1. BOUYGUES.
A very small discount to NAV and pricing perfection on Bouygues
Telecom
January 2016
Mathias Lascar
mlascar@makorsecurities.com
++ 44 207 290 57 77

2. Our thoughts in a nutshell
• We think deal Orange / Bouygues Tel can go through although
there are still a lot of obstables to meet
• Valuation
• Political support from Orange shareholder (French State) in the wake
of a major election – presidential election in 2017
• Antitrust (EU or France)
• At 10bnE valuation for Bouygues Tel, we estimate Bouygues
trades « only » at 9,2% discount to its NAV
• We need to discount this discount (!) by 5% at least on execution
risks, so real discount to NAV is more like 4,2% we think
• Also, future company will be a holdco. A 15/20% discount to NAV
more likely

3. Risks to our case
• Price tag of Bouygues Telecom
• We estimate 10bnE is a max price for Bouygues Telecom
• Any increase in price tag would obviously be a negative to the
Chinese of the discount
• Every 1bnE variation of price of Bouygues Tel represents roughly 3E of
NAV per share
• If deal takes place, Bouygues will get circa 3bnE of cash in
(1bnE from Alstom share buy back and 2bnE from Bouygues
Tel according to market rumours)

4. Bouygues: a 9,2% discount to NAV with
10bnE on Bouygues Tel
% change in EN
Bouygues 0%
Price 35,60
Shares 345,135
Market value 12 287
Total market cap 12 287
NAV 13 530
NAV / share 39,20
Discount to NAV -9,2%
Listed Asset Price Shares O/S Ownership Shares' owned Value % of Total
Alstom 27,44 310,6 30,7% 95,45 2 619 19%
TF1 9,80 210,5 43,0% 90,57 888 7%
COLAS 102,00 32,7 96,6% 31,54 25% discount to share price 3 218 24%
Autocontrol 35,60 345,1 0,0% 0,00 0 0%
Sub Total 6 724 50%
Non Listed assets Ownership EV Value % of Total
Construction 100,0% 2366 2 366 17%
Immobilier 100,0% 0 1 043 8%
Bouygues Telecom 89,60% 10000 8960 8 960 66%
Minority interests -52 0%
Provisions for post employment benefits -356 -3%
Loss Carry Forwards 53 0%
Holding costs -40 8 x EBIT -320 -2%
Net debt holding level -4 887 -36%
0%
Sub Total 6 807 50%-38%
Total NAV = 13 530 100%

5. CIX of trade we push
• - EN FP
• + 10% ALO FP
• + 10% TFI FP
• + 35% SGO FP
• + 35% ORA FP

6. Bouygues price targets from competition
Broker Recommendation Price target Comments
Natixis Buy 38
Alphavalue Reduce 36,3 Haven't seen report, but price target probably based on a NAV basis
SG Sell 29
PT based on an SOP valuation (no comment on discount), Broker
sees antitrust issues on the back of Telenor / Telia merger fail
JP Morgan Neutral 36
Chevreux Hold 35
Exane Neutral 32 42E NAV with Bouygues Telecom at 10bnE

7. Bouygues Tel standalone valuation: 5,2bnE
Bouygues Telecom
2014 2015 2016 2017
Sales 4 432 4 323 4 380 4 436
EBITDA 694 696 745 815
EBIT -65 -94 -39 62
EBITDA % 15,7% 16,1% 17,0% 18,4%
EBIT % -1,5% -2,2% -0,9% 1,4%
x 2015 EV
EV implied by EV / Sales x 1,21 4 323
EV implied by EV / EBITDA x 7,5 696 5220
EV implied by EV / EBIT x

8. Details on Bouygues Tel valuation
• Company targets a 25% EBITDA margin in 2017 for Bouygues
Telecom
• vs 16,1% in 2015 ….
• Target to have EBITDA of more than 1bnE in 2017
• Concensus 15/20% below
• Bouygues Telecom market share in mobile at 14,2%
• # 3 along with Free (13,3%) behind Orange (35,6% market share) and
SFR (28% market share)
• Since SFR was acquired by Numericable it lost 1,2m
subscribers (close to 5% of client base) and hence re-started a
price war (since Oct / Nov 2015)

9. A few words on Orange / Bouygues tel
• Orange and Bouygues Telecom did say on 5 Jan 2016 that they
were in discussions
• Confidentiality agreement signed and preliminary discussions started
• French politics not negative
• French deputy minister Mrs Lemaire (in charge of Numeric) says that
negociations had to take place
• French eco minister Macron says will assess value creation and
intends to remain reference shareholder
• Orange CEO says talks need to be quick (1 to 2 months) and
strong determination to preserve jobs and friendly tarriffs

10. Antitrust
Positive
Disposal of EEE stake could
facilitate (UK)
• CMA UK antitrust decision on 18
Jan
• Would increase likelyhood that
Orange / Btel judged by French
antitrust rather than EU
• In case more than 1/3 of
combined sales based outside
France, EU antitrust.
Otherwise, France (see next
slide)
Negative
EU antitrust rejected in September
15 the merger Telenor / Telia
Will the EU antitrust accept that
France looks at Orange / Bouygues
Tel « sensitive » issue ?

11. % of pro forma sales France ORA + BTEL &
market shares in mobile and fixed (France)
Sales Q3/15
ORANGE France 4794
Spain 1216
Poland 709
Belgium / Lux 306
Central Europe 421
Middle East / Africa 1304
Enterprise (EE) 1577
BOUYGUES Overall 1163
Total ex EE 9913
France ORA + BTEL 5957
in % 60,1%
Total cum EE 11490
France ORA + BTEL 5957
in % 51,8%
Source: Exane

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