC. You have the floor, sir.

Eric Ravary

Good morning, everyone. I do have three questions as well. on CapEx that you -- can we have an order of magnitude on a proforma basis, how do you compare 2023 to 2022, not including telecoms because you already have a guidance for that? Another question on Bouygues Telecom this time, the dispute with the free and the ruling by court to have -- what was it, the EUR300 million payment. Are you going to appeal that ruling? And then what's your policy in terms of provisions? And then the last question -- a follow-up question on Colas. The order book, the backlog is up 7% for Colas at end 2022. Any idea of the part of price and volume for the order book?

Olivier Roussat

We'll start with the long answer. Benoit will give you the details about the litigation with Iliad -- well between Bouygues Telecom and Iliad. Well, the one thing that you should know that we are challenging the court's ruling that is one more episode in a line of action conducted by fee against the three operators for the past 10 years. They do not want to carry subsidized offers even though they're perfectly legal. So of course, we're challenging the decision. We appeal the decision, the ruling and we believe that the offers are perfectly legal and they have been confirmed by European legislation. So we are well within our rights when we have these subsidized offers. Pascal on CapEx?

Pascal Grange

We do not provide guidance on CapEx except for Bouygues Telecom. Bouygues Telecom being the largest consumer of capital expenditure. So the guidance for next year is pretty much the same as this year, EUR1.5 billion, you can see that year after year. Bouygues Telecom has been able to give a pretty accurate guidance. On the construction business, we maybe having more CapEx in 2023 compared to last year because we're starting a number of major projects. There could also be additional CapEx at Colas. And that is because they will be receiving the two bitumen vessels that they ordered last year.

But usually, capital expenditure is often met with advances on works invoiced. And then the last question, the mix -- the price volume mix on order books. Well, if you compare order books from one year to the next, well, if you have a large order coming in at the end of the year, it makes comparison a bit difficult. And what is attributable to a commercial policy, what is attributable to inflation, it's hard to tell. But about France, that's what I was saying earlier on. North America has been very dynamic. And you can see some of the effects of the Biden plan, and we are very confident on volumes for 2023. Conversely, in Central Europe, the road business is -- well, at the standstill because of the Ukraine situation, plus inflation is higher here, and this may well have impact on volume. So the order book remains high. There's some inflation there. But of course, we have been taking a number of projects as well. Frederic?

Frederic Gardes

I just like to clarify a point concerning the dispute with Iliad. You have nothing to pay until the appeal has been ruled on. Is that true?

Benoit Torloting

No, no, no, not true. I'm afraid. What I said earlier on a repeated is that we have appealed the ruling. We've also contested the provisional execution of this fund.

Frederic Gardes

So you do have over EUR300 million to pay out?

Benoit Torloting

Yes, EUR308 million, which would be precise. We have no other questions on France, we have now questions in English I believe.

Operator

[Operator Instructions] We'll take the first question from the English side from Alex Roncier from Bank of America.

Alexandre Roncier

Good morning and thank you for another question on Construction, one on Colas, one on Telecoms. In construction, what benefits you see with the Paris Olympics in 2024. Is that already built into the guidance. Concerning Colas, I've noticed that the margin seems to have benefited at a holding company level that would appear to be the benefit of a number of asset sales that you've mentioned. There's also a margin at 0 in the U.S. I suppose that, that is because of inflation. And the cost base, can we expect a drastic improvement in the years to come? Or will this be spanned several years? And finally, in Telecoms -- you talked about an 80% acquisition in the high-density area. Are we talking about fiber acquisition? Are we talking about acquisitions in fixed lines in general.

Olivier Roussat

Now I'm going to answer your question about construction. The 2024 Olympics Games, first of all, we have been involved two projects, the Olympics pool for diving, which is just opposite the Stade de France. This is a project that is well underway. In fact, we've already installed the platform in the pool center with the second big project North of Paris, which is called the Arena. These are orders we took in several years ago. So we have nothing up and coming, which is just as well given the fact that the Olympics are in 2024. It takes time to build these things. Thankfully, we have nothing else in the pipeline. Then you had a question on margins at Colas. I see Frederic scribbling his answer. Frederic, you have the floor.

Frederic Gardes

If I heard you clearly, there were two parts, one about the U.S. and another at holding company level in the U.S. As is often the case in the U.S., things happen more rapidly and more suddenly, more violently than elsewhere. Yes, we were quite

sely affected in the first quarter. So overall, if we add in a few one-off difficulties that have since been resolved, yes, this was a year where our performance is not as good as we expected.

As for the holding company question, well, with sales increasing quite sharply, we have more than covered our general expenses, which are quite high. However, you're quite right. There is also a contribution from the asset-light plan that we have implemented a few years ago, which is aimed at releasing cash that is tied up in nonstrategic assets and this [indiscernible] cash that we released to use it outsourced. That has also contributed.

Alexandre Roncier

The details of your acquisitions, Benoit, if you would say on that?

Benoit Torloting

Pertaining to fixed lines, 80% of our growth is in fiber. Outside of the high density, it's in the medium density and the public initiative zones. So thanks to fiber and thanks to our quality of execution, we have strong growth in areas where traditionally Bouygues Telecom was not as strong. So fiber, yes, has certainly been very supportive for us. The fiber is really a means for Bouygues to increase its market share, particularly in areas where we were not present in ADSL because we simply decided not to develop our own infrastructure, not so with fiber because we are looking at 30 million premises connected to date.

Operator

[Technical Difficulty] Societe Generale.

Unidentified Participant

I hope you can hear me. It was a quick question, firstly, on telecoms. And then secondly, just a quick explanation on EQUANS and I hope you can maybe answer that. But firstly, on telecom revenue for 2023, you've not given a precise target for revenue. Do you suspect top line may be a little bit softer this year? Or is this just a question sort of semantics that you're not going to give an actual number for guidance? And your guidance for EBITDA also seems pretty precise is 7% or so that you're implying. So what do you -- what's the outlook in terms of such as staff costs, energy and also the wholesale rates on [ copper ], which [indiscernible] is talking about lifting. Could you just describe the moving parts, please? And the second point was just a very quick explanation of your very strong seasonality at EQUANS. Could you just explain that point? I mean, if it's just Q4 margins were stronger than the rest of the year, fair enough, but was it something else you were trying to get across? Thank you.

Olivier Roussat

One quick one, Benoit. on Telecom's guidance is that our sales will be higher than in 2022. Now you can call that imprecise, if you like, which I would understand, but do you remember that we are in inflation context with a very strong competition. So we don't want to be giving indications about what our price policy might be for the year. This is the fundamental reason or one of the fundamental reasons that we are less precise about sales. As regards to EBITDA, our guidance is a little more accurate at EUR1.9 billion. I break that down. We're not going to go to details, but do bear in mind that we are intensifying our value creation strategy.

To answer your question about the impact of inflation, we are rolling out a policy to control costs in all areas. So it's this twofold strategy of value and optimization costs that gives us a guidance that will be up clearly on 2022. As for the seasonality of margins, up to now, we've had a relatively seasonal business with Colas. In the first quarter, we have not a lot of business costs, but not a lot of sales. Now with EQUANS, we have a business which is also seasonal. Jerome, would you like to say a few words about the variations in margins over the few years and why Q4 is higher than other quarters?

Jerome Stubler

Yes, we have seasonality every year. This is mainly due to the impact of weather on outdoor works. That's the first impact. So we have also got another form of seasonality that exists in our businesses, but I'll elaborate on that this afternoon.

Olivier Roussat

Next question. Thank you, Jerome.

Operator

The next question comes from Sam McHugh from BNP Paribas.

Samuel McHugh

I understand you don't want to give away the specifics on pricing strategies in telco, but have your thoughts on kind of balancing customer growth and pricing change at all in the last 12 to 18 months, the market does seem to have called down. Do you see any benefit from being a bit more focused on pricing versus customer growth? And then secondly, just a clarification on the accounting change. Is that EUR23 million benefit just a Q4 benefit? It's not a similar benefit to anticipate in the first three quarters of 2023? Thank you.

Olivier Roussat

Okay. You're talking about the new accounting method -- new accounting frequency cost. I am speaking on behalf of my colleagues, that is that they are no longer considered as expenses. They are found below EBITDA because they are deemed to be debt. The second part of the question, to be very frank, I didn't understand a word. Did somebody understand? Can I call a friend? On which part of our business -- on Bouygues Telecom, my apologies, yes. Now I believe I heard the question. The first part of the question concerned, could we be more specific about our sales guidance?

Once again, fewer promotional drives in the French market in recent years, and that's true. And I can confirm that in the last three or four months, there's fewer promotional drives, be it in mobile or fixed lines. So the prices are on the increase, that's focused in. Bouygues Telecom has adjusted its own prices on the customer base and on customers acquired. So yes, this should feed into the sales for the year. What about the next few quarters? As I said, well, the -- it is a very strong competitive environment and we have nothing to announce just yet as regards pricing.

I think there was actually a more specific question about the increase in EBITDA. Is that a full year effect when we look at frequencies over the full year? If so, does EUR23 million, is that specific to Q4 or can we expect that to recur over the full year? If I fully understood the question, and the answer is EUR23 million was in Q4. The whole year was booked into Q4 and it will be EUR23 million over the full year 2023. We booked that amount just Q4 last year.

Samuel McHugh

Thank you.

Operator

[Technical Difficulty] From Jakob Bluestone from Credit Suisse.

Jakob Bluestone

Hi. Thanks for taking my question. I've got two, please. Firstly, can you maybe expand a little bit on the decision to move to COPA from current operating profit. Why do you think that's the right metric? And why are you not booking the PPAs in other operating income and expenses? So you can just clarify that. And maybe if you can also give a little bit of guidance for what we should be modeling for the PPAs? And then just secondly, on the telecoms business, historically, you had a fairly sizable exposure to roaming presumably it was a significant tailwind in 2022. Can you maybe just quantify how big a tailwind for either revenue or EBITDA was roaming in 2022? Thank you.

Olivier Roussat

Before we get the precise figure because roaming has declined since COVID. Could I ask what is the -- ask what the impact was on 2022. Concerning roaming during the COVID year, 2020 and 2021, roaming decreased very sharply at Bouygues Telecom. What we found in 2022 is that roaming is gradually coming back to pre-COVID levels, particularly with the public at large. People have started traveling again. People are traveling around the country. So roaming is almost at the same level as before COVID. However in B2B, clearly, there's been a change of behavior on the part of companies and even though some company has opened up again, and there's more and more traveling. And people are working remotely. So roaming in B2B is somewhere between the pre-COVID level and the level of drop to during COVID. I hope that it will improve again this year because there are more and more countries opening up, I'm thinking of China, in particular.

But in B2B, I think something has been a structural change in so far as employees are traveling less and working more remotely. I should add that concerning roaming, we are very much impacted by what happened in the U.S. and Asia. Europe is very small in terms of gains concerning our key performance indicators, how we've changed them and how you should do your modeling.

I think maybe Pascal Grange will be the person to answer that question.

Pascal Grange

Yes, we decided to change this indicator and started publishing it from Q3 of last year, with a view to preparing for the inclusion of EQUANS. We decided to do this because we felt that the amortization of PPI is not representative of the performance of our businesses and is not representative of the EQUANS performance. So we wanted to give you the best possible vision of the economic performance of our businesses. This is why we've decided to calculate COPA while factoring out amortization PPA.

From the point of view of modeling, it's quite straightforward. For 2022, EUR56 million in PPA amortized. EUR56 million of the amount, EUR13 million are EQUANS related meaning that next year we will have EQUANS impact for about EUR50 million and the impact of our other businesses for a little over EUR40 million. These are figures that are in decline, the relatively stable barring further acquisitions.

Olivier Roussat

Thank you, Pascal. Next question.

Operator

Next question from Jerry Dellis from Jefferies.

Jeremy Dellis

Yes. good morning. Thank you for the presentation and thank you for taking my question. I have two questions on telecoms, please. Mobile service revenues for Bouygues Telecom have been extremely flat every single quarter through 2022. And the mobile ABPU trends adjusted for roaming have also been showing rather stable and low levels of growth. So how do we see this better pricing environment in French telecoms actually being sort of reflected in revenues? Is there an offsetting effect somewhere else, please? Then my second question has to do with your broadband business, where, obviously, revenues are growing at a very healthy rate. Do you expect to sort of sustain that level of revenue growth into 2023? And could you please comment on how your broadband customer base is distributed between the urban areas and perhaps more rural locations where you're getting access to customers for the first time, leveraging your fiber reach? Thank you.

Olivier Roussat

That's quite a detailed question. So we gave you an initial answer to that 80% of the connections were in areas that are not dense in regions where we were not really present. So this has really led to an increase in market share. Maybe Benoit would answer the rest of your question.

Benoit Torloting

Concerning mobile, the services sales figure includes services billed to clients, which is on the increase and what we call incoming revenue from interconnection. So that is not growing as sharply because that is actually on the decline for two reasons: First of all, the prices that operators pay one another for incoming calls that are decreasing year after year. There's also the volume of messages or even calls that are currently being replaced by messages on WhatsApp and [indiscernible]. This decline in incoming calls, which is still -- has no impact on EBITDA because at the same time, we are paying other operators less for these interconnection costs for our clients, phoning into other operators.

So in terms of EBITDA, it's completely neutral. This is why our guidance is based on sales invoiced to clients, which is an indication of the number of clients and the individual amount paid by each client. This figure is increasing substantially in mobile and even more substantially in broadband. As because in broadband, we are winning over clients. Our positioning is gathering pace in our traditional regions, but also in new lesser density regions where the switch over to the rollout of fiber is enabling us to gain market share. So the broadband gains are higher than in mobile and will continue to be higher.

Olivier Roussat

Thank you, Benoit. Have we another question?

Operator

No, there are no more questions.

Olivier Roussat

Okay. Let me thank you, and see you all at 2 o'clock for our Capital Markets Day, which will be devoted to EQUAN.

For further details see:

Bouygues SA (BOUYF) Q4 2022 Earnings Call Transcript