REGISTRATION DOCUMENT AND FINANCIAL REPORT - Iliad

5. INFORMATION ABOUT THE COMPANY AND THE GROUP
5.1 HISTORY AND DEVELOPMENT
through the fixed telephony operator One.Tel, which was acquired by the Group in December 2001, and with
prepaid phone cards marketed by Kertel, acquired in March 2003. These two acquisitions have contributed to the
Group’s growth and profitability and have enabled it to spread network costs over a more diversified business
base, covering both Internet traffic and switched voice traffic.
Since November 2005, the Group has operated the only WiMAX license in mainland France, through its
subsidiary IFW.
The Group holds the sole license to use frequencies in the 3.5 GHz bandwidth for the whole of mainland France.
As such, the Group is able to use WiMAX technology (IMT-2000). In 2007, the Group performed various tests
on this technology, which is currently in the development stage.
WiMAX technology is:
• A strategic goal for many suppliers (as expressed at the GSM Congress in Barcelona) with a view to
unveiling new equipment lines;
• WiMAX technology standardization and certification has evolved due to the acceptance of WiMAX 802.16e
as IMT 2000 technology and the work on technical specifications of the WiMAX forum;
• Wide-scale deployment in the United States with Sprint;
• Bids for WiMAX licenses continued in 2007 in Europe and more particularly in Germany and Italy.
The Group has also taken over PN, renamed Free Infrastructure in February 2007, a company dedicated to
developing and building optical fiber networks.
The Group’s business is based on one of the leading alternative telecommunications networks in France and
includes service offerings mainly targeted at the consumer market. The Group currently has two business
segments: Broadband and Traditional Telephony.
The Broadband segment is undergoing a period of significant growth driven by the expansion in infrastructure
and lower hardware costs (for computers, modems, etc.), as well as the increase in the number of public projects
and, more particularly, by the widespread availability of broadband technologies such as ADSL and the success
of optional “triple play” services. The Group’s Broadband business is centered on (i) Internet provider services
operated by Free, based on broadband Internet access via ADSL; (ii) shared website hosting services and the
registration of domain names, provided by Online, and dedicated hosting services provided by Dédibox; (iii) call
center activities through Centrapel and Total Call; (iv) WiMAX operations carried out by IFW; and
(v) fiber-to-the-home (FTTH) programs rolled-out by Free Infrastructure, Citéfibre, IRE and Immobilière Iliad.
Following the success, first, of its “Pay-as-you-go” and “50-hour plan” services and subsequently of its unlimited
broadband access service which costs €29.99 per month, Free is now the third largest Internet service provider in
the French residential broadband market with 19.7% 8 of all ADSL subscribers at December 31, 2007.
The Traditional Telephony segment is centered on the activities of the fixed telephony operator One.Tel and on
the call termination business developed by Kedra.
With approximately 168,000 customers at December 31, 2007, One.Tel is a relatively small fixed
telecommunications operator, but it is profitable and has adopted an aggressive pricing policy. Following the
acquisition of this company in December 2001, the Group focused on repositioning One.Tel’s service offering,
adopting a policy of carrier preselection, simplifying the range of services offered and establishing an attractive
pricing policy (a price of €0.01 per minute for all local and national calls). Since its takeover by Iliad, a system of
payment by direct debit has been strongly encouraged in order to guarantee the payment of bills by its customers,
and at December 31, 2007 90% of One.Tel’s customers used this method of payment.
8 Source: France Télécom
16 - Iliad – Registration Document 2007