2010 REGISTRATION DOCUMENT - Iliad

RISK FACTORS
Legal risks 4
4.3 FINANCIAL RISKS
4.3.1 FOREIGN EXCHANGE, INTEREST RATE AND LIQUIDITY RISKS
These risks are described in full in Notes 28 and 32 to the consolidated fi nancial statements for the year ended December 31, 2010.
4.3.2 EQUITY RISKS
4.3.2.1 Significant percentage of capital and voting rights held by the Company’s principal
shareholder
On February 28, 2011, Xavier Niel, the Company’s principal shareholder held 62.65% of the capital and 60.57% of the voting rights. The fact that a
signifi cant portion of the Company’s capital and voting rights is held by a single shareholder, and that said shareholder may freely dispose of all or part
of his interest in the Company, could have a material adverse effect on the price of the Company’s shares.
Equity risk is minimal as the Group does not have any signifi cant equity portfolios.
4.3.2.2 Share price volatility
The Company’s share price may be highly volatile and could be impacted by a number of events affecting the Company, its competitors, the
telecommunications and Internet industry or the fi nancial markets. The Company’s share price could fl uctuate signifi cantly in response to the following
types of events:
changes in the Group’s fi nancial performance or that of its competitors;
the announcement by the Company of the success or failure of the commercial launch of a new product;
announcements by competitors or announcements concerning the telecommunications or Internet industry;
announcements regarding changes in the Group’s management team or other key personnel.
In recent years, the fi nancial markets have experienced signifi cant volatility that, at times, has had no relationship to the fi nancial performance of listed
companies. Market volatility, as well as general economic conditions, could affect the Company’s share price.
4.3.2.3 Subsequent sale of shares by significant shareholders
The Company’s principal shareholders are Xavier Niel and its managers. If any of these shareholders were to sell a large number of shares on the
market, Iliad’s share price could be affected, depending on the market conditions at the time of the sale, the number of shares sold and the reasons
for and the terms of the sale, as well as the public’s perception of such sales.
4.4 LEGAL RISKS
4.4.1 RISKS RELATING TO UNFAVORABLE CHANGES IN THE LEGAL AND REGULATORY ENVIRONMENT
The Group’s operations are subject to specifi c French and European Union regulations governing the electronic communications sector. For the last
ten years the electronic communications sector has been subject to increasing fi scal pressure, with operators being subject to various specifi c taxes
and contributions.
Any unfavorable change in the regulations applicable to the Group’s operations could have an adverse effect on its business, results of operations
and fi nancial position.
4.4.2 RISKS RELATING TO THE GROUP’S RELATIONS WITH THE INCUMBENT OPERATOR
Despite the legal and regulatory framework requiring the incumbent operator, to permit the development of local loop unbundling and to grant the
Group access to its installations, the Group may be confronted by situations where there is a confl ict of interest with the incumbent operator as its
dominant competitor and principal supplier. The incumbent operator could therefore exercise signifi cant infl uence over the Group’s operations and
strategy, with potentially adverse effects, and could also restrict its capacity for growth.
Registration document 2010 - 17