Bouygues S.A.

Thank you. Good morning, ladies and gentlemen.

I would like to remind everyone that you can find in the company website at www.bouygues.com, the earnings press release, the presentation will be commencing on during this conference call, an Excel file with historical key figures for the group and each business and the company's financial statements. Statements made on this call are forward-looking statements.

Such statements refer to objectives that are based on management's current expectations or estimates and are subject to a number of factors and uncertainties that could cause actual figures to differ materially from those described in the forward-looking statements. I will now turn the call over to Pascal Grange, Deputy CEO and CFO for Bouygues.

Thank you, Karine. Good morning to all of you.

And thank you for joining us to discuss brief 9 months 2021 results. With me in the room is Christian Lecoq CFO of Bouygues Telecom.

Following our comments, we will be answering your questions. Let me discuss the main highlights for the first 9 months results as shown on Slide 4.

First, in line with the first half of 2021, the group's results over the first 9 months showed strong improvement on the return to their precrisis level, which is a very good news. Second, the group generated a strong free cash flow and its financial structure remained very solid.

Third, in an environment which continues to be uncertain, the group confirms its outlook for 2021, which has already been revised upwards in H1. And finally, you know that we are very enthusiastic as we signed a purchase agreement with ENGIE to acquire EQUANS for an enterprise value of €6.7 billion.

Following your feedback after our conference call on EQUANS last week, I want to clarify a few points. We perfectly understand that the situation is not ideal for you regarding the information we can give EQUANS.

However, we have committed to ENGIE not to disclose any figures on EQUANS until the closing date. We must respect its confidentiality.

And unfortunately, this uncomfortable situation will last a few months. I want to be very clear.

We had access to all necessary data during the due diligence process in order to make our binding offer. Based on what we have learned, we are convinced that we will be able to improve EQUANS' margin to best-in-class level.

The results of the operational efficiency plan deployed over the last 2 years at Bouygues Energy & Services has proved its quarter-after-quarter. At closing, we'll be able to communicate a road map on intermediate objectives.

In the meantime, I must ask you to be patient. Let us now turn to the group's key figures on Slide 5 to review its good performance in more detail.

Group sales for the first 9 months of 2021 reached the precrisis level at €27.5 billion compared to the same period of last year. They are up 10% with all our business segments delivering growth.

The growth was stronger in France and in international markets as French activity was impacted by a strict lockdown from mid-March 2020 before recovering gradually. Nine months 2021 current operating profit improved by €23 million compared to the first 9 months of 2019, thanks to improved profitability at TF1 and Colas on higher volumes and ABPU at Bouygues Telecom.

At 4.1%, current operating margin is back to its 9 months 2019 level. We are, therefore, well on track to achieve our guidance for the full year.

Net result attributable to the group for the first 9 months of 2021 is much higher than 1 year ago and slightly below 9 months 2019, notably due to lower consolidation from Alstom. And finally, the group generated €805 million free cash flow.

This level of free cash flow is well above 9 months 2020 and 9 months 2019, excluding Alstom's dividends in 2019, which amounted to €341 million. Let us now move on to Slide 6 that highlights the group's strong financial position.

At end September of 2021, net debt was €2.6 billion, which is a historical low for a 9-month period. Compared to September last year, net debt was down €1 billion, a significant reduction.

The strong cash generated by operation of €1.1 billion on the disposal of Alstom's share capital for a total of €1.4 billion more than covered both the acquisition of BTBD for roughly €800 million and the payment of dividends for €738 million. Net gearing decreased by 10 points over the same period to 22%, reflecting the very strong situation.

Last, after the announcement of the purchase agreement with ENGIE to acquire EQUANS, credit agencies Moody's and Standard & Poor's issued press release on 10th of November regarding Bouygues rating. Moody's rating is maintained at A3 with a stable outlook.

Standard & Poor's rating is A- with credit watch negative. These ratings reflect the sound financial profile of the group.

Moving to Slide 7. Available cash was at the high level of €12 billion compared to €10.1 billion 1 year ago.

It included €4 billion in cash and €8 billion of undrawn medium- and long-term credit facilities with no covenants. As you can see, the debt maturity schedule is well balanced with no debt tool.

Please note that this maturity schedule does not yet include the issuance of €800 million of bonds at the end of October with a coupon of 0.5% held in anticipation of the reimbursement of the same amount scheduled in February 2022. As such, the group relies on the particularly strong financial position, which remains a major asset to strengthen its business segments and accelerate their growth notably in the context of EQUANS.

Let's now turn to Slide 8 to see the net debt evolution between end of December 2020 and end September 2021. You can observe that a moderate 652 -- €656 million, sorry, increase in net debt since the end of last year is mostly explained by the following 4 items.

First, the positive impact of €984 million of proceeds net of fees from the sale of Alstom shares in March on June 2021; second, an outflow of €66 million related to share buybacks, which more than covered the exercise of stock options for €51 million; third, an outflow of €738 million related to the payment of dividends; and fourth, an outflow of €853 million from operations increased by €126 million year-on-year that I will explain on the next slide. As you can see, we also included the 9-month 2019 figures to assess the evolution compared to a standard year.

Turning to the breakdown of operations for 9 months 2021 on Slide 9, we can notice that. First, net cash flow, including lease expenses, increased by roughly €600 million, a significant improvement reflecting the increased activity in all businesses.

This level is also higher than in 9 months 2019. Second, net CapEx was up €334 million, mainly due to Bouygues Telecom, in line with its strategy of running out 5G, fiber networks, enhancing network quality.

And third, as you can see on the chart, working capital requirements related to operating activities increased by around €390 million compared to the same period of last year, reflecting the stronger level of activity. Compared to 9 months 2019, working capital requirement is at a lower level, demonstrating the efforts made by all business segments.

I will now turn to the review of operations, starting with the Construction businesses. Let's begin with the backlog in the Construction businesses on Slide 12.

At €31.8 billion, the overall backlog at end September 21 was at a high level, providing good visibility on future activity. The share of the order book in international markets was up 2 points year-on-year, representing 64% of the backlog at Bouygues Construction and Colas with new contracts won in third quarter shown on the right side of the slide.

For example, Colas won 3 road contracts in Ontario for €126 million. Furthermore, Bouygues Construction won a contract for the building of a student housing project for €194 million in assets in the United Kingdom.

Let's now look at some details by business segments on Slide 13. As you can see, the momentum at Colas remain strong.

The backlog reached the very high level of €9.6 billion, up 4% year-on-year, driven by strong international business momentum. Indeed, at the end September, the international backlog increased year-on-year by 9%.

The decline in Bouygues Construction's backlog reflects a high basis of comparison related to the very low backlog drawdown during the lockdowns period and the award of a number of major projects in the first half of 2020. Moreover, there was a lower volume of significant deals processed in 2021.

We believe volume should be higher in 2022. At Bouygues Immobilier, the dynamic in residential reservations remained strong, up 13% year-on-year in 9 months 2021, reflecting solid customer demand.

The volume of building permits submitted also improved compared to 9 months 2020, providing good prospects for future activity. However, delays in obtaining building permits are still very long, and we therefore have a lower supply of available units.

Regarding commercial activity, clients are in a wait-and-see mode. And as a result, the backlog was down 15% year-on-year.

Let's now look at the Construction activities key figures on Slide 14. Sales and results showed strong improvement compared to 9 months 2020, which was significantly affected by the pandemic.

Compared to the 9 months of 2019, results of the Construction activities are close to their precrisis level. Overall, sales are still down by 5% due to a high comparison base.

Let me remind you that in France -- that France experienced a high level of activity in 2019, 1 year before the municipal elections. At €515 million at end of September 2021, current operating profit is close to the figures of end September 2019.

And current operating margin returned to the level of the first 9 months of 2019 at 2.5%. It benefited from the improved profitability of Colas with the current operating margin of 2.4% compared to 2.2% in the first 9 months of 2019.

Bouygues Energy & Services margin has also improved over the same period from 1.8% to 2.4% for the first 9 months 2021, thanks to the operational efficiency plan implemented 2 years ago. Now let's talk briefly about TF1's results on Slide 16, which were released at the end October.

TF1 released a very good set of results, which showed a strong improvement year-on-year compared to 9 months 2019. Sales were up 21% compared to 9 months 2020 and up 2% compared to 9 months 2019.

They benefited from, first, a strong momentum in TV ad spending even though third quarter 2020 was a tough basis of comparison; and second, the good performance of Newen production activities. Current operating profit of €223 million showed a significant increase both versus 9 months 2020 and 9 months 2019.

As a result, current operating margin rose significantly by 4.3 points to 13.5%. In this context, TF1 revised upwards its full year guidance and now expect its 2021 current operating margin to be above 12%.

Now let me turn the call over to Christian Lecoq.

Thank you, Pascal, and good morning, everyone. Starting with Slide 18, you can see good Telecom's commercial momentum in mobile continued during the first 9 months of the year.

At end September 2021, Bouygues Telecom had 14.6 million mobile plan customers excluding MtoM. Following the integration of 2.1 million BTBD customers and a gain of 436,000 new customers since the beginning of the year.

Thanks to this performance, Group's Telecom almost achieved 2/3 of its Ambition 2026 target to win 4 million additional mobile customers, excluding MtoM. Now let us turn our attention to our fixed customer base on Slide 19.

As you can see, the total fixed customer base is 4.4 million at end September 2021, up 204,000 customers in the first 9 months of 2021, driven by FTTH. The FTTH customer base reached 2.1 million at the end of September 2021, thanks to the addition of 417,000 new customers since the beginning of the year.

Almost half of the fixed line customers now have an FTTH offer compared with 34% a year earlier. The FTTH rollout is also accelerating.

At the end of September 2021, the number of FTTH connections marketed reached €22.5 million, in line with the objectives of the Ambition 2026 strategic plan. In these areas, the number of FTTH connections doubled compared to end December 2020, reflecting the acceleration of deployment.

Here again, we remain on track to deliver our goal of 3 million additional FTTH customers by end of 2026. I want to stress that this increase in volume is not detrimental to ABPU.

Indeed, as shown on Slide 20, our More for More strategy continues to bear fruit. Mobile ABPU and Fixed ABPU were up year-on-year in the first 9 months of 2021.

Mobile ABPU increased by €0.3 to €20.6 restated for the roaming impact. And Fixed ABPU increased by €0.1 to €28.2.

On a sequential basis, both mobile ABPU and Fixed ABPU were up compared to the second quarter of 2021 with [indiscernible] €0.2 and €0.4. As expected, fixed ABPU was back to growth in this third quarter, which is good news.

Please do keep in mind that the ABPU figures on this slide do not include BTBD. This growth in post volume and ABPU resulted in a solid top line growth in the first 9 months 2021 as illustrated on Slide 21.

Total sales was strong and up 13% year-on-year in the first 9 months 2021. Sales from services were up 14% over the period or 5% excluding BTBD.

This performance was achieved both through mobile revenue which was up 17%, including BTBD and through fixed revenue grew 8%. Sales increased by 7% and performance boosted by the increase in handset sales over the period.

EBITDA after Leases for the first 9 months increased by 7% year-on-year at €1.2 billion, a performance in line with our full year target. The EBITDA after Leases margin was down as expected, reflecting the dilutive impact from the BTBD integration and a mix effect related to the FTTH ramp-up notably in [indiscernible].

Operating profit was higher than 1 year ago at €541 million, thanks to a noncurrent income of €107 million, essentially related to the disposal of data centers. Finally, I would like to say that net CapEx was compared to the 9 months of 2020 at €878 million, which is also consistent with our annual targets.

Lastly, I would like to conclude that we confirm our 2021 outlook. Now I'm pleased to hand over the floor to Pascal.

Thank you, Christian. I would like to briefly comment on the financial statements on Slide 23.

We have already discussed revenues and current operating profit at the beginning of this call. Other operating income and expenses were positive at €90 million in the first 9 months.

It notably included noncurrent income of €107 million at Bouygues Telecom, as Christian explained; a negative €6 million at Bouygues Immobilier related to adaptation measures; and last, expenses related to M&A projects at TF1 and at the holding level. You can also note that the cost of debt decreased slightly year-on-year, thanks to lower interest charges and the lower amount of debt.

Regarding the income tax line, the effective tax rate was 31% in the first 9 months 2021, very close to normative level. The share of net profit of joint ventures and associates was €202 million.

It included the contribution of Alstom which was partially offset by losses at Salto at TF1 level as well as SDAIF at Bouygues Telecom level as expected. We will now turn our attention to the group outlook on Slide 25.

Based on its 9 months 2021 results, the group is confirming its outlook. In 2021, sales and current operating profit should be very close to the 2019 level, and current operating margin should return to its precrisis level.

In 2022, current operating profit should continue to grow and exceed the 2019 level. This concludes our presentation.

Thank you for your attention. Operator, please open the floor for questions.

Sorry, I will start with EQUANS. Just I would like to understand why you can't communicate more given ENGIE has published some details today after your conference call.

So is it because their revenue or EBIT definition is not comparable to yours? I would like to have a bit more color on that.

And maybe second question is on telecoms and pricing. So the ABPU is up.

Can you help us with the different triggers there? What's the contribution from back book repricing in particular?

And any color on the market pricing dynamics would be very helpful.

As far as EQUANS is concerned, effectively, we are contractually committed not to communicate figures about EQUANS before closing. You are right, our EBIT definition is not totally in line with what we do at Bouygues level, in particular, because I think the [indiscernible] and 2 type of charges, which are first reorganization costs and potential impairment losses related to their stakes in some subsidiaries.

But in fact, I don't have the detail of what they are precisely doing. But the first element is the most important.

We are contractually committed not to communicate.

This is Christian. About your question on telecom.

Just with the ABPU increase mainly thanks to the work we are doing on our back book. You know that for new clients, we have two kind of pressure on the ABPU due to new clients.

You can have some promotions, especially in the low end part of the market. And second, you know that a big part of our new clients the benefit from way back during the first year, the first 12 months period in mobile and in fixed.

And are you comfortable that you can still push for more back book repricing? And you [indiscernible]

That's what we are doing. But at the same time, if we are able to take more volume, it could have a negative impact on ABPU, but would be good for the future because as you know, as I said, new clients have lower ABPU than existing clients.

So what we have to monitor is the mix between existing clients and new clients. And we have also to monitor the level of churn.

So that's what we are doing. So we want to continue to increase our back book pricing, but without having a high level of churn.

So we are doing that very carefully.

I've got two. So the first one, regarding Colas.

In the press release this morning, you mentioned a 4% guidance for the operating margin -- the current operating margin for Colas by 2023? Could you maybe give us or remind us your objective of counterpart margin for the 2 other division, Bouygues Construction and Bouygues Immobilier maybe for 2023 as well, please?

And the second question on Bouygues Energy & Services, could you maybe share with us the current operating margin [indiscernible] for Bouygues Service or maybe for the 9 months, please?

As far our profitability guidance for Bouygues Construction we aim in the medium term to have a normative level, which is around 3% to 3.5%. And secondly, your question was related to the Bouygues Energy & Services margin -- sorry, I didn't speak about Bouygues Immobilier first.

On Bouygues Immobilier, we aim in the medium term, but it won't be in the next 2 years, we -- in the medium term, we imagine to have a margin which will be normative at 6% approximately. And for your second question, the operating margin for the 9 months of 2021 is, I have to check what is the figure for the 9 months, 2.4% for the 9 months this year for Bouygues Energy & Services.

On next question?

On 2.7% on -- for the Q3.

I had a question about the free cash flow generation. So as you show in your slides, you have a very strong progression of the free cash flow.

My understanding is that this is without the working capital requirement, which has been a drag year-to-date as it is usual. And I was wondering if for Q4 we should expect, again, as we saw in Q4 last year, a big improvement in the working capital requirement contribution.

So that's the first question.

Yes. In fact, in our Construction businesses, we are used to have a very -- an important swing quarter-after-quarter on this working capital requirement.

Let's say that we achieved a very good level of working capital requirement end of 2020. And we were thinking that probably we will be -- we'll have in the first half of the next year -- of this year a kind of regularization of that.

There is 2 good news. We didn't see that phenomena during the first half of the year and the 9 first months of this year, and that's good news.

We will have a good last quarter because it's a seasonality effect. So yes, we will have an improvement of that capital -- working capital requirement during the last quarter of this year.

So is it conceivable that because excluding working capital, the trends are better that you could deliver a better free cash flow generation, including working capital for the full year in 2021 versus 2020? Or is it too early to say?

But before this -- yes, we imagine that before working capital requirement, the cash flow -- the free cash flow will be higher than the one we had in 2020. But we don't give any forecast for the working capital requirement.

As you know, in our Construction businesses, some inflows could be in 1 year or the year later. And it's impossible to monitor with such a level of precision.

Understood. And on telecoms, as we know, Iliad is making a bigger push on the bundled products on mobile handsets and service revenue.

I was wondering if you saw any impact there. And then lastly, if I may, in terms of your distribution, obviously, you've now extended your distribution through the agreement with CIC, Credit Mutuel.

And I was wondering if you were also pushing harder in terms of your home stores this year? And what we should expect in the coming quarters on that front?

So first of all, Iliad, we didn't see any impact of Iliad's new offer either in the B2B business or the B2C. What is good for us, I think that Iliad had the same strategy as us.

So they tried to increase the ABPU mainly by moving the clients from the €2 offer to €10 or €20 offer. I know also that when Iliad said that we didn't increase prices for 5G, for example, the 5G is included in their offer only in the €20 offer.

So if you want a 5G offer at Iliad, you have to pay €20 and not €2 or €10. It's a way for them to move their clients to higher prices and so to increase the ABPU, and we are doing exactly the same thing and this thing, so it is good for us and for the market.

Your second question was about CIC. Yes, we -- since yesterday, we have begun to sell Bouygues Telecom offers in CIC and Credit Mutuel branches that before it was only the CIC mobile and offers and the Credit Mutuel mobile offers.

So now it is the Bouygues Telecoms brand, Bouygues Telecoms also that are sold by CIC and Credit Mutuel, which is a good thing. This is the second step of our integration plan.

The first step was to migrate CIC and Credit Mutuel clients to Bouygues telecom's mobile network. We have done part of the job.

It will continue in 2022 because in some [indiscernible] needed before the migration to increase the capacity of our mobile network. The second step was the launch of the Bouygues Telecom offers in the local branches.

So that is done now. And the third step will be to migrate between the clients to Bouygues Telecom's IT system.

And to do that, we will do that before the end of 2023 because we need the two years from the acquisition to do that because we have some job to do before to be able to move the clients from the EIT -- IT system to Bouygues Telecoms offer. So yes, today, it's a good -- the integration is very -- on a very good path.

Just one that I would like to come back on CIC and your new offers under Bouygues, which I think on the CIC network. What is your strategy regarding the old brands from EIT?

Are you trying -- after the migration on your network tools to just migrate customers from the former brands to just Bouygues and maybe try to up-sell them at the same time? Or are you going to consider keeping former clients of CIC Mobile and all the other MVNO brands under the former brands?

Okay. So first, as I said before, for new clients now CIC and Credit Mutuel are now selling Bouygues Telecoms offers.

So no more Credit Mutuel, like you said, the [indiscernible] offer or CIC Mobile offer. At the same time, we keep what we call the product licenses like [indiscernible] Mobile.

So these brands will continue. We won't change this brand to Bouygues Telecoms offer.

Regarding Credit Mutuel Mobile and CIC Mobile clients, existing clients, as I said, we will move them to Bouygues Telecom's offers and Bouygues Telecoms -- so in fact, Bouygues Telecom IT system, information technology system. But to do that, we need between 18 and 24 months from now.

So it will be done by the end of 2023. It's a big move that we have done, not as easier as moving from the mobile network that we are doing now.

We are doing that now. Moving from one IT system to another IT system is much more complicated.

Okay. But maybe rephrasing my question is more if I'm today like a CIC Mobile customer, will I receive an e-mail or a text from Bouygues in, let's say, 6 months or 12 here saying that my current CIC mobile offer is no longer available and that I propose like a new Bouygues offer.

And at the same time, that you will try to probably up-sell those customers and incremental [indiscernible]

Exactly, exactly. We will be able, of course, to try to put in place our more formal strategy like for Bouygues Telecoms client.

But we will work with CIC and Credit Mutuel because these clients are also clients of these banks. And so we have to work together to look how we will do that.

Okay. Perfect.

And maybe just one follow-up, if I may. I was seeing on the market recently that Orange was launching or trying to develop new basically shops in rural areas, some smart shop, very small shop, more localized in smaller areas.

And I suppose that's because fiber obviously being deployed in more and moral rural areas and you guys are going to come and probably disrupt the market, given you currently have a low share in those region. Are you thinking still about trying to expand your distribution network through other agreements?

I mean you had CIC. You've had other agreements for distribution before.

Or are thinking at some point of going more aggressively and invest more yourself with Bouygues instead?

Well, as you said, first, we already have, I think, more than 500 shops. We now have the CIC, Credit Mutuel network -- commercial network.

And as Orange did, we are also working on a new concept to be able to maybe develop some very small shops in a very rural area. And we have some [indiscernible] so we are able to moving shop, I would say, something like that, we are able to send in the new areas where we are opening FTTH [indiscernible]

Question is about the sensitivity of the construction and road building activities to higher inflation rates enduring into 2022. Could you give us some color, please, on supply chain issues, which might be emerging at the moment?

And what sort of cost inflation you see within the civil works and road building businesses, can you be confident that the operating margins in both of these businesses will expand year-on-year in 2022? And then just a brief clarification, please.

You reaffirmed earlier the 3% to 3.5% operating margin target for civil works in the medium term. And I'd be grateful if you're able to clarify what sort of time scale medium term means for this metric, please?

Okay. Starting with your second question, let's say, that the target is will be 2023 to be to reach at least 3%.

You are speaking about civil works, but please consider that it is building and civil work. Your question is related to the cost -- inflation in our cost basis for construction activities.

Let's say that, obviously, we are facing these difficulties. Increasing prices are related first to inflation, but also related to shortage of certain raw materials or equipment.

As far as the shortage, I will start with the shortage, to say that obviously, it's a constraint for our projects, which we are not facing at the present time to date. We are not facing some difficulties, which leads to postponement of complement dates and so on.

So it's a kind of a disorganization of the -- of our team. But costs, which are related to that, but we don't have any special issue for completion dates, and so penalties, delay penalties and so on.

As far as inflation is concerned, we are facing these difficulties. Let's say that we are covered by different mechanisms.

The first one is, for instance, at Colas, we have very short contracts. And for this reason, we are able to include in our sale price, the cost -- this increase of price.

Secondly, we have some indication for [indiscernible] in main contracts, especially in public contracts. Therefore, we are able to transfer to our clients these increases in cost.

Thirdly, we have, for instance, at Bouygues Construction for private contracts. When we signed the contract, we cover, in fact, a lot of them by subcontracts and so on.

So we have transferred the risk to our supplier or our subcontractor. So we are transferring the risk.

And there is a remaining effect for us. And when we price for these contracts, we have always contingency provision in order to cover things, which are not known at the date of signing of the contract.

But for the moment, in general, we are able to cover this increase in prices in these contingencies, cover the increase in prices. Obviously, I speak to date, we can imagine that probably we'll have a remaining impact in 2022 related to inflation.

But we have these 4 mechanisms in order to mitigate partly at least mainly this risk.

That's very clear. Just one clarification, please.

Is the requirement to sort of pass on higher prices, is that having any perceptible impact on end customer demand at this stage?

No, not at this stage.

I have a follow-up on the Fixed ABPU topic. Just thinking of the mix between the dilutive volume and [indiscernible] increasing, how do you see this progressing from here?

Do you see a point where Fixed ABPU growth could reach in negative territory impacted by the diluted promotions before maybe rebounding at a later stage as the promotion is lapped and, of course, the price increases have as well. And secondly, just on prices.

I was interested to hear an update on your price increase strategy. To go from here, will you continue to work on various clusters and raising those in turn and then monitoring [indiscernible] before moving to the next cluster?

Or do you see a role for different approach? So any color on this will be helpful.

So first, regarding ABPU, what you understand that is that new clients benefit from the first 1 year of promotion. It's not exactly a promotion.

It's the fact that price is cheaper during the first year. So when you have more new clients, you have a diluted impact on ABPU.

And once this is not the case, of course, it is better for ABPU. But keep in mind that when you grow is higher than for [indiscernible] you'll see a dilutive impact on ABPU.

That what we saw on the fixed ABPU, for example, in -- at the end of 2020 and in Q1 and Q2 of this year because we have a step in terms of FTTH net adds in the middle of last year. And you see -- you saw the result in EBIT, but it is not a bad news, I would say.

We continue at the same time to work, so it's not the effect of promotions of the market. So the effect, the result of the fact that the French market is organized with first year, I would say, half prices, and after that, normal prices.

And it is the same for everybody in the market, if you add us, SFR and Orange, so in the fixed business and either in the big part of the mobile business also. But it is not the effect of, I would say, marketing promotions or low pricing or a level of competition.

It is the structure of the market. It is -- so at the same time, we are working -- we continue to increase ABPU for our existing clients with our more foremost strategy.

Yes, we are working this cluster to monitor the level of churn and also because [indiscernible] the same service, I would say, in exchange of the price increase. Some clients with ABPU, for example, with [indiscernible] inside the bundle.

Some others with DAP with the new service, for example. And some other is something else.

And first, that is what the marketing team is working on is to decide what is the good service for these clients and is the service is good for the clients, is the clients will be happy to pay more for the service and won't churn. So this is why we are working with the risk cluster.

Just a follow-up on the fixed ABPU. We did the promotions, mentioning the first year promotion, which lasts in the second year, and you have like also an increase coming from that.

But my question, I guess, is with that mix, the first year promotion, which comes with the embark based on the FTTH side and the back book price increases, do you see this mix bringing the fixed EBITDA growth to any better territory at some point? Or do you think that you will continue to bring at the fixed ABPU or [indiscernible]

In the medium term, if you look at the medium term, of course, ABPU will go up because at this moment, we have 2 effects. We have new clients which benefited from the low pricing during the first half, of course.

But you also have existing clients, existing DSL clients that we are migrating from DSL to FTTH. And for these clients, we offer them, we [indiscernible] during the first year.

So for the moment, we have 2 negative effects, the new clients and the migration of existing clients. In the future, as everybody will be in FTTH, you will have only new clients.

So in the futures, of course, ABPU in the fixed business can only grow up, keeping in mind also ABPU tariffs are higher than the DSL1 for some normal level of tax. So in the medium term, of course, ABPU was now quarter after quarter for '22 or Q4 2021, I don't know because it depend on how good we are in taking the client or good we are to maintain the clients, if we depend on the seasonality and there are many things.

So it is difficult for me to say to you, I'm sure that the fixed ABPU will increase the next quarter. I don't know.

Probably yes, but it will depend on the volume.

I just had one follow-up on the impact of rising costs, specifically for the Telecoms business. Can you quantify the sensitivity or impact of inflating lease costs and energy costs specifically in the telco business?

So about lease costs, we have no impact. We have only long-term contract now with Cellnex, TDF and so on.

And the contracts are not linked with inflation rates. We have a fixed incremental things for our list.

So it is not linked with inflation at all. Regarding energy, we fixed towards the price of our energy from now to 2024.

So we won't be impacted by any increase in term of energy prices from now to 2024. The cost of energy is quite low at Bouygues Telecom, it's around 1% of the turnover now, at least not as high as in other activity.

So first question on Colas, please. The margin in the third quarter was maybe a little bit what we would have expected after a very strong start to the year.

Colas in their press release to a slightly less favorable weather in the U.S.? I mean is there anything else that you can pinpoint to in terms of margin, which was below 8% in Q3.

We've seen in '18 or '19, for example, that the margins could have gone up to close to 9%. Second question is just on the order intake, and you're talking about the expectations of contracts coming through in Q4.

I mean we are halfway there. Still not much announced.

Can you help us understand a little bit where you expect, what kind of large contracts you expect to be booked as a Colas and Bouygues Construction? And last point on Bouygues Energy & Services.

A few years back, you gave a margin target for this year at around 3.5%. And we're going to fall short of this.

But can you help us understand what we should expect from here? I mean we are -- you said 2.4% EBIT margin at 9 months '21.

What are the next milestones and step change in these margins into next year and 2023, please?

Considering your last question, we mentioned for Energy & Services that we expect for the next year margin slightly above 3% for 2022. Considering the reason of the -- we are expecting an improvement in our margin for Energy & Services, and we confirm it.

Now the pace of that improvement is notably related to credit crisis, which is not yet totally behind us. Your second question was related to contracts, we are expecting in the future for Colas.

It's properly in the rail activity that we will have some good news to turn on in the next quarter related to that. And your third question was related to Colas and the level of margin of Q3 in our Construction activities, you can monitor just for a quarter your margin.

We are aligned with the guidance we have issued related to the annual operating margin of Colas slightly, which is increasing year-after-year. So we have said that we will be at a higher level than in 2019, and we confirm that the guidance.

But there is no specific event except the one which are mentioned in the Colas communication, weather in the U.S., for instance.

I think at the first time I've heard you mentioned the contingency provisions as one of the inflation protection. Could you give us a bit of a sense of how big these contingency provisions are relative to contract sizes?

And then on average, what percentage of the provisions do you generally find you need to use each year? And then how much of the provision [indiscernible]

Sorry, we want to communicate on how we price our contracts because we pay our contract activity-by-activities. It's impossible to give you some flavor in that respect.

And is it possible to give a flavor of the proportion of contingencies that are being used up for inflation versus general use of these provisions? And any kind color of would be interesting, just because I haven't heard you talk about it before.

Sorry, but we are unable to give you this information, which is confidential. Well, what I can say is that there's no specific -- we have no over consumption of this contingency provision.

Okay. Thank you for joining us today.

We'll be announcing our full year 2021 sales and earnings on 24th of February 2022. Should you have any questions, please contact our Investor Relations team.

The contact information is on the press release on our website. Thank you.