Title: W%20e%20l%20c%20o%20m%20e%20%20t%20o%20%20t%20h%20e%20F%20r%20a%20n%20c%20e%20%20T%20e%20l%20e%20c%20o%20m%20I%20n%20v%20e%20s%20t%20o%20r%20%20D%20a%20y
1W e l c o m e t o t h eF r a n c e T e l e
c o m I n v e s t o r D a y
2I n v e s t o r D a y
Innovation and Growth
N o v e m b e r 1 2 t h , 2 0 0 3
3Objectives of the Day
- Explain France Telecom view of innovation and
partnerships as growth and cost efficiency
drivers - Explain why and how France Telecom growth
initiatives will support our growth targets - Demonstrate ExCom members involvement in these
projects - Update on business trends for 2004 and 2005
Confirm guidance on upper range of 3 - 5 revenue
growth for 2003 - 2005
4Agenda for the Day (1)
- 1. Innovation to serve clients needs Th. Breton
- 2. Growth initiatives- Broadband D. Lombard
- - Ease of Use S. Ahuja
- - Corporate solutions B. Dalibard
- 3. Partnerships and growth D. Lombard
- 4. Cost effective IT and Networks
- - Network evolution J.-Ph. Vanot
- - IT effectiveness J.-P. Cottet
- - Roadmap to convergence S. Ahuja
- - Sourcing L.-P. Wenes
5Agenda for the Day (2)
- 5. Lunch and demos
- 6. Business Review M. Combes O. Sichel W.
Verstaete J.-Y. Gouiffès B. Dalibard J.-P.
Cottet - 7. Conclusion F. Dangeard
- 8. Q A ExCom
6Building Momentum for Growth
Thierry BretonChairman and CEO
7CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
8- Delivering on our commitments
- Anticipating Industry structural changes
- Building momentum for Growth
9Ambition FT 2005 Commitments to Master our
Destiny
Address liquidity constraints restore balance
sheet structure
Implement NewManagement NewOrganization
151515
Execute an ambitious but realistic
transformation program
TOP
Refocus on Strategic Priorities
Assets disposalsNew Services Innovation
The foundation for a comprehensive transformation
of France Telecom
10New management principles
- New management new incentive schemes
- Renewal of the Executive committee
- Assessment of the Executive committee members
every 6 months - 6 months objectives and assessment at all levels
- Key executives talent review
- 700 entrepreneurs network
- Tightened operational integration
- Strong integration of Operations and Corporate
Functions - SEVP in charge of FT 2005 coordination
- New Internal governance bodies
- Group level planning procedures for RD, network
and IT - Full integration of sourcing
- Project based transformation approach
- 100 TOP programs
- 40 division-led growth projects
- 14 transversal growth projects
Adapt permanently skills, talents and
responsibilities according to performance and
objectives
11A management team that is delivering on FTs
commitments
Results
Commitments
Achieved in H1 2003, EUR15bn raised. FT regains
the initiative
Restore the balance sheet
Achieved in H1 2003, liquidity crisis fully
solved
Debt refinancing
TOP ahead of targets, initial 2003 targets
reached over 9 months. FCF in 2003 EUR1bn ahead
of initial target
Improve Operational Performance
40 Growth programs launched 14 Transversal
Innovation and Growth
EUR 2.7bn asset disposal so far in 2003. Offer
on Orange.
Focus on Strategic assets
The track record clear road map, delivering
quicker and over expectations, building momentum
12A sustained tempo, a clear roadmap
FT ambition 2005 New Management New
Organization 15/15/15 Top Program
TOP ahead of targets in Q1
TOP ahead of targets in Q2
TOP ahead of targets in Q3
15bn capital increase
Orange offering
Law removingFrench State majority holding
obligation
15 Bn debt refinancing
Dec Jan Feb Mar Apr May
Jun Jul Aug Sept Oct
Accelerated Broadband coverage of France
Orange world
Growth Initiatives launched
Wanadoo photo album
SMS on fixed line
Leadership in WiFi deployment
Integrated offers for SME Intranets and networking
TV on ADSL
Building a strong momentum as early as the first
year
13- Delivering on our commitments
- Anticipating Industry structural changes
- Building momentum for Growth
14A world still organized today around separate
networks and services
Fixed network and services
- Access specific terminals
- Access specific services
- Independent service platforms
- Multiple customer identifiers
- Separate billing
Mobile network and services
Internet network and services
15In our vision the user is the center of his
communications universe
Information/entertainment
- The customer defines and personalizes his
services - Services become multi-access
- Focal point is shifting from the network to the
user - The customer is at the center of the network
The most important paradigm change the
industry has ever seen
Communication
Transactions
EXPLOSION OF USAGES WHAT YOU WANT, WHERE YOU
WANT, WHEN YOU WANT
16Five major technology discontinuities will enable
this revolution
Ubiquitous wireless
3
2
Broadband everywhere
IP network
1
Delayered and open networkand IT platforms
5
Multi-access innovative devices
4
17IP Networks The cornerstone of a delayered
infrastructure
1
Mobile
Device
Open network
Services
WIFI
Backbone mobile
Network database (e.g.,HLR)
2G/2.5G
Soft-switch(voice)
3G
IN
Fixed line (voice)
2G
Data con-vergence applica-tions
Subscriber switching
Switching PSTN
IP backbone
IN
Content
Data
Back-bone IP
ISP Platform
DSL
TPS
IP gateway
Edge router
Leased line
Third parties
FR/X25/ATM
FR/X25/ATM
A revolution similar to the IT revolution
18Home Broadband The connection for future
multi-service delivery
2
Home services
- New bandwidth- enabled services
- Access throughput continuously increasing
- Devices capability upgrade and interoperability
- Wireless home network
Interactive gaming
Wireless
Surveillance
_at_
Internet
Voice over IP
Visual phone
TV
Broadband access
Home gateway
Security
19Enterprise Broadband Accelerated IT
transformation
2
Broadband-enabled centralized ITand network
architectures
Benefits for the enterprise
- Accelerated consolidation of applications and
information - Ubiquitous information for users and applications
- Extension of functionalities to all locations and
mobile workers - Rationalization of support costs (hardware, local
support personnel) - Increased operational flexibility for deployment
of new applications
Data processing center
Telco datacenter
Branch office
Broadband WAN/LAN (2-10 Mbps)
PCs
Printers
Laboratory for Interoperability
20Wireless From mobility to ubiquitous
accessibility
3
Personal services
- Ubiquitous accessibilityto personalized services
- Access independent
- Contact lists
- Extended reachability
- Unique authentication
Mobile
Hotspots
Office
21Multi-access innovative devices
4
"Home network"
Entertainment Net
New powerful portable terminals
X-Box
MP3
- Enhanced user interface
- New capabilities
- Interoperability between home / personal and
entertainment / office - Partnershipwith key manufacturers / software
vendors
- MP3 player with 40 GB hard drive
- Can also be used for storage e.g., personal
documents, picture albums
Digital Video
New terminals allowing interoperability
Wireless B media adapter
- 16 Mb Smart phones
- With 2 Megapixels camera
- Wireless
- Listening to digital music with existing stereo
- Digital images on TV
- Music and images selection wit remote control and
screen menu
22Open systems enhancing interoperability of
telecom services
5
- Services based on software platforms connected to
IP network - Standard APIs
- Rapid service deployment
- Network independent customer management
- Innovative tariffs and products
Service platform
Transaction systems
Customer identifier
Transport network
- Higher capillarity
- Dynamic capacity managements
- Lower operational costs
23Reshaping France Telecom
From
- Access and voice narrowband
- Access and voice mobile
- Broadband and Internet services
- Managed data services
Close to local customer, but leveraging global
platforms
24- Delivering on our commitments
- Anticipating Industry structural changes
- Building momentum for Growth
25The engine of France Telecom transformation
- World class customer management
- Lean operations
- High quality customer experience (QoS, Customer
Care)
- Home communications
- Personal communications
- Enterprise communications
Usage and business model innovation for growth
Network and IT infrastructure convergence
Strategic partnerships
26FT has a unique set of strengths
- Over 50 million Homes
- Over 50 million Personal
- Over 500K Enterprises
Customers
- Strong RD capabilities
- Complex technology/system integration
capabilities - Network deployment capabilities
- Service quality culture
- Experience in leveraging partnership
- Fixed, mobile and internet networks
- Strong brands
- Global IP network
- Presence in 220 countries
A committed management team
Skills
Assets
27France Telecom masters technology and leverages
it for services innovation
- Presence
- Reachability
- Payment
- Security
- Gateways and home terminals
- Handset middleware
- User-friendly interface
- Identity and authentication
- Contact list
- Instant messaging
WIFI
Soft-switch(voice)
3G
2G
Datacon-vergence applica-tions
IP backbone
Transaction platforms
Content
TPS
Third parties
- IP networks (IP-VPN, MPLS, QoS, )
28A structured growth program Top Line
- 40 Division-led growth projects
- 14 transversal growth projects to develop and
launch new services - All projects under ExCom member leadership
- Strong mobilization of the company
- Quarterly review of program
29Growth projects
- Orange
- Improve customer mix
- Yield Management
- IN Services
- Key Non Voice Services
- Signature Devices
- 3G Rollout
- Business Services
- Transversal Projects
- Roaming Initiatives
- Fixed Line, Voice and Data Services in France
- Increase market coverage
- Boost sales of accessories
- Develop self care
- Revisit marketing mix of small business
- Relaunch fixed handsets sales
- Maximize value of high potential customers
- PBX - IPBX
- Broadband everywhere with satellite and WiFi
- Increase Intranet revenues on SMEs
- Fight competition on dense MAN areas
- Close large outsourcing deals
- Develop CPE services
- Application Managed Services
- International, Voice and Data Services
- Equant indirect channel efficiency
- TP Group Accelerate fixed line penetration
- TP Group Accelerate data development
- TP Group develop mobile penetration
- Strengthen Uni2 market position
- ROW new initiatives
- International voice revenues
- Wanadoo
- Increase value for Broadband in France
- Increase our position on Broadband in Spain
- Improve our positioning in the UK
- Develop paid services
- Develop B-to-B mobile interactive services
- Capitalize on directories
- Identity / Authentication
- Address
- Presence
- Reach
- Payments
- Office
- ADSL Multiservice
- Video-Telephony
- VOIP
- DRM
- Content synergies
- Control of Services
- Data mining, Segmentations and market studies
synergies - Distribution synergies
30Significant growth coming from better execution
Project Examples
Orange
- Customer mix improvement
- Yield management
Usage businessmodel innovation for growth
Wanadoo
- Churn management
- Marketing Spend effectiveness
FDF
- Sales agency effectiveness
- Marketing mix improvement for pro clients
31Usage innovation todays focus
Growth domains highlighted
- Ease of use in personal communications
- New broadband services
- Bandwidth-enabled enterprise IT transformation
Usage businessmodel innovation for growth
Operational excellence
32Ease of use Develop usage through seamless use
and simplicity
Projects
IdentityAuthentication
A common identity to access all relevant personal
services, with strong authentication for trusted
access
Contacts list
A unique contacts list available on any device
and network,secured by the identity and
facilitating connections
Presence
Knowing the presence/availability on any
networkof someone from my contacts list
Reachability
The capacity to reach someone on/from any
network/deviceaccording to his/her presence
Payment
A flexible payment of network services and
content,secured by identity-authentication
33Ease of use milestones commitments
2003
2004
2005 over
- Orange contact list in UK
Q2 2003
- Single Sign On (SSO) for FT group portals
Q2 2004
- Single contact list for fixed and Wanadoo
H1 2004
- Voice and video on WanadooInstant Messaging
H1 2004
- Seamless fixed, mobile voice mails
Q3 2004
- W-HA Common payment indentifier
Q3 2004
Q3 2004
- Wanadoo-Orange IM interoperability
H2 2004
- Automatic call forwarding fixed-to-mobile
Q4 2004
- Large scale deployment of payment
Q4 2004
- Full interoperable contacts list
H1 2005
- Mobile-to-fixed call forwarding
H1 2005
- Presence-based contact list
H2 2005
H2 2005
34Broadband Expanding services
Personal Communication
Transaction
Video
telephony
Q2 2004
Softwaredownloading
Broadband
Image
messaging
Home
networking
Photo Video
Albums Q3 2003
Entertainment
Personal Content
Additional revenues based on an available
already invested network
35Broadbands milestones commitments
2003
2004
2005 over
Jun. 2003
Q4 2003
- Satellite Internet access
Q4 2003
- TV-over-DSL launch in Lyon
Dec. 2003
- 3G field test in Lille, Paris Toulouse
Q2 2004
- TV-over-DSL launch in Paris
Q2 2004
Q2 2004
- Interoperability fixed mobile video-telephony
H2 2004
- 3G full-scale product launch
End 04
- Video-over-DSL in foreign subsidiaries
2005
End 2008
36Corporate solutions enhancing enterprise
performance through bandwidth enabled
IT-transformation
Project Examples
- Offer employees on the move access to their work
environment whatever their devices and networks,
and wherever they are
Mobile workers
- End-to-end management of customer communications
needs including PBX, LAN/WAN integration and
communications-based applications (messaging
security)
Customer premises equipment
Outsourcing
- Integrated management of networks, IT
infrastructure and services
37Corporate Solutions milestones commitments
2003
2004
2005 over
Q4 2003
- Partnership with Accor, AF,
Q4 2003
- Larger salesforce dedicated to IT C
infrastructure services
Q4 2003
- Integrated nomadism offers for SME enterprises
in France
Q1 2004
H1 2004
- Convergence of voice VPN and IP VPN
Q3 2004
- Nomadism offers available for Equant customers
Q3 2004
- Nomadism offers available in the UK
Q3 2004
- Business continuity solutions(security data
center)
Q4 2004
- Nomadism solutions extended to voice and IM
H1 2005
- Similar services by FT subsidiaries abroad
H1 2005
38FTs Network and IT Convergence toenable usage
innovation
Availability of consistent services and
applications across networks based on open
platforms
Servicesplatforms
Convergence of transport of voice and data over
mobile and fixed networks, allowing reduced
spending and consistent standard of services
Convergencenetwork
Simplification and convergence of IT operations
and key applications such as CRM and content
billing across the company
IT infrastructure
39Leveraging strategic partnerships
Technologies
Distributors
- Liberty alliance / Jabber
France Telecom
Content
Equipment and software provider
- Gain competitive edge
- Ability to integrate technologies
- TPS/ TF1 for TV over ADSL
- Nortel, alcatel, Nokia on 3G mobile services
- Microsoft Handspring for smartphones
- Sony to connect game consoles through ADSL
40Conclusion
- France Telecom a multi communication services
company for home, personal and enterprise
markets.not a utility - Growth initiatives are setting a growth momentum
for 2004 and beyond
Higher part of the 3 to 5 range
Objective 2004-5
41Growth initiatives
- Broadband Didier Lombard
- Simplicity drives usage Sanjiv Ahuja
- Corporate Solutions Barbara Dalibard
42B r o a d b a n d
Didier Lombard
43CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
44Broadband a key market for FT
Broadband Today
Over 3m lines installed In France end of 03
Strong leadership from the beginning
2m Wanadoo customers in Europe (end of Q3)
45Broadband a key market for FT
Broadband Opportunity
Better Coverage
Higher Speed
Expanding Services
46Higher Speed
Fixed offered bit-rate(kbits/s)
Mobile Downstream / Upstreambit-rate(kbits/s)
450
A constantly rising speed provided on both Fixed
Mobile
47Better Coverage
ADSL Coverage French Market
100 Coverage with Wifi satellite
Full broadband nation-wide coverage by 2005
48Expanding Services
Telephony
Mobile
Broadband
Home
networking
Image
Internet
Additional revenues based on a available
already invested network
49TV over DSL in France
- Key customer benefits
- Access to TPS pay TV
- Wide choice, easy to search, order watch TV
contents - Better quality image thanks to guaranteed bit
rate
More valuefrom samenetworks
- Key France Telecom benefits
- Develop ARPU on consumer market
- Apply unique technical expertise in video
technologies - No additional cabling required (standard ADSL)
Non-exclusive agreement
Leverage attractive content to build up ARPU
50TV over DSL milestones
TVoDSL commercial rollout in Lyon late Dec.
2003, then Paris in Q2 2004,and progressively
reach in other French cities
Short Term
Approx. 25,000 customers by end 2004
Develop partnerships with multiple TV content
providers
Medium Term
- Target 10 of pay TV market by 2008
51Fixed Line video-telephony
- Key customer benefits
- Enrich the telephony experience
- Enhanced environment for teleworking groupware
- Interoperable with mobile video-telephony
More valuefrom samenetworks
- Key France Telecom benefits
- Renewing value of telephony
- Leveraging IP to build up value
Enriching the telephony experience
52Mobile video-telephony
- Key customer benefits
- Attractive new communication experience
- Interoperability with Fixed video-telephony
- Interoperability with TV on ADSL
More valuefrom samenetworks
- Key France Telecom benefits
- Building up value of communication
- Stimulating usage
- Attracting customers to more capable devices
Personal and interoperable
53Video-telephony milestones
Mobile
Fixed
Field test with 1,500 customers Lille, Paris,
Toulousein Q2 2004
Wanadoo Visio currently trialed
Non-PC product launch to 15,000 customers before
end of Q2 2004
Full-scale product launch before end 2004
Interoperability between consumer Fixed
video-telephony UTMS video-telephony (villes
Orange)
Implementation in foreign subsidiaries in 2005
Interoperability between TV on ADSL
video-telephony by end 2005
54Home networking
- Key customer benefits
- Connecting diverse devices (PC, TV, phone,
console) - Sharing resources
- Managing home content and processes
More valuefrom samenetworks
- Key France Telecom benefits
- Controlling network service (multi-VC, quality,
reachability) - Assisting customers with their networks (self
install, - configuration, security.) and different
technologies - Strong relationship with vendors is necessary
Home gateway is key to new broadband services
55Broadbands milestones commitments
2003
2004
2005 over
Jun. 2003
Q4 2003
- Satellite Internet access
Q4 2003
- TV-over-DSL launch in Lyon
Dec. 2003
- 3G field test in Lille, Paris Toulouse
Q2 2004
- TV-over-DSL launch in Paris
Q2 2004
Q2 2004
- Interoperability fixed mobile video-telephony
H2 2004
- 3G full-scale product launch
End 04
- Video-over-DSL in foreign subsidiaries
2005
End 2008
56S i m p l i c i t y d r i v e su s a g e
57CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
58A typical customer may have...
- Web services passwords
- Fixed number
- Bank account pin numbers
- Mobile phone number
- Car phone number
- Work email
- Home email
- Work voicemail
- Home voicemail
- Mobile voicemail
Unnecessary complexities
59What our customers say...
- too many
- Numbers
- Mail boxes to check
- Passwords to remember
- Key clicks to get where I want to go
- ...and
- They find most new services confusing to use
- They are confused by a variety of payment
solutions - They are frustrated by a lack of interoperability
between operators, platforms,devices and services
Our customers teach us the way forward
60Challenges
Solutions
- Fragmented offerings
- Introducing new services is hampered by
interoperability issues - Nothing is connected (different networks,
platforms and devices)
- Make it simple(simplicity drives usage)
- Integration(between networks, service providers,
application developers etc.) Will deliver
simplified services and enhancements faster
Removing barriers to growth
61How to make it simple and integrated
The foundations for a coherent suite of France
Telecom Group services
62Identity
Too many passwords
One secure password access to all services
- Consistent and personalised interface across all
devices - Access rights management
- Ability to sign a transaction
- Secure access to business services and corporate
intranet - Interoperability across networks/operators
- Open solution (liberty alliance)
- Single-sign-on for all FT group portals in
France Q2 2004 - Become a trusted ID provider for third parties by
2005
Personalization and security
63Reach
Too many phone numbers, too many mailboxes,too
many unconnected ways to communicate
One number, one mailbox, be in contact, be
connected anywhere with one device
- Integrated instant messaging and email alerts
2004 - Seamless management of fixed and mobile
voicemails Q3 2004 - Wireless ADSL gateway able to communicate with
mobile phones, with automatic call forwarding
when called party is away from home Q4 2004 - Mobile to fixed call forwarding when called party
is at home 2005
Interoperabiliy for seamless services
64Contact list
Contact lists everywhere(one in my computer, one
in my home phone, one in my mobile)
My personal contact list accessible through the
network to any device, any location, anytime
- Orange Backup launched 2002
- Orange UK single contact list launched 2003
- Fixed line (France) H1 2004 with new terminals
or voice access - Wanadoo single contact list H1 2004
- Universal contact list 2005
A Complex Infrastructure
65Orange Backup
- Never lose your personal information
- Everything is backed up on the Orange network
66Presence
I want to know with whom in my personal community
I can communicate with
Always know whos online and available
- Full instant messaging with voice and video on
Wanadoo portal in H1 2004 - France telecom employees using instant messaging
beginning of H1 2004 - Orange and Wanadoo interoperability in H2 2004
- Presence based contact list on the internet in
2005
Leveraging intelligence in the network
67Payment
I want a simple way to purchase items
Simple online payment solutions
- Capability to send out millions of bills and
collect small amounts - Sourcing of best-of-breed software platforms
(kenan, portal, IPIN) - Real-time account management and on-line purchase
authorisation on all networks - Reputation with content providers inherited from
Teletel and Audiotel - Single merchant kit for fixed, mobile and
internet Q3 2004 - Large scale deployment of content billing for
m-commerce Q4 2004
Trusted, standardised and open
68Payment
Trusted, standardised and open
69Ease of use milestones commitments
2003
2004
2005 over
- Orange contact list in UK
Q2 2003
- Single Sign On (SSO) for FT group portals
Q2 2004
- Single contact list for fixed and Wanadoo
H1 2004
- Voice and video on WanadooInstant Messaging
H1 2004
- Seamless fixed, mobile voice mails
Q3 2004
- W-HA Common payment indentifier
Q3 2004
Q3 2004
- Wanadoo-Orange IM interoperability
H2 2004
- Automatic call forwarding fixed-to-mobile
Q4 2004
- Large scale deployment of payment
Q4 2004
- Full interoperable contacts list
H1 2005
- Mobile-to-fixed call forwarding
H1 2005
- Presence-based contact list
H2 2005
H2 2005
70C o r p o r a t eS o l u t i o n s
Barbara Dalibard
71CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
72Evolution of corporate customer infrastructure
Towards open networks shared with partners
73Business trends
- Employees are a key asset of Customer centric
organisations and need efficient communication
Nomadism
- After optimisation, businesses want to take
advantage of new technologies with simple and
integrated solutions
Integration and outsourcing of communication
services
Developing managed and integrated communication
services
74Nomadism market trends
What applications do employees need?
75.0
60.4
39.4
35.4
16.7
4.2
Source IDC/Orange 12/2002
- 8 out of 10 employees are mobile within their
company - 3 out of 10 are mobile outside the company
- Up to 60 of businesses have started an IT
mobility project, and 37 of CIOs consider that
it is strategic to their business
Our customers expect to be connectedanywhere,
anytime, from any device
75Nomadism France Telecom leadership
Are you used to surfing on the Internet,sending
or receiving emails,accessing to intranet or
local company applications from
Oleane, Equant
Wanadoo
Orange
Source Panel Orange DME / User survey July 2003
/ Base 113
Excellence in coverage, technology and
service,proven track record in security and ease
of use
76Nomadism our proposition
- Offer employees on the move, whatever the network
and device, the set of services they need - User friendliness connection kit, single
sign-on - End-to-end security
- Integrated customer care
- Developed in partnership with key clients
- First market to launch France
- 1,7 million blue collars
- 2,6 million white collars / professionals
A France Telecom Group wide project
77Nomadism a segmented offer
- Solution for professionals
- Access through Wanadoo and Orange to Wanadoo Mail
and Portal using SSL security - Solution for SMEs
- Access through Oleane and Orange to Oleane Mail,
Portal and Business Services using IPSEC security - Solution for Corporates
- Access via Equant IP VPN, Orange and Wanadoo to
Equant Mail and to corporate Intranet through
security (IPSEC, MPLS) and corporate
authentication services
Coverage, Technology, Service, Security,
Simplicity
78ITC infrastructure managementCustomer
challenges
Businesses encounter major technology changes
- VOIP, IPBX, IP centrex, WLAN
- Single voice and data networks
- Desktop to desktop multimedia streams to manage
- POTS, PBX, LAN
- Separate voice and data networks
- Building to building network engineering
Customers need help to manage a major transition
79ITC infrastructure managementSimplifying the
landscape
- Practices
- Plan Consulting, application/network performance
analysis - Build project management, deployment (including
equipment supply) - Run Operation, maintenance, user and telecom
manager assistance - Technologies
- Telephony PBX, IPBX, IP centrex
- LAN, MAN infrastructures, servers, cabling and
WLAN - Messaging MS Exchange, Lotus Notes
- Servers Unix, Linux, Windows, JEE, .NET
- Security firewalls, antivirus, antispam,
intrusion detection, IP SEC
Simplifying the technological transition
80IT C infrastructure management IP Voice
services
Technology
Customer benefits
- Easy and enhanced re-distribution of incoming
calls - Calls transferred to tele-workers
- "click to call", web request
IP-enabled call centers
Advanced services
Call management
Unified messaging Computer-telephony integration
- Easy integration of VoIP with applications such
as e-mail and IM unified messaging - Simple computer telephony integration
- Cost of on-net traffic
- Cost of management and change
- Cost of cabling
Basic telephony services
IP PBX IP Centrex
IP enables value-added services
81IT C infrastructure management Security
services
- Consulting, Assessments
- Comprehensive Services portfolio, from single
firewall management to complete security
out-tasking - Internet access protection
- Intranet segmentation
- Remote access securisation
- Intrusion detection, antispam, anti-virus
- We partner with leading vendors
We protect the Network
82ITC infrastructure management CPEs and servers
management
Ex Number of managed LAN ports
113 400
- Up and running business units
- Over 700 M revenues with external customers
- Management of
- 800 firewalls,
- 800 000 mailboxes,
- 2500 servers
External customers
France Telecom
49 400
7 300
15 000
15 000
15 000
- Presence
- Equant international coverage
- French presence (over 1000 field technicians
serving our customers) - RD and technology expertise
- IPBX, IP centrex, WLAN, IP SEC
2001
2002
2003
Service level commitment extended to end users
83Communications Outsourcing Market
Key Players and Segment in target market
Application Management
CSC
Accenture
EDS
IBM
Atos Origin
CGEY
Infrastructure IT
BT
Kind of outsourcing
Fixed telecom networks
WorldCom
Infonet
CW
FT / Equant
ATT
National Telcos
Mobile telecom networks
Geo coverage
International (multi-regional)
Regional
National
84Communications Outsourcing benefits
- Customer expectations creating value
- Reduce costs and increase flexibility
- Secure business critical applications
- Reduce cycles to implement core business
operations - Manage fewer contracts and suppliers
- France Telecom expectations
- Immediate increase of revenues (x2 to x5 for
existing customers) - Establishing long-term customer loyalty
- 3 to 8 years contracts
- 85 of deals are renewed
Eur 200 Mn / year today, estimated market of Eur
2.5 Bn and growing
85Corporate solutions opportunity
More Services
Communication Expertise Including Mobile
Internet
Global Reach
Ability to execute integrate
The business is changing
86Corporate Solutions milestones commitments
2003
2004
2005 over
Q4 2003
- Partnership with Accor, AF,
Q4 2003
- Larger salesforce dedicated to IT C
infrastructure services
Q4 2003
- Integrated nomadism offers for SME enterprises
in France
Q1 2004
H1 2004
- Convergence of voice VPN and IP VPN
Q3 2004
- Nomadism offers available for Equant customers
Q3 2004
- Nomadism offers available in the UK
Q3 2004
- Business continuity solutions(security data
center)
Q4 2004
- Nomadism solutions extended to voice and IM
H1 2005
- Similar services by FT subsidiaries abroad
H1 2005
87P a r t n e r s h i p sa n d g r o w t h
Didier Lombard
88CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
89Telecom services involve integration of many
elements
Equipment manufacturers
Content editors
Terminals
Contents
Network equipments
Customer
IT Systems
Distribution channels
Software developpers
Distribution others
Partners
FT to focus on customer experience and service
innovation
90France Telecom ambition with partners
- France Telecom intend to deliver services, and
not only connectivity to customers - France Telecom want to focus on service
integration and innovation, not on manufacturing
or content editing - France Telecom will rely on skilled and
experienced players to foster the development of
new services and be ahead on the market
A win-win operation that saves time and money
91Rebalance relationship between operators and
manufacturers
1 situation in the 80s
- Equipement and terminal vendors were selling to a
limited number of operators, which had a large
control of RD priorities and funding - Shared vision of future services
- Joint efforts for innovation
- - Too many local standardisations
- - Higher costs
The arsenal model
92Rebalance relationship between operators and
partners
2 situation from the 90s to now
- Equipment manufacturers became global and
invested more in RD - Operators relied on regular sourcing for their
terminal and equipment needs and invested less in
RD - de facto global standardisation
- lower costs (RD depreciation over larger
volumes) - - less service innovation (RD far from end user
customers) - - less ability for operators to differentiate
The utility model
93Rebalance relationship between operators and
partners
3 France Telecom strategy
- Common work, with joint teams in same locations
(but no permanent JV) to be ahead of competition - Limited period of exclusivity, in order to
leverage usage through generalization - Strong link with sourcing policy, to keep costs
as low as possible - Mutualisation of vision, RD funding and risks
The partnership model
94Major milestones
- Dedicated organisation at corporate level
- First steps
- with Nortel, Alcatel and Nokia on 3G mobiles
services, - with Microsoft and Handspring for smartphones,
- with TPS/TF1 for TV on ADSL,
- with Sony to connect games consoles through ADSL
- with many technology suppliers to build new
architectures and anticipate development of new
services (Liberty Alliance, Jabber, ) - Comprehensive negotiations in progress, in order
to announce Tier 1 partners by end of 2003
Partnerships to foster FT competitive edge
95- T e c h n o l o g y C o n v e r g e n c e
- Networks Jean-Philipe Vanot
- IT Jean-Paul Cottet
- Roadmap to convergence Sanjiv Ahuja
- Sourcing Louis-Pierre Wenes
- Conclusion Sanjiv Ahuja
96CAUTIONARY STATEMENT
This presentation contains forward-looking
statements about France Telecom. Such statements
are not historical facts and include expressions
of managements expectations about new and
existing programs, opportunities, technology and
market conditions. Although France Telecom
believes its expectations are based on reasonable
assumptions, these forward-looking statements are
subject to numerous risks and uncertainties.
These statements should not be regarded as a
representation that anticipated events will occur
or that expected objectives will be achieved.
Important factors that could cause actual results
or performance to differ materially from the
results anticipated in the forward-looking
statements include, among other things, the
success of the announced FT 2005 plan, including
the 15 15 15 plan and the TOP program,
changes in economic, business and competitive
markets, technological trends, France Telecoms
other strategic, financial and operating
initiatives, risks and uncertainties attendant
upon international operations, exchange rate
fluctuations and market regulatory factors. More
detailed information on the potential factors
that could affect the financial results of France
Telecom is contained in the Document de référence
submitted to the COB on March 21, 2003 and in its
Form 20-F filed with the U.S. Securities and
Exchange Commission. The forward-looking
statements contained in this document speak only
as of the date of this presentation and France
Telecom does not undertake to update any
forward-looking statement to reflect events or
circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
97N e t w o r k s c o n t r i b u t i n g t o
t h e c o s t r e d u c t i o na n d g r o
w t h p r o g r a m s
98Orange Access Network state
BTS
HLR
BSC
BTS
MSC
Internet
BSC
BTS
Intranet
SGSN
GGSN
BTS
Radio sub-system
Network sub-system
- Orange Access built on state of the art equipment
that allow - Evolutivity largely compatible with new
functions providing speech quality and capacity
increase (new voice codecs AMR half rate) and
data throughput increase (new codings CS3/CS4,
50 over GPRS) - Network quality and stability consistent across
every Orange network, monitored by high quality
survey. - Reduction of CAPEX and OPEX for UMTS due to
GSM/UMTS co-siting and transport mutualisation
Mature GSM/GPRS Access Network sites are
massively re-used for UMTS
99Orange Core Network state
BTS
HLR
BSC
BTS
MSC
Internet
BSC
BTS
Intranet
SGSN
GGSN
BTS
Network sub-system
Radio sub-system
- Orange Core Network built on very recent
equipments(less than 5-7 years old) which allow - Evolutivity evolution towards UMTS without huge
technology evolution and little impact on
operation teams - Scalability cope with subscriber and traffic
increase. - Operability is under control huge skills and
experience shared across Orange Networks - Orange Backbone will be mutualised for GSM and
UMTS
Smooth evolution of Core Network from GSM/GPRS to
UMTS
100Copper Local Loop
- High availability e.g. 4.2 failures /100 main
lines /year - About 95 of lines are technically
"adsl-capable" at 512 kbps rate after
installation of DSLAM - About 60 of lines (more in dense areas) for
video services at 6 Mbps rate
Customers reached
100
512 kbps
90
80
70
60
6 Mbps
50
40
30
USA
20
France
10
0
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
km
Benchmark IEEE 2001
France Telecom Copper local loop is a strong
asset for broadband
101Copper Access Network Strategy
- Achieve 90 ADSL natiowide coverage by 2005 in
France
100
7000
90
6000
80
5000
70
60
4000
50
3000
40
30
2000
20
1000
10
0
0
2000
2001
2002
2003
2004
2005
Percentage of coverage
Number of DSLAM-equipped sites
- Enhance service offering based on multi-service
ADSL - first step launch of TV on ADSL (Lyon, end of
2003)
- Automated provisioning of mass market customer
accesses - in 2.4 days including jumper connecting
(less than 90 minutes for order processing and
network configuration through management tools) - provisioning capacity as of December 2002 27,000
orders per day
Extensive coverage and multimedia offer
102ADSL
Capex has significantly fallen
Quality has significantly increased
DSLAM price on Q1 2001 basis
DSL services QoS
Availability ()
() DSLAMATMBAS
Estimate for Q4 2003
Estimate for 2003 2004
Decreasing costs while increasing quality
103 Optical access network for Corporates
Number of fiber optic connected Corporate Sites
- Nearly 10,000 Large Corporate fiber optic
connections - Increasing bit rates
- From Multilan/Interlan 2.0, over ATM -gt 150 Mbps
- To SMHD Giga, based on WDM rings -gt 32 x 2.5
Gbps - Enhancement of service offering and cost
optimization Gigabit-Ethernet - Pilot network in Ile de France Ethernet MAN
- -gt interconnection of LANs up to 1 Gbps, shared
between customers, supporting Ethernet Switched
Service
Dense fiber capillarity and Enhancement of
services based on Ethernet
104Core and aggregation network evolutions
National IP Backbone total carried bit rate
(Gbps)
70
60
50
40
30
20
10
0
YE 2001
mid-2002
YE 2002
mid-2003
- IP innovative architecture and features
- Reliability (duplication, protection)
- Provision of MPLS-based carrier-VPN service
- IPV6 capability within a part of the
international network
- ATM benefiting from last technological
innovations - High capacity switches, high bit rate interfaces
- Use of statistical technics, Gigabit Ethernet
capabilities
Reliable and steadily growing IP MPLS core
backbone
105Transmission core network
Evolution of capacities and investment costs of
WDM systems
4500
120
100x40G
4000
100
100
3500
3000
80
2500
Total Capacity of WDM systems (Gbps)
Cost of carried Gigabit (ref. Eoy 1997)
60
2000
EBN
37
1500
40
NABN
1000
22
80x10G
20
40x10G
500
18
32x2,5G
8x2,5G
0
0
YE 1997
1999
2001
2003
future
Drop in transmission costs divided by 4 on 4
year-period
Decreasing costs while increasing capacities
106NC Division's efficiency CAPEX evolution
NC Division's capex
2002
2003-2004-2005 average
36
30
Local Loop
25
20
x-DSL DSL-eligibility increase ATM IP
6
13
PSTN
33
37
Common Resources other
- Big cost-savings resulting from
Technological progress
TOP sourcing program
TOP CAPEX chantiers e.g. investment process
107I T c o n t r i b u t i n g t ot h e c o s
t r e d u c t i o na n d g r o w t h p r o
g r a m s
1081. IT savings as budgeted in 2002
IT Expenses (CAPEX OPEX)
2003 - 2005 cum. savings ? 1,5 Bn
Rough figures
1091. IT actual savings as in 2003
IT Expenses (CAPEX OPEX)
2003 - 2005 cum. savings ? 2 Bn
2003 - 2005 cum. savings ? 1,5 Bn
1102. How was it achieved?
- Project portfolio streamlining
- Killing useless or redundant applications
- Cancelling or delaying less value-added projects
- Focusing projects on high-value functionality
- Infrastructure rationalization
- Roll-out of more optimized IT architectures
- Desktop and servers simplification and
re-engineering - Consolidation of data centers
1112. How was it achieved?
Data center consolidation
- January 2003
- 100 Production Data Centres
- 60 Operations Teams
- End of 2003
- 36 Production Data Centres
- 27 Operations Teams