Sommet Mondial de la Société de l'Info

							   IDATE
November 2005

Didier Lombard
 Chairman and CEO
  France Telecom
A changing world
Over the last few years, innovation has
been driving industry transformation
                           s     The customer at the center of his
                                     communications universe
                                 Services become multi-access
                                 Usages are simple and user friendly




                       IP network
                       Broadband everywhere
 5 major technology    Ubiquitous wireless
   discontinuities
                       Multi-access innovative devices
                       Delayed and open network and IT platforms

               Integrated operator as the incarnation of this paradigm shift
                                                                          3
Voice commoditization highlighted as a
key challenge

                    VoIP


                    A challenge
                to the established
                  voice business
       Price           model           Unlimited
     pressure                          offerings
    on mobile

                                 Innovation is the way forward
                                                            4
New types of players entering the competition

   Internet players      Unregulated players    Industrial players
                                               NOKIA
                                                    PHILIPS

        Skype



          MVNOs

   Mobile operators       Regulated players      Fixed operators



                New Competitors – New Business Models – New Strategies
                                                                     5
Our vision has proved right
                "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
“Incumbents”    share at the expense of short term EBITDA”
                Cazenove
                November 2005 Interim Results

                “Solid results, mixed outlook” Nomura
“Pure Player”   “Outlook disappointing, as we had feared” Bernstein
                November 2005 Interim Results



  MVNOs


                “How the Internet killed the phone business”
                The Economist-Sept 05
   VoIP         “We believe Skype destroys $3-5 in                      2,6
                                                                       Bn $
                traditional Telco revenue for every $1 it generates”
                Halpern-March 05
                                                                                           6
            NExT
France Telecom’s strategy for
    this changing world
                                7
NExT
Vision
Offer customers a New Expérience in Telecom services

Ambition
     “Become Europe’s telecom service provider of reference”




                        NExT From network access to services delivery
                                                                   8
NExT Give access to a new world of services


• Unlimited                     • TV over DSL                     • New IP services
  call plans                    • Live Tv and                     • Connect remote
• FamilyTalk                      mobile video                      employees
• Livecom                       • Photo transfert                 • Connect all
                                  …                                 corporate sites
  …
                                                                     …




                                                                 • Project design
    • Livebox                                                    • Solution integration
    • Livezoom                                                   • Customer service
    • m-coaching                                                   …
     …
                   Consumers                        Businesses



                   A new generation of telecom services to change everyday lives
                                                                                      9
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


                                                                                   10
France Telecom
behaves as a
responsible player
driving the industry
The NExT transformation
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



                                    Simplicity, innovation, performance
                                                                          12
Innovation: a company attitude, a recognized talent


 World class R&D Center                San Francisco
                                                        Issy les Moulineaux
                                                        (8 centres in France)
                                                                                London                 Beijing
                                                                                  Warsaw   New Delhi
                                                             Boston
   17 sites, including 9 abroad                                                                                  Seoul

                                                                                                                   Tokyo

 4200 researchers                                                                                                 Canton




 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
                                                                                                                         13
Innovation: delivering new products everyday
                         2004                                                  2005
 Q1              Q2             Q3           Q4               Q1               Q2              Q3


                                                                     VoIP                             Live
                                                                    Europe           EDGE           Services



Fixed/Mobile   E-telephony       Livebox                             Visio          LiveBox
                  Large           Home          Video-
Conv. VPN                                     telephony              kiosk            PRO
               Companies         gateway


 TV on                           Business     Talk Now             ADSL2+                         Music
 ADSL
                   3G                        (Push to talk)
                                Everywhere                                                      download

                                              Very high                                         Business
                                                                                    Livecom       Talk
                 Photo                          speed
                 Album                       internet for
                                             businesses                                          Internet
                                                                                    Premium     Business
                                                                                      MMS          pack
                                                                   Live HDTV
                  VoIP                        Instant                 over                      Emergency
                                             messaging                              Funtones    contatcsO
                 France                                             ADSL2+           (RBT)            KOO


                                                                                                               14
Build the future through Strategic Partnerships

          Spheres                                                   Access,
                    Personal         Home          Enterprise     Networks, IS,
    Objectives                                                     Middleware

      Reactivate        interactive mobile
       growth       entertainment appliances
                            Home gateway                            NGN-IMS
                                                    Seamless IP    Beyong 3G
       Build the                                    MM services
      integrated
                                Authentication, Access security       Seamless
       operator
                                                                        mobility
                     Seamless IP multimedia                           solutions,
        Adress             services                                  Innovative
     paradigmatic                                                       wireless
                                                                         access
       changes                                                         networks



                                                      Innovating with industry leaders
                                                                                    15
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
            Broadband access for all




                                                                                            70 to 89%
                                                    EDGE + 3G                               90 to 100%

                  MOBILE BROADBAND: 85%                                ADSL: 96% of the population
                   of the population covered                            covered at year-end 2005


   “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
                                                                                                         16
Winning together




               17
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
                                                                            18
Thank you
            19