IDATE November 2005

1. IDATE November 2005 Didier Lombard Chairman and CEO France Telecom

2. A changing world

3. Over the last few years, innovation has been driving industry transformation IDATE 2003 5 major technology discontinuities s • The customer at the center of his communications universe • Services become multi-access • Usages are simple and user friendly • IP network • Broadband everywhere • Ubiquitous wireless • Multi-access innovative devices • Delayed and open network and IT platforms Integrated operator as the incarnation of this paradigm shift

4. Voice commoditization highlighted as a key challenge Investor Day June 2005 VoIP A challenge to the established voice business model Unlimited offerings Price pressure on mobile Innovation is the way forward

5. Internet players Industrial players Unregulated players NOKIA PHILIPS Skype MVNOs Mobile operators Fixed operators Regulated players New types of players entering the competition Investor Day June 2005 New Competitors – New Business Models – New Strategies

6. Our vision has proved right “Incumbents” "The main story in the results looks like being a change in strategy to invest heavily in 2006 to generate revenue growth and protect its market share at the expense of short term EBITDA” Cazenove November 2005 Interim Results “Pure Player” “Solid results, mixed outlook” Nomura “Outlook disappointing, as we had feared” Bernstein November 2005 Interim Results MVNOs VoIP “How the Internet killed the phone business” The Economist-Sept 05 “We believe Skype destroys $3-5 in traditional Telco revenue for every $1 it generates” Halpern-March 05 2,6 Bn $

7. NExT France Telecom’s strategy for this changing world

8. NExT Vision Offer customers aNewExpérience inTelecomservices Ambition “Become Europe’s telecom service provider of reference” NExT From network access to services delivery

9. Businesses Consumers NExT Give access to a new world of services • TV over DSL • Live Tv and • mobile video • Photo transfert • … • New IP services • Connect remote • employees • Connect all • corporate sites • … • Unlimited • call plans • FamilyTalk • Livecom • … • Project design • Solution integration • Customer service • … • Livebox • Livezoom • m-coaching • … A new generation of telecom services to change everyday lives

10. Content everywhere, multi-platforms, multi-territories: one of the key pillars of NExT Sport everywhere Exclusive soccer & rugby agreements, plus other sports Music everywhere Unique offer across PC, mobile and TV Partnering with Warner Music TV everywhere TV bouquets & VOD avalaible through ADSL and 3G, TV, PC, and Mobile

11. France Telecom behaves as a responsible player driving the industry

12. Areas of transformation • Integrate networks and IT • Boost the Group’s innovation and marketing • Unify and simplify customer relations • Simplify brand architecture • Drivers • From Techno-push to Market-pull • Strengthen operational performance The NExT transformation Simplicity, innovation, performance

13. Innovation: a company attitude, a recognized talent • World class R&D Center 17 sites, including 9 abroad • 4200 researchers • 7500 patents: 450 registred in 2004 • R&D investments: +20% in 2004 and 2005 • France Telecom • One of the “Most innovative European telcos of 2004”, Forrester • “Best Innovator” France 2005, Innovation & Technology category, AT Kearney Innovation & Integration as the source of profitable growth

14. Innovation: delivering new products everyday 2005 2004 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Live Services VoIP Europe EDGE Fixed/Mobile Conv. VPN E-telephony Large Companies Livebox Home gateway Visio kiosk LiveBox PRO Video-telephony Talk Now (Push to talk) Business Everywhere 3G ADSL2+ Music download TV on ADSL Business Talk Livecom Very high speed internet for businesses Photo Album Internet Business pack Premium MMS Live HDTV over ADSL2+ VoIP France Instant messaging Emergency contatcsOKOO Funtones (RBT)

15. Build the future through Strategic Partnerships interactive mobile entertainment appliances NGN-IMS Beyong 3G Home gateway Seamless IP MM services Authentication, Access security Seamless mobility solutions, Innovative wireless access networks Seamless IP multimedia services Innovating with industry leaders

16. In order to succeed, we need to invest heavily in networks: key factor to extend new services • Broadband access for all and everywhere • DSL, ambitious commitments, sound results : the highest density in Europe. • Complementarity features of the Wi-Fi, EDGE and 3G networks • “ZAE” Broadband Plan (up to 100 Mbits/s) : a competitivity driver for the majors corporations and SMEs in metropolitan areas * ZAE:Zones d’Activités Economiques; Economic Activity Zones Broadband France: Europe’s leader

17. Winning together

18. Winning together Telecoms as a key driver of economic and social development • Productivity and economic growth • Regional attractiveness and competitiveness Investments benefiting the industrial and social ecosystem • Networks - Equipments - Contents • Services for each and everyone Support growth and innovation • Specific infrastructure economics (fixed costs/long-term profitability) • Commitment and responsibility of all players Adapt regulation to this new challenge • Boost investment in new technologies • Give Europe the opportunity to be a leader of this new world

19. Thank you